Affymax Research Institute announced Wednesday that itreceived a $2.2 million, three-year research grant from theNational Institutes of Health to study the application ofAffymax's VLSIPS chip technology to develop novel DNAsequencing methods.

Affymax's VLSIPS (very large-scale immobilized polymersynthesis) system can build on a tiny chip large arrays ofsingle-stranded DNA probes. With a technique calledsequencing by hybridization, target DNA sequences can beidentified by their binding to complementary strands on thechip, reducing research time using existing methods frommonths to days.

According to company spokeswoman Diana Kapp, VLSIPS is amore efficient and cost-effective way to sequence DNA --factors that are a critical to the success of the Human GenomeProject, which is aimed at determining the composition of thehuman genome.

The company expects to spawn other product lines as a resultof the Human Genome Project, specifically diagnostic productsaddressing the clinical diagnosis of genetic disease.

Kapp said that the grant further validates the VLSIPStechnology beyond drug discovery. "We hope to expand the useof VLSIPS beyond drug discovery using outside funding such asthis grant."

Affymax has formed a subsidiary, Affymetrix, to commercializethe diagnostic application of VLSIPS. Details about how thesubsidiary will be financed and the formation of itsmanagement team have not yet been decided, Kapp said.

The Palo Alto, Calif., company last month received U.S. patentNo. 5,143,854 covering how VLSIPS can be used to buildpeptide and nucleotide compounds on a chip by layering aminoacids. The company also has applications filed for the use of thetechnology related to DNA sequencing, Kapp said.

Affymax's stock (NASDAQ:AFMXF) was up $1.50 a share onWednesday to $16.50.

-- Michelle Slade Associate Editor

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