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Quark Biotech Buys Incyte s Microarray Business, Develops Function Arrays


Drug developer Quark Biotech says it was one of Incyte’s biggest microarray customers — but that Incyte had no idea what Quark — with operations in Cleveland, Israel, and Pleasanton, Calif. — was really doing with its microarrays.

“They never suspected we used the arrays for function,” said Quark founder and CEO Daniel Zurr. Instead of doing expression profiling, like most of Incyte’s clients, Quark has been spotting down cDNA transcripts on arrays then hybridizing the contents of cells used in functional “knockout” assays to the arrays to figure out what the knockouts are doing to the cells.

But now there is no longer any need for hush-hush: Quark just announced that it has acquired Incyte’s microarray business, hiring key personnel and moving Incyte’s facility out to its Pleasanton plant. Now Quark will use this Incyte team and technology for its internal microarray-based function assays, as well as for making small molecule microarrays, Zurr said in an interview with BioArray News. While the company will use the microarrays in several collaborations with big pharma, including AstraZeneca, Fujisawa, and two others it does not want to name, “we strictly are not using it for service,” said Zurr. “We are using huge numbers of microarrays because we have millions of [DNA] fragments” to test for function.

Oracle and Weizmann

The privately owned company, which was founded in 1994 with funding from a number of Bay area investors, has attracted as its chairman none other than Oracle founder Larry Ellison. Ellison is joined on the board by Nobel Laureate Joshua Lederberg and Amgen co-founder Joseph Rubinfeld. The company has not only grabbed the Cleveland Clinic molecular biologist Andrei Gudkov for an academic collaboration, but has also gotten the Cleveland Clinic to give over one of its central buildings for Quark’s headquarters. In return, the clinic gets rights to use Quark’s technology. The company also has close ties to the Weizmann Institute in Rehovot, Israel, and has recruited many scientists from Weizmann, Zurr said. If you’ve never heard of Quark, it’s because the company has kept a quirkily low profile, shying away from journalists and shunning venture capital money.

Given its Bay area roots, it is not surprising that Quark ny was “very friendly,” with Incyte during its time as a customer, and did not even consider any other sellers when shopping for an in-house microarray department. The deal was a good fit because Incyte had been anxious to shed its microarray business and other areas not key to its pharmaceutical development plans ever since it decided to focus on drug discovery last year and pull out of the commercial microarray market, according to analysts.

Zurr also said he could not have used arrays from market leader Affymetrix, in which oligo probes are built up base by base through a photolithographic process, “because when we build the array, we don’t know the sequence.”


Form Follows Function

This sequence-blind arraying is part of a process that turns traditional genomics-driven drug discovery on its head: Instead of going from sequence to protein to function to target, then trying to come up with a drug and a clinical use for the target, Quark starts with the clinical endpoint — a particular disease process — then looks for genes and proteins involved in key pathways related to that endpoint, and designs small molecules to modulate these pathways. The company calls its backwards drug development method “ED3” or “ED Cubed,” a formula that stands for endpoint-driven drug discovery. “The whole point is the endpoint,” Zurr said, smiling. “When you really want to develop a drug, you have to define what is the endpoint of the disease. And then you go backwards and try to find the target you are after. In most drugs you look for a target the small molecule will inhibit.”

This may sound like a slick pitch to investors, but when Zurr explains the details, it soon becomes clear that there is substance behind the slogans.

First, he said, the R&D team takes a tissue culture of a type of cell for which it is studying a particular clinical endpoint and uses viral vectors to knock out a gene or protein in each cell. The inserts in the viral vectors are made from chopped-up DNA, in which each gene is cut in two so that there is a separate insert for the sense strand and the antisense strand: “In the event you have antisense you knock out the RNA, and in the event you have sense you actually create in the cell a small peptide that can act as a dominant negative and block the protein,” Zurr said.

Then the team applies the clinical endpoint that it wants to study to the knockout cells in culture — for example hypoxic ischemia in a population of neurons, (a common condition involved in brain damage). Cells where the vector has inhibited proteins in the ischemia-related apoptosis pathway become more robust, whereas those where cell growth or protective pathway is inhibited become more fragile, and the rest of the cells in which the knockout did not affect this pathway remain the same.

This is where the microarrays come in, explained Zurr. “How do you know [which] inserts really … make the cell more resistant to ischemia? The only way is to take those cells and extract the viral particles out of them, and then hybridize them on the DNA chips where you also have all those inserts printed on the chip.”

If a cell is more robust, more copies of that insert will hybridize to the corresponding insert on the chip, creating a stronger signal than inserts from other weaker cells. An especially dim signal also would show that the insert made the cell more sensitive to the clinical endpoint. “On all the chips you see upregulation and downregulation,” Zurr said. “But here it’s not expression it’s function … The big news is that you can use the DNA chip for function that is directly related to the clinical endpoint.”

After finding the inserts that seem to inhibit a disease process in this assay, the group then goes to the test tube and sequences them. The whole process is patented, said Zurr.


Let’s Get Chemical

Quark intends to adapt its newly acquired array technology for another completely different downstream purpose: chemical genomics. Zurr, however, is less loquacious when speaking about this new project, which he said is in the “advanced development stage,” given that applied-for patents are still pending. While the insert arrays for function are traditional 50- to 500 base pair cDNAs on glass slides, Zurr declined to discuss the substrate or spotting technique for these new small molecule arrays, which the company plans to use to screen protein libraries for targets. He did say, however, that the scientists at Quark can fit as many molecules on their chip as they can cDNAs on a traditional Incyte array (which means up to 10,000, if Incyte’s protocols are followed).

Like the function arrays, these chips are to be used solely for internal drug development projects. “It is a very fast way and you can use a very small amount of the protein to find the interaction between the protein and the small molecule,” said Zurr.

Might Quark change its mind and decide to generate some short-term revenues from its arrays before it discovers a drug for a particular disease?

Not a chance, said US director of operations Boaz Laor. “We have a stream of income from our collaborators,” he said. And even in this market, he added, “if the company is good there shouldn’t be any problem in raising money.”

While the company was cryptic about future plans for funding and expansion, Zurr did not rule out the now-nearly unthinkable idea of going public. “Every desert should have an oasis,” he said. “Even the desert of the IPO.”



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