Affymax announced Tuesday that it received a U.S. patentgiving it broad control over a technology for rapidly producingand testing thousands of chemical analogs on a silica chip ofless than a half-inch square.

Affymax's Affinity Matrix technology has drawn attention forits potential for sharply stepping up the pace of drugdiscovery. It is based on an unusual marriage of syntheticchemistry with photolithography, a technology more commonlyassociated with the process of layering miniature electricalcircuits on semiconductors.

Called very large-scale immobilized polymer synthesis, or itstrademark name of VLSIPS, Affymax's system allowsresearchers to simultaneously synthesize and then test up to65,000 drug candidates on a tiny chip. The process compressesresearch that would take months using existing methods into afew days.

"Strategically, this is the most important patent they couldget," said Adele Haley, managing director of the investmentfirm of Stover Haley & Noyes of Stamford, Conn. "VLSIPS is themost proprietary of the company's technologies." It isAffymax's calling card in drumming up interest from largerpotential corporate collaborators.

Affymax's stock (NASDAQ:AFMXF) closed Tuesday unchanged at$19 a share. The company, which operates out of Palo Alto,Calif., and is headquartered in Amsterdam, the Netherlands,went public last December at $20 a share.

The newly issued U.S. Patent No. 5,143,854 covers how VLSIPScan be used to build peptide and nucleotide compounds on achip by layering amino acids. After the array of compounds iscreated, the entire chip is exposed to a fluorescently taggedtarget molecule. After the chip is cleared of unattachedtargeting material, a computer scans the chip for the intensityof fluorescent markers indicating those compounds with thehighest binding affinity to the molecular target.

"This technology, along with the others in our portfolio,addresses an enormous problem acing the pharmaceuticalindustry today -- the inordinate time and expense required toidentify potential therapeutic drugs," said Alejandro Zaffaroni,Affymax's founder and chief executive officer.

"This is the first piece of our patent strategy," said David B.Singer, Affymax's vice president of finance. Besides patentapplications on machinery design and reagents, Affymax isgoing after other applications. "We'll pursue patents to makeany polymer with monomers," he said.

Affymax has two leading strategies to drug discovery. Thefirst and more competitively crowded is creating and managinglibraries of compounds that can be screened to yield lead drugcompounds that show desired effects. To build these libraries,Affymax claims an advantage in its development recombinantpeptide diversity (RPD), an advanced form of geneticengineering that generates vast collections of peptides.

The second approach, covered by the new patent, takes a leadcompound and then produces thousands of drug analogs fromwhich are selected the most effective compound forpreclinical development and possible human clinical trials.

"There's a growing interest, and a number of small companiesthat are moving into, rapid screening technologies," said Haleyof Stover Haley & Noyes. "Where they (Affymax) stand alone isin VLSIPS."

The VLSIPS process was described in the Feb. 15, 1991, editionof Science (an article that itself was honored by the AmericanAssociation for the Advancement of Science as the journal'sbest research article of that year).

The patent itself sheds new light on the configuration of theVLSIPS machinery and takes the process beyond thepreparation of peptides into its use in synthesizing polymers,said Kevin Kaster, Affymax's patent counsel. The work pointsto plans to use the technology to assemble large organiccompounds on a chip.

Affymax expects that the patent will have no immediateimpact on its commercial development or collaborations withcorporate partners, Singer said. The company has alreadysigned to its collaborative roster Alza Corp., Ciba-Geigy,Marion Merrell Dow Inc. and a unit of Johnson & Johnson.

With no close competitors in the VLSIP technology, Kaster saidhe anticipates no legal challenge to the new patent, especiallyin light of Affymax's willingness to jointly develop productswith companies interested in its technology. "Our philosophyis, you advance technology a lot more by collaborating thanfighting," he said.

Affymax's apparently strong hold on a potentially valuabletechnology means that the company can look to drive a hardbargain, Haley said. "To work with them is a very expensiveticket." It's this ability to leverage the potential of a uniquetechnology that is the basis for the company's value.

"So many companies are working on one or two receptors (drugproducts)," she said. "With this technology Affymax couldpursue them all."

With an extremely strong balance sheet for a 4-year-oldcompany -- $113 million in cash and marketable securities asof June 30 -- Affymax deliberately takes the long view of itscollaborations, Singer said. "We'd much rather get a(percentage) point on a royalty than a much larger paymenttoday," he said. He declined to disclose specific provisions ofthe company's collaborations.

The patent issued on Tuesday was filed in June 1989 andsupplemented in March 1990, Kaster said. "The patent officeoften gets more lumps than it does praise, but we felt the itbent over backwards to understand the technology."

-- Ray Potter Senior Editor

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

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