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Perlegen Signs Its First Big Pharma Deal with GlaxoSmithKline, Finishes Fifty Genomes

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Last week, Affymetrix spinoff Perlegen Sciences announced its first commercial engagement, a research collaboration with pharmaceutical giant GlaxoSmithKline to examine over a million SNPs in order to find genetic markers of drug response.

Perlegen CEO Brad Margus told BioArray News that this agreement, of undisclosed financial terms, is the first of many the firm is hoping to corral as its technology and research begins to bear fruit in the form of data — terabytes and terabytes of it from dozens of subjects today and potentially hundreds tomorrow.

A 94-employee company founded in 2000 within Affymetrix, and spun out in 2001 with a $100 million venture-capital war chest, Perlegen is gearing up toward an eventual goal of placing an entire human genome on glass wafers for DNA analysis. The deal with Glaxo comes as a result of the completion of an ambitious project to sequence 50 human genomes at single-base resolution. The 15-month-long project was completed on Aug. 16, Margus said.

The company separated, then scanned full sets of chromosomes from 25 racially diverse individuals using whole wafers of microarrays custom-manufactured by Affymetrix for the project. The wafers, sheets of 49 high-density chips, contain probes for individual base pairs along the genome, allowing the Perlegen scientists to tile through the genomes base by base to look for variations.

The researchers compared the data from each of the genomes to that from the other 49 sets to discover all the variations between them. To achieve this milestone, the company purchased millions of dollars worth of chips from Affymetrix and created the infrastructure to scan the chromosomes and then store and analyze the data created, which at its peak was as much as five terabytes a week.

“We discovered millions of SNPs by looking at the 50 genotypes,” Margus said. “It was all new and we found four times as many SNPs as the public effort had been finding, and we were looking at a lot more people.”

This effort has allowed company investigators to expand their capabilities in genetics, according to Margus. “We had a PhD scientist who just joined us,” he said. “She had spent the last three years looking at 20,000 bases around a gene. In the first week she was with us, we let her look at 10 million bases north of that gene and 10 million south of that gene — in 25 people — to let her see what she had been missing. We call it the fire hose syndrome, getting so much data at one time, in your face. It’s really awesome to have that.”

From Shrimp to SNPs

Margus has a deep personal conviction for expediting any progress that the company might make. Two of his four children have ataxia-telangiectasia, or A-T, an inherited disease. Margus, who holds an MBA from Harvard, formerly was the CEO of Kitchens of the Oceans in Florida, a $100 million-a-year shrimp processing company. He was persuaded to lead Perlegen by co-founder David Cox, formerly director of Stanford’s human genome center and now CSO of Perlegen. Margus first met Cox, a pediatrician and a geneticist, in 1993 when he was seeking assistance for a foundation he had created for research to help children with A-T. Seven years later, when Perlegen was being organized within Affymetrix, Cox suggested Margus for the position.

Now, after two years of research, the agreement with GlaxoSmithKline signals the beginning of a next phase of growth for Perlegen, building on the information gathered in the genome scans.

“Only in the last two months have we been able to show [potential clients] what our platform can do,” Margus said. “Now we will reorganize to become an organization that can oversee many concurrent studies.”

Glaxo Bites, Others Nibble

The pharmaceutical companies are interested, he said: “We’ve had five or more visit for a day. Their interests cross a broad spectrum — from whole genome scanning [to] applying the technology upstream to find the genes that are causal or to focus downstream where they have a trial in progress.”

This deal, however, may have been presaged by the close intertwining of Perlegen, Affymetrix, and Glaxo. John Young, a member of Perlegen’s board of directors, just completed a term of service on Glaxo’s board, and Glaxo owns an 8 percent stake in Affymetrix.

As part of an arms-length relationship with Perlegen, Affymetrix supplies whole wafers to Perlegen at a discount and, through June 30, claimed $11.5 million in revenues from the firm, including $5.6 million from the sale of wafers, in the first six months of 2002.

Affymetrix holds a 53-percent equity stake in Perlegen after accepting venture financing from outside investors — including CMEA Ventures of San Francisco, Lombard Odier & Cie, Maverick Capital, MPM Bioequities of Boston, and 30 institutional and individual investors including Alejandro Zaffaroni, a co-founder of Affymetrix. In an agreement with investors, Affy has relinquished voting control of Perlegen but does appoint three of the seven Perlegen board members. The board includes former Senator Bill Bradley and Maxine Singer, president of the Carnegie Institution of Washington.

Perlegen may target a second round of financing or an initial public offering in 2003, said Margus. In the meantime, it will rev up to begin investigating SNPs, millions at a time. “There is a whole genotyping market that doesn’t exist today that will explode when companies like Perlegen discover content that people can put on their platforms,” he said.

— MOK

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