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In Weird Turn of Events, Hyseq and Affy Settle Suit and Form Joint Venture

SAN DIEGO, October 25 — A four-year patent litigation suit between Hyseq and Affymetrix has come to a strange and surprising end. The two companies announced on Thursday that they have agreed to dismiss all pending suits in the US District Court, to cease their involvement in pending patent interference proceedings before the US Patent and Trade Office, and to form a joint venture. 

Also, within moments of announcing the end of the dispute, which began in 1997, Hyseq said that it would use the proceeds of the settlement — an undisclosed amount — to fund the launch of a new subsidiary, Callida Genomics, that will develop and commercialize its sequencing-by-hybridization technology.

The settlement, which is still subject to court approval, would give Affymetrix a commercial license to Hyseq’s array-related patents. In return, Hyseq, which also changed its name on Thursday to Hyseq Pharmaceuticals, would get an internal-use license to certain Affymetrix intellectual property for its pharmaceutical business as well as a BiotechAccess supply agreement for Affy’s GeneChip technology.

Callida Genomics has been assigned all of Hyseq’s sequencing-by-hybridization patents and a team of approximately 30 Hyseq scientists, including SBH inventor and Hyseq founder Radoje Drmanac. George Rathmann will serve as chairman, interim president, and chief executive officer of Callida, in addition to his current role as chairman of Hyseq.

Hyseq will be majority owner of Callida, and Callida will wholly own the Affy-Hyseq joint venture, to be called N-Mer. The companies said that N-Mer, which will have access to Callida’s proprietary sequencing-by-hybridization technology from Hyseq and Affymetrix’s GeneChip technology, would accelerate the development and commercialization of a high-speed DNA sequencing chip. 

Affymetrix will be the exclusive array and system supplier and the exclusive distributor of N-Mer products. Affy will have the right to purchase a majority interest in the N-Mer subsidiary under specific undisclosed terms. Affy will also be a minority owner of Callida and both companies agreed to make additional investments contingent upon attainment of certain milestones. 

Hyseq CEO Ted Love said in a statement, “We are pleased that the creation of Hyseq Pharmaceuticals and Callida Genomics allows each to focus on their main business objectives to bring important biopharmaceutical and DNA chip products to commercialization.”

Sue Siegel, president of Affymetrix, said that her company is “delighted to have these matters behind us.”
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