By Lisa Seachrist

Washington Editor

Privately held genomics specialist Third Wave Technologies Inc. will merge with PE Biosystems, a PE Corp. business, in an all-stock transaction worth approximately $330 million.

With the merger, PE Biosystems acquires Madison, Wis.-based Third Wave's innovative DNA analysis method called Invader to speed the discovery and understanding of single nucleotide polymorphisms (SNPs).

Under the terms of the agreement, all of the equity of Third Wave will be exchanged for an aggregate of approximately 1.972 million shares of PE Biosystems' common stock. PE Biosystems' stock (NYSE:PEB) closed Monday at $163.875 a share, down $4.

"There are a number of ways to analyze SNPs; none of them is perfect," Michael Hunkapiller, PE Biosystems president and vice president for PE Corp., told BioWorld Today. "The Invader technology allows for cost-effective, high-throughput assays. It's clear this is a good step in the right direction for us."

The merger of the two companies will be a tax-free pooling of interests. Third Wave shareholders will acquire PE Biosystems common stock before PE's 2-for-1 stock split that was announced Thursday. That stock split is set to go into effect Feb.18.

Third Wave's Invader technology employs two nucleic acid probes, one of which is recognized and cleaved by an enzyme, to identify a specific sequence of DNA or RNA. The presence of the released cleaved probe then can be measured using existing readout devices such as microtiter plate readers, mass spectrometry and DNA chips.

PE Biosystems is banking on the technology to accelerate the move toward personalized medicine by enabling the large-scale testing of SNPs. Scattered about the human genome is more than a million SNPs, some of which will prove important markers of disease and drug susceptibilities. SNPs are thought to account for the individual differences resulting in predisposition to disease and varying drug responses.

Using Invader with PE Biosystems' Sequence Detection Systems will allow researchers to conduct real-time genetic analysis to link SNPs to disease and establish genotypes most likely to benefit from certain pharmacologic interventions.

"We believe our technology will become the method of choice for detecting genetic variation and developing personalized medicine," Lance Fors, founder and CEO of Third Wave, told BioWorld Today.

Fors noted the Invader technology was more accurate than the polymerase chain reaction (PCR) technology commonly used in routine high-volume assays. PCR technology has been a business mainstay for PE Corp. In addition, Invader is a less costly alternative, enabling a breadth of applications from research to diagnostic.

Another PE Corp. business, Celera Genomics in Rockville, Md., will be an early customer for Invader technology. Celera is busily sequencing the human genome and, in the process, generating a number of SNPs. With the Invader technology in combination with PE Biosystems' microfluidic and microarray technologies, Celera will be able to move from simply generating the SNPs to identifying their utility.

"PE Biosystems develops the chemistry platform and the instrumentation to conduct genetic analysis," Tony White, CEO of PE Corp., told BioWorld Today. "Celera develops the content. It is possible some of the information Celera develops could migrate to PE Biosystems in the form of a diagnostic product."

PE Biosystems will continue to look for additional technologies capable of enhancing gene discovery and analysis.

"We look at the application we want to serve and work backward to find the best technology available," White said. "That's why we chose Third Wave. The technology is elegant and answers the need for cost-effective, high-volume assays."

Third Wave recently announced the Sanger Centre in Cambridge, UK, had chosen Invader technology to identify SNPs on the recently sequenced human chromosome 22. (See BioWorld Today, Jan. 10, 2000, p. 1.)