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With Affy Licensing Pact Completed, NimbleGen Looks to Broaden Offering Beyond Array Services

NimbleGen Systems last week concluded a licensing deal with Affymetrix that will allow it to add catalog arrays to its current service-based offering.
Affymetrix has granted NimbleGen a non-exclusive, worldwide license to its intellectual property, enabling NimbleGen to manufacture, use, and sell nucleic acid microarrays and related products and services. Financial details of the licensing agreement were not provided.
While NimbleGen has sold some catalog arrays in the past, its business has been primarily based on a services model based out of its subsidiary in Iceland. Now, according to a company official, NimbleGen’s hands will no longer be stymied by IP issues when it decides how and where to sell its chips.
Stan Rose, NimbleGen’s CEO, told BioArray News in an e-mail last week that the agreement means that the firm will be able to begin selling arrays directly to more of its customers globally.
“We already [directly] sell some arrays in some circumstances. We are now putting in place the infrastructure to sell, distribute, and support arrays on a much broader basis," Rose wrote. “We will also be introducing a variety of related products that will enable customers to get the most out of their array experiments.  We’ll be announcing availability of specific products over the coming months, on a product-by-product basis,” he wrote. 
In a follow-up interview, Rose did not rule out the possibility that NimbleGen in the future may seek additional licenses as its business expands. “As to the IP situation, we have always conducted our business in a way that respects valid IP rights of others. Now that we’ve decided to expand our business, you can be sure we will obtain whatever licenses we believe we need — and that will also have to be evaluated on a product-by-product basis,” Rose wrote.
The agreement is not the first between NimbleGen and Affymetrix. The firms signed a pact in 2004 through which NimbleGen agreed to manufacture custom arrays for Affymetrix under the so-called NimbleExpress program (see BAN 6/23/04)
But the new license is the first to give NimbleGen rights to directly market its arrays to customers in the US, Europe, and Japan. 
Rose declined to provide a timeline for when some of NimbleGen’s most in-demand services, like its comparative genomic hybridization offering, could become directly available to customers in the form of catalog arrays. He said that the company would answer those questions in coming weeks.
NimbleGen’s current services include array CGH, expression analysis, chromatin immunoprecipitation (ChIP)-on-chip, and comparative genomic sequencing. A DNA methylation service is also available through an early-access program (see BAN 6/27/2006).
In an announcement on the company’s website, Rose provided some information on NimbleGen’s agenda for the coming months, including a plan to increase density to 4 million probe features per array from the 790,000 feature arrays the company currently offers. In addition, Rose said in the statement that the licensing agreement with Affymetrix will enable NimbleGen to “launch a range of complementary instruments, consumable products, and software that will help scientists get the most out of microarray experiments.”
NimbleGen’s move into the off-the-shelf array market — as well as its plans to push into software, instrumentation, and consumables — could have repercussions in the highly competitive market for catalog arrays and peripherals. In particular, providers of next-generation microarray applications will likely be keeping a close eye on NimbleGen’s next steps as it expands beyond a services model in these areas. Firms like Agilent Technologies, which has been comfortably selling oligo-based array CGH products in the US market for two years while NimbleGen served its US customers primarily through a service model, may see a new competitor in the marketplace.
Sea Change
Nimblegen’s decision to license Affy’s IP represents a sea change in the firm’s strategy, according to Rose, who told BioArray News that NimbleGen previously “did not address some large opportunities out there because we thought that there was a need to license or litigate certain issued patents and we did not think that was a good use of our time and money.”
However, he added, “Over the past few years we have grown and we’ve become stronger financially and at the same time we’ve seen more and more demand for direct access to our products from scientists that we weren’t comfortable selling to previously,” Rose said. “We’ve now been able to come to a licensing agreement with terms that we felt justified our investment,” he added.

“We’ve now been able to come to a licensing agreement with terms that we felt justified our investment.”

In a statement, Affy said that the deal with NimbleGen validated its position as “a clear market leader and innovator.” The company reached a similar licensing arrangement with Invitrogen in June (see BAN 6/27/2006).
Rose said that NimbleGen plans to expand across all pillars of its infrastructure, and will hire staff in R&D, sales, and support to build out from its current set-up which was “designed for one business model,” Rose said.
NimbleGen currently employs around 60 people.
Though its model will evolve, NimbleGen does not plan to pull out of its investment in Iceland, where much of its business has been handled in the past.
Rose said that NimbleGen has “an extremely talented group of employees in Iceland, we've invested in development of very efficient processes there, and as a result we have a tremendous amount of expertise and know-how in Iceland.” 
Rather than redirecting funding from the subsidiary as the company focuses on more direct sales, Rose said that NimbleGen will make a greater investment in its service center in Reykjavik.
“We believe we have the best and largest microarray service operation in the world in Iceland, and we plan to invest more in Iceland over time, not less,” he said.

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