Peoples Genetics Inc. Chief Operating Officer Kevin Molloy describes the company's challenge as being a little like looking for a needle in a haystack.

That challenge is finding disease-causing gene mutations in large populations to discover the inherited causes of disease. In early September, the Woburn, Mass.-based company said it had completed deployment of its first-generation, high-throughput automated instrumentation.

"What makes the company unique is the combination of proprietary sample procedures that enable us to pull in DNA from many thousands of people," Molloy said.

The company uses its high-resolution process, called constant denaturant capillary electrophoresis (CDCE), to separate mutant from non-mutant DNA molecules.

"CDCE allows us to discover the variants present in any gene of interest down to very low frequency," Molloy said. The company's high-throughput mutational spectrometers enable Peoples Genetics to discover and quantify potentially disease-causing mutations in more than 2 million human genes per year.

"We believe that to be able to understand the common roots of a genetic disease, you need to look at many, many people to find the subtle differences," Molloy said.

The privately held company said that it can detect the identity and frequency of any gene mutation found at a level of one per 20,000 in the pooled DNA samples from a population as large as 100,000 individuals.

"We are actually commercializing a technology developed in a collaboration between [Massachusetts Institute of Technology] and Northeastern University," Molloy said, noting that the company holds several patents surrounding the technology and has more pending.

Peoples Genetics began in November 2000 with scientific founders Barry Karger, who is center director of the Barnett Institute at Northeastern, and William Thilly, professor of biological engineering at MIT. The company's business model is based on offering its technology in return for cash, although it has a second goal of internal discovery to develop molecular diagnostics, which Molloy said is perhaps more important long term. He said Peoples Genetics is one to three years away from moving from the lab to the clinic.

Peoples Genetics is particularly interested in the genetics of diabetes and cancer. Molloy said that because the diseases are widely thought to be multigenic, or having multiple genetic components, it makes discoveries difficult. Because of that, he said, large-scale association studies like Peoples Genetics' should be "quite useful" in helping to find causal alleles.

The company, he said, is in two collaborations with undisclosed partners: one in Type I diabetes that attempts to find the allele that increases the risk for the disease and a second to discover the genetic determinants of early onset cancers.

The company has raised $12 million to date through a Series A and angel round, but Molloy said officers plan to close a Series B by late summer 2003.

There are 20 employees at Peoples Genetics, with no immediate plans to make additions. Given market conditions, he said, the company is trying to be "careful about its growth."