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Affy Developing Sequencing-on-Chip Tech, Plans to Bundle USB Reagents, GeneChips

Confirming what industry analysts and array users have been suspecting, Affymetrix last week announced that it will use its planned $75 million acquisition of reagents maker USB to more directly offer reagent kits and to help it develop a new technology to play in the next-generation sequencing market.
Affymetrix also discussed plans to launch a 30-million-feature, three-chip set for copy number variation analysis sometime during this quarter, and described a plan underway to independently build a new human variation database that will serve as a source of content for future generations of chips.
According to Affymetrix President Kevin King, the firm intends to bundle USB reagent kits with existing and future GeneChip products. Affy currently contracts with several external parties, including Invitrogen and Ambion, to manufacture some of its kits. King made his comments at the JPMorgan Healthcare Conference in San Francisco last week.
King said during a webcast of his presentation that the USB acquisition, expected to close this quarter, will “increase the value of our current portfolio of products as we capture more of our customer spend that’s currently related to GeneChip arrays.”
He noted that USB currently has around 80,000 customers, half of whom are industrial, and said that the opportunity to introduce some of those customers to Affy’s array technology was attractive.
Over the past few quarters, Affy has typically sold around two-thirds of its products to academic or government-funded researchers, while slightly more than a third of its business is with industry, mainly pharmaceutical and biotech companies.
This week Pratima Rao, Affy’s senior director of product marketing, told BioArray News that the company is acquiring USB to provide customers with a “whole-product solution that includes extensive reagent kits.”
According to Rao, USB has an “established brand and loyal customer base” and its reagent platform, which includes “flexible” enzyme manufacturing and synthetic organic chemistry, is “very complementary to Affymetrix’ current product portfolio and can be applied to a broad variety of new and emerging applications.” 
Customers have been expecting that Affy would combine USB’s kits with its products since the firm announced the purchase in December. However, some have expressed concern that the acquisition would compel Affy to replace third-party kits that may be better than USB’s kits.
“Affymetrix has traditionally kept out of the reagents market and this has served their users well because it gave us the opportunity to work with various different vendors to try and optimize each part of their overall labeling protocol,” Divyen Patel, CEO of Memphis, Tenn.-based Genome Explorations, a certified Affymetrix service provider, said recently (see BAN 1/8/2008).


Patel said that if Affy bundles USB’s reagents with its chips it could either result in a kit that is “sub-optimal for yield and/or quality,” or Affy could instead work with USB and other vendors to generate a “completely optimized kit that is turn-key for all users and results in perfect quality and yields.”

“USB will increase the value of our current portfolio of products as we capture more of our customer spend that’s currently related to GeneChip arrays.”

Others weren’t so sure. Paul Van Hummelen, research manager at the Flanders Institute of Biotechnology in Belgium, also a certified Affymetrix service provider, told BioArray News that it is “probably good” that Affy will develop and package its own kits.
“This will indeed make them less dependable on third parties and prevent the kits from changing too many times because of changing agreements with these third parties,” he said. Van Hummelen said that he hopes Affymetrix can “spend more time to develop better amplification protocols that are better tailored to their array technology”, but that the switch to USB-manufactured kits probably won’t have too much of an impact on service providers.

“We will probably have to change our protocols and kits in the near future,” Van Hummelen said. “I just hope that they will be of good quality.”

Rao did not discuss how the acquisition could affect sales of kits manufactured by third parties.

Next-Generation Chips

During Affy’s presentation at JP Morgan last week, Affy CEO Stephen Fodor said the company will use technology developed by USB to deploy enzymatic sequencing reactions directly on arrays that have captured portions of the genome, using new chemistry that "allows us to use both polymerase and ligase labeling reactions."
He said that will launch its first products that use surface enzymatic labeling reactions directly on the chip within the first half of this year. Specifically, Affy plans to release a set of three chips that contain 30 million 50-mer oligonucleotide probes that span the genome.
Each chip in the set will have 10 million 50-mer probes, with a 50-mer probe tiled every 150 bases across the “non-repetitive, working parts of the genome.” This three-chip set is intended for copy number variation work. Affy’s Rao declined to discuss a name for the product or further details this week.
Beyond the three-chip set, Affy is also developing applications that would enable the company to compete against expensive next-gen sequencing technologies sold by firms like Illumina, Roche, and Applied Biosystems, which some see as competitive to existing Affy products.
“The next product is application of these sequencing reactions directly on the array,” said Fodor. “The new chemistry that we’ve enabled allows us to use both the polymerase- and ligase-labeling reactions directly on the surfaces. We can target all or any particular region of the genome and so then targeting genotyping or all the way to the whole genome will be available with this technology,” he said.
According to Fodor, Affy will eventually target the “whole-genome level, including any sequence frame within the genome” using the new technology. He said that Affy’s greatest advantage over next-gen sequencing platforms will be the relatively lower cost of its chips.
“We are not talking about tens of thousands of dollars per experiment here,” said Fodor. “We are talking about putting this level of information on single arrays in high-volume, high-throughput formats so that they are actually accessible to the marketplace in the broad, high-volume applications. That is the target that we are going after and that is the force on which we’ll spend our research dollars.”
In addition to developing the new sequencing-on-chip technology, Affy is currently involved in an effort to create a new human variation database that it will use to generate content for future arrays.
According to Fodor, current Affy products are based on the HapMap database, which includes around 4 million SNPs from 270 individuals. Fodor said that Affy is now taking the “entire known human variation database, about 12.5 million variations” and created a set of chips that it is using to interrogate an additional 1,100 samples in order to generate this larger database.
Fodor said the new database will be ready during the first half of this year and will be used as a “resource to design our next-generation products” that will be “able to look at up to 10 million assays per chip in the near future.”
The new extended variation map generated by Affy will also be provided to customers with these products when it becomes available, Fodor said.

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