By Lisa Seachrist

Washington Editor

WASHINGTON — Affymetrix Inc. and OncorMed Inc. have built upon previous collaborations involving breast cancer and the p53 oncogene to co-develop a subscription gene expression database as a tool for drug development.

The collaboration is based upon Affymetrix's GeneChip expression analysis tools, which provide rapid genetic analysis using miniaturized, high-density arrays of DNA probes or "chips," and software to analyze and manage the genetic information. The companies will develop the database by comparing the gene expression found in diseased and normal tissues.

"We've had a very positive working relationship with OncorMed," said Ed Hurwitz, vice president and chief financial officer at Santa Clara, Calif.-based Affymetrix. "This collaboration creates a win-win situation for both companies."

Hurwitz noted the expanded working relationship allows Affymetrix to marry and leverage its GeneChip technology with OncorMed's expertise in cancer biology. The gene expression database won't be limited to cancer, however.

Under terms of the agreement, Gaithersburg, Md.-based OncorMed will supply tissue samples and its expertise in tissue pathology and molecular genetics while Affymetrix will design and supply custom and standard expression monitoring GeneChip probe arrays. The database will allow third-party subscribers to use the arrays and database to determine drug targets and identify drugs that alter gene expression in desirable ways.

"Affymetrix's GeneChip probe array technology is an important enabling tool in genomic-based drug discovery and development about which we are very enthusiastic," said Timothy Triche, chairman and CEO of OncorMed. "Our expanded collaboration will provide a great value to both companies and, even more importantly, to our respective customers."

Once the database is completed, Affymetrix will market the database to subscribers and split the revenues evenly with OncorMed. The companies aren't disclosing further financial arrangements associated with the deal.

In addition, Affymetrix has agreed to allow OncorMed to offer GeneChip expression services to third-party customers. OncorMed will purchase GeneChip probe arrays from Affymetrix and will independently market expression analysis services and custom databases to pharmaceutical and biotechnology companies.

"This agreement allows us to offer GeneChip technology to a wide variety of customers," said Leslie Alexandre, vice president of corporate affairs and marketing for OncorMed. "It is a major enhancement in the services that we offer."

Alexandre said the p53 collaboration, which began 18 months ago, is about to bear fruit. The p53 GeneChip has been on the market for research applications with frozen tissue, but the company will present data at the American Association of Cancer Researchers' annual meeting later this month in New Orleans validating the chip in paraffin-embedded tissue samples.

Hurwitz said the OncorMed collaboration is likely to become the model for deals Affymetrix makes in the future: working with organizations that have specific biological expertise to create reference or specialty databases.

Affymetrix has collaborations with Glaxo Wellcome plc, of London, to build a database of genetic information on people with HIV; with Parke-Davis Group of Warner-Lambert Co., of Morris Plains, N.J., to analyze gene expression patterns; with Incyte Pharmaceuticals Inc., of Palo Alto, Calif., to develop databases comparing gene expression in healthy and diseased cells; and with Hewlett-Packard Co., also of Palo Alto, to develop advanced instruments used in the GeneChip System.

Hurwitz observed the pact with Incyte sounds similar to the collaboration with OncorMed, but the Incyte work is much smaller in scope and is limited to genes involved in the inflammatory process, such as G-coupled and certain cytokines. Affymetrix and Incyte also are in a patent dispute related to Affymetrix's GeneChip.

Affymetrix's stock (NASDAQ:AFFX) closed Wednesday at $35.125, up $1, and OncorMed's stock (AMEX:ONM) ended the day at $6.25, down $0.50. *