By Randall Osborne

Armed with another patent granted to cover partial gene sequencing, Hyseq Inc. has filed a second complaint against genomics competitor Affymetrix Inc., alleging the company infringed on Hyseq's rights to sequencing by hybridization.

Like the first lawsuit, filed in March by Sunnyvale, Calif.-based Hyseq, the new litigation affects Affymetrix's product line — and its deals with collaborators using the cited sequencing technology, said Lewis Gruber, Hyseq's president and CEO.

"Our two chief scientists invented the technology in Yugoslavia in the 1980s," Gruber said. "They filed their patent application in 1987. As far as we can tell, they were the inventors."

Edward Hurwitz, vice president and chief financial officer of Affymetrix, said the Santa Clara, Calif.-based company will fight the new lawsuit with the same arguments it will use against the first.

"We don't infringe on the patent because we don't use the technology the way they have interpreted," Hurwitz said. "And even if the [patent] claims were written broadly, and upheld in their broadest sense, we would argue they are not valid because there was prior art" — that is, the technology already was in the public domain.

Sequencing by hybridization is less costly and faster than traditional methods, which use restriction enzymes and gel electrophoresis. Hyseq uses short, synthesized stretches of radioactively tagged DNA as probes, which attach through hybridization to unknown complementary gene sequences.

A computer helps to read and analyze the hybrids made of the probes and unknown DNA strands, leading to the discovery of new sequences. The method has been used to survey more than 4 million DNA samples this year, creating what Hyseq calls the world's largest propriety gene database.

"We filed the lawsuit as a last resort," Gruber said, adding that Hyseq had begun talks with Affymetrix before Hyseq was formed in 1992.

Five patents have been issued to Hyseq, Gruber said, and three of them have been applied in the two lawsuits against Affymetrix. The latest action covers partial sequencing, which lets the user select regions of a molecule to be sequenced.

"This allows it to be used not only for diagnostic applications, where you may want to know a sequence of scattered sites, but for therapeutic applications," which require more specificity, Gruber said.

Hyseq contends that Affymetrix is violating all three patents in both lawsuits with its entire product line.

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

The GeneChip systems consist of disposable DNA probe arrays containing gene sequences on a chip, and software with which to process the information.

Hyseq CEO Experienced In Patent Fights

Another Affymetrix collaborator is Genetics Institute Inc., of Cambridge, Mass., a company with which Gruber tangled previously over an alleged patent infringement related to the red blood cell-producing drug erythropoietin (EPO).

Gruber, a former patent lawyer, then worked as an attorney for Amgen Inc., of Thousand Oaks, Calif., which prevailed in the EPO battle with Genetics Institute. (See BioWorld Today, Feb. 16, 1995, p. 1.)

The cases are different because the Amgen dispute involved a product and the Hyseq battle is over technology. But, Gruber said, the Hyseq case is similar to Amgen's in that both companies have "very strong fundamental positions," Gruber said.

As time goes on, a settlement with Affymetrix appears less likely, he added, since Hyseq has been licensing its technology to others — such as Perkin-Elmer Corp., of Norwalk, Conn., and Chiron Corp., of Emeryville, Calif.

Each company got a stake of more than 5 percent in Hyseq as part of its deal. Hyseq's partnership with Perkin-Elmer was to develop new genetic research tools, and the pact with Chiron was to develop disease therapeutics. (See BioWorld Today, June 23, 1997, p. 1.)

"There's less and less that we have available for Affymetrix to license," Gruber said. "We've always held open the possibility."

Gruber said the latest lawsuit is set for trial in 1999. It was filed separately from the March action in hopes that neither would slow the other down, he added. Hurwitz, however, said 1999 would be the earliest the case could be heard. The two lawsuits will "likely get consolidated," he said.

As of Sept. 30, Affymetrix had $85.2 million in cash, with a net loss of $15.4 million for the first nine months of 1997. The company's stock (NASDAQ:AFFX) closed Monday at $35, down $0.125.

Hyseq had $62.3 million in cash on Sept. 30, with a net loss of $4.9 million for the first nine months of the year. Its shares (NASDAQ:HYSQ) closed Monday at $11.875, up $0.25. *

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