Callida is Latin for “clever,” and Callida Genomics, a new spinout of Hyseq Pharmaceuticals, plans to live up to its auspicious name by developing kits that allow researchers to sequence an entire genome on a microarray in the time that it takes to do a single hybridization.
“Our dream is to be able to sequence the whole human genome of every newborn baby within a day, and to do it for $10,000 or less,” said Callida CEO Rade Drmanac. “The advantages in terms of preventative medicine are so enormous that I believe it will be the dominant way for health care in the future.”
The company plans to produce kits that use its core technology, sequencing by hybridization (SBH), in which short strands of labeled genomic sequence are hybridized to oligonucleotides on arrays, then the sequences are pieced together using algorithms.
Before offering whole genome analysis kits, the company also plans to develop products that allow labs to sequence two or three kilobases at a time for verification of expression vectors or studies of site-specific mutagenesis.
But to accomplish this ambitious feat of scaling down sequencing operations to the micro-level, Callida is going to have to find tricky ways to transcend the problems that have plagued its parent in the past, and iron out existing technological glitches in its core technology.
Spawn of a Settlement
Callida was spun out of the October settlement between Hyseq and Affymetrix, which ended their four-year old patent battle. In the settlement, Affymetrix agreed to provide $1.5 million to Hyseq to finance N-Mer, a joint venture to develop SBH arrays on GeneChips. Hyseq, meanwhile, garnered venture financing to spin out Callida, of which it is now a 50 percent owner. Then it made N-Mer a 100-percent owned subsidiary of Callida, in which Affymetrix has the option to buy a majority interest.
“N-mer is a very nice outcome that will benefit both Callida and Affymetrix,” said Drmanac. “Hyseq will not spend any more money on the lawsuit, and through the settlement we got funding from Affy-metrix that is currently supporting Callida’s and N-Mer’s work.”
Hyseq has assigned all of its intellectual property relating to microarrays to Callida, and 30 Hyseq scientists have become Callida employees. The company plans to add additional sales and marketing staff in the next two years, as it gets ready to launch products.
The Resurrected HyChip
The establishment of Callida is a major victory for Drmanac, who has been trying to develop the SBH technology for the past eight years as the HyChip. But as Hyseq became increasingly focused on a series of legal battles over intellectual property, the technology languished and the company’s cash reserves dwindled.
In the past year this technology seemed to have been entirely forgotten as the cash-strapped Hyseq struggled to reinvent itself as a ge-nomics-based pharmaceutical company under the leadership of Amgen founder George Rathman (who has also supplied the company with $20 million cash infusions).
With the birth of Callida, however, the idea of marketing microarrays for sequencing has been resurrected at Hyseq, and the company’s double-edged strategy of producing both tools and therapeutics has been clearly delineated. Now Callida and N-Mer can focus on developing the SBH technology.
Oligo Assembly Algorithms
SBH technology involves using an algorithm to mathematically determine all of the possible four-base sequences for an oligonucleotide of a certain length. For example, there would be about a million possibilities for the sequence of a 10-mer oligo, and this number would be adjusted to account for blocks of GC-rich sequence, stability of probes, and repeats, said Drmanac.
These oligos are synthesized and bound to a microarray substrate, and then the genomic sample is cut into smaller pieces, labeled, and hybridized to the array. As with gene expression microarrays, the oligos that have hybridized with pieces of this genomic DNA light up on the array, indicating that these 10 base-pair sequences are present in the genome.
A second algorithm is used to piece together the sequences detected on the array. This algorithm takes advantage of the fact that sequences overlap, by tiling together layers of sequence in a similar way to that in which computer algorithms such as James Kent’s GoldenPath assembled the human genome from 500-base pair reads produced by a capillary electrophoresis sequencer.
Despite the amount of time that has already gone into development of SBH technology, it is still not ready for prime time.
“Sequencing by hybridization is not yet a current technology,” said Franco Preparata, a computer science professor at Brown University who is currently working on SBH-related algorithms. “There are still considerable biochemical issues that have to be settled, and until those biochemical difficulties are removed, it is not likely to be an alternative to electrophoresis-based techniques.”
Chief among these difficulties is the problem of non-specific binding of target sequence to oligonucleotide probes, which leads to false positives and could lead to inaccurate sequencing. Drmanac insists that the Callida’s algorithm and the existence of many overlapping sequences compensate for this weakness.
“If some mers don’t work or behave as false positives, you have enough redundancy to get accurate final base calling,” said Drmanac. “The current error rate is less than one in 10,000 bases.”
The Affymetrix partnership will likely help Callida solve any remaining biochemical problems, as Affymetrix has expertise in oligonucleotide hybridization chemistry.
But this venture, which is currently Callida’s only collaboration, could also lock in Callida to the least clever format for hybridization before it has a chance to find out whether bead-based arrays or microfluidics substrates work better.
Callida is trying to avoid this eventuality by concurrently testing out other microarray substrates while N-Mer is developing GeneChip-based sequencing chips. The company is negotiating a collaboration with a leading manufacturer of microfluidics chips to develop SBH microfluidics chips, according to Drmanac, and has already begun development of bead-based SBH arrays using beads from Luminex.
“Our business model is organized around different assay platforms, and we envision four or five of these platforms being used,” said Drmanac.
Ultimately, he said, the company would like to develop technology that allows single molecule detection and has the capability to sequence an entire genome in one hybridization. Given that no current technology platform offers this level of sensitivity and density, Callida is going to have to bring out some of its trademark ingenuity to solve this problem.