Hyseq Inc., which uses sequencing by hybridization to identify genes,raised $12 million in a private placement that gives the Sunnyvale,Calif., company enough cash to cover operations for more than twoyears.

Lewis Gruber, Hyseq's president, said the new financing will enablethe firm to develop its own data base of gene sequences and begindeveloping diagnostics and drug candidates based on the information.

The four-year-old company has been using its proprietary sequencingmethod to identify genes for partners, including London-basedSmithKline Beecham plc and another major drug maker that was notidentified. Gruber said Hyseq has discovered 10,000 to 20,000 newgenes for its corporate collaborators.

"With this financing," Gruber said, "we can begin to build up ourown data bases."

The $12 million private placement, managed by Fahnestock & Co.Inc., of New York, boosts the total funding raised by Hyseq to about$17 million since 1992.

In the agreement with SmithKline Beecham Clinical Laboratories, adivision of SmithKline, Hyseq is applying its large-scale sequencingtechnology to develop diagnostics for genetic diseases.

Sequencing by hybridization, Gruber said, is less expensive andfaster than traditional sequencing, which uses restriction enzymes andgel electrophoresis.

Hyseq's automated technology uses short, synthesized stretches ofradioactively tagged DNA as probes, which attach throughhybridization to unknown complementary gene sequences. Thehybrids made of the probes and unknown DNA strands are read andanalyzed by computer to reveal the newly discovered sequences. n

-- Charles Craig

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