Applied Biosystems Inc.'s (ABI) announcement Tuesday that itwas merging with Perkin-Elmer surprised some industryobservers and analysts, many of whom had considered theFoster City, Calif., instrumentation maker a stand-aloneentity.

But the marriage may provide an opportunity for ABI tocombine its expertise with Perkin-Elmer's promising PCRtechnology.

"I think ABI sees in PCR (polymerase chain reaction) anenormous potential, especially in being able to open up newapplications for their technology," Jonathan Osgood of Alex.Brown & Sons in Boston told BioWorld. "ABI sees it as aseamless evolution of what they've been doing all along. Theyfeel this will keep them on the leading edge of life sciencetechnology tools."

ABI evolved out of a need perceived by some in the industry foran instrument manufacturer.

"A lot of venture capitalists who had started some of theoriginal biotech companies realized there would be the needfor a supplier (of instrumentation) to them," said MikeHunkapiller, ABI's vice president. He has been associated withthe company since 1981, first as a consultant, then as anemployee in 1983. In fact, he was a senior research fellow atCal Tech developing the protein sequencing technology that ABIwent on to commercialize.

Researchers at Cal Tech, among them Leroy Hood and hiscolleagues, were also looking to commercialize theirtechnology, including Hunkapiller's protein sequencer.

"We shopped the technology around to the commercialinstrumentation companies, including Beckman," said Mike'sbrother, Tim, who was and still is a member of Hood's researchteam. "They all turned it down."

But Andre Marion and Sam Eletr, who were both at Hewlett-Packard, were interested. "They came to see if the technologywas worth it," said Mike Hunkapiller. And that's how ABI gotits start.

Since then, "what ABI has done (in terms of scientificinstrumentation and technology development) has beenhistoric," said Brook Byers, a partner in the firm of KleinerPerkins Caufield & Byers, one of ABI's original investors.

"They automated several things, which was very important tothe industry," Byers said. "But there's so much more toautomate."

"ABI has been a leader in the instrumentation market since dayone," said Osgood, who has been following ABI closely for thepast four or five years. "They realized the potential ofautomating the menial tasks of a life science research lab," hesaid.

Now, 11 years later, Osgood said the "DNA side of the businessis very robust." In fact, Mike Hunkapiller said that ABI's DNAsequencing technology is at the beginning of its real growthcurve, as is Perkin-Elmer's PCR technology.

Two things are driving that, he said. First, there is theemergence of a variety of active genome sequencing programs.Also, sequencing programs used in conjunction with PCR areeasily transportable into practical fields of research (fromagriculture to forensics).

"None of the sequencing technology has had that outlet in thepast," Mike Hunkapiller said. "ABI's product lines only servedbasic research labs."

The company's stock (NASDAQ:ABIO) was up $2.38 a share onWednesday to $19.38.

-- Jennifer Van Brunt Senior Editor

(c) 1997 American Health Consultants. All rights reserved.

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