By Lisa Seachrist

Washington Editor

WASHINGTON - Hoechst Marion Roussel Inc. expanded its GeneChip agreement with Affymetrix Inc., signing a three-year subscription-based supply agreement worth at least $15 million.

Frankfurt, Germany-based Hoechst entered into a corporate-wide EasyAccess Gold GeneChip probe array supply agreement that will allow the company to buy more than 100,000 GeneChip probe arrays for use in its pharmaceutical programs. Hoechst became the third major pharmaceutical company to enter into Affymetrix's EasyAccess Gold GeneChip program.

"Hoechst was one of our earliest customers," said Ed Hurwitz, vice president and chief financial officer for Santa Clara, Calif.-based Affymetrix. "This is really part of our normal selling cycle."

Under the terms of the agreement, Hoechst will receive priority service for any standard Affymetrix GeneChip probe arrays that are based on the public databases, as well as any custom GeneChip products based on any gene sequence or database available to Hoechst. In return, Affymetrix will receive an annual subscription fee, custom design fees and per-chip fees. These payments are expected to exceed $15 million over the first three years of the agreement.

The GeneChip system consists of disposable DNA probe arrays containing gene sequences on a chip, instruments to process the probe arrays and software to analyze and manage genetic information.

The EasyAccess agreement will allow all Hoechst drug innovation centers and the Hoechst-ARIAD Genomics Center (a joint venture of Hoechst and ARIAD Pharmaceuticals Inc., of Cambridge, Mass.) access to Affymetrix gene expression monitoring technology as part of their research and discovery efforts. The Hoechst-ARIAD Genomics Center is a functional genomics collaboration aimed at identifying novel therapeutic targets and proteins.

The EasyAccess program takes away the cost hurdles that individual bench scientists incur when they seek to employ GeneChip technology, Hurwitz said. By subscribing to EasyAccess, companies help remove cost barriers faced by drug-development programs since the technology can be spread across all of them.

Hurwitz noted that the Hoechst decision to make GeneChip technology an integral part of its genomics-based drug discovery highlights the fact that the "GeneChip platform is a vital part of an integrative approach."

"We have all along thought that the GeneChip's complementarity to other informatics technology would allow it to be integrated with many different databases," Hurwitz said. "This is really a model for how all of these technologies can work together."

F. Hoffmann-La Roche Ltd., of Basel, Switzerland, was the first subscriber to the EasyAccess Gold program in August 1997. American Home Products of Madison, N.J., joined the program in February 1998. Affymetrix has collaborations outside its Gold program with several dozen other customers.

On Wednesday, Affymetrix entered into an EasyAccess Silver Agreement with Rhone-Poulenc Rorer Inc., of Collegeville, Pa., giving RPR preferential access to Affymetrix's standard and custom GeneChip arrays, instrumentation and software for use in monitoring gene expression. Terms were not disclosed.

"We think we have the best chip technology and the only proprietary and licensed one," Hurwitz said. "We hope that 1999 is the year that the GeneChip becomes an integral part of the drug discovery process."

Affymetrix's stock (NASDAQ:AFFX) fell 31.25 cents per share Thursday to close at $31.25. n

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