Post on 07-Jan-2023
Instrument Makers as Discipline Builders
Affymetrix, the microarray industry, and the birth of transcriptomics
Ashveen PEERBAYE - INSEAD - Feb 07, 2006
1. In the beginning…
n Basic idea behind microarrays : test for the presence of DNA sequences in an unknown sample by using “probes” of known DNA strands (hybridization)
n Edwin Southern (1975, Oxford University, UK)
n Oxford Gene Technology Limited (1995) – Southern Array Patents (1997)
1. In the beginning…
n Pharmacology at the end of 1980s: – Combinatorial chemistry and high-
throughput screening: generating and screening large libraries of molecules to find potential drug candidates
n Affymax Research Institute (Palo Alto, Cal.) founded in 1988 by Alejandro Zaffaroni, leader in combinatorial chemistry
2. Stephen Fodor gets into the picture…
• BS in Chemistry (1978)
• MS in Biochemistry/Biophysics (1982)
• PhD in Biophysics (Princeton, 1985)
• Postdoc (Berkeley)
• “There was no way I was going to work in industry”
• Joins Affymax in 1989
2. Stephen Fodor gets into the picture… n Initial attempts : applying semiconductor
technology (photolithography, miniaturization, parallel processing) to chemistry in order to synthesize peptides (proteins) – Failure. “Career suicide” ?
3. Birth of the microarray industry n The shift to DNA probes (1991) n “Technology push” : applying
photolithography to synthetic chemistry n “Market pull” :
– Advances in genomics and the Human Genome Project (1983-2003)
– Huge promises and opportunities (genome sequencing, gene identification, genetic diagnosis, drug discovery…)
3. Birth of the microarray industry n 1992 : Affymetrix, a spin-off of Affymax
– Mission : Drive gene chip technology forward n A company without a product… n …but with brilliant scientists, “star”
directors… – Scientific team (Fodor, Read, Stryer, Pirrung,
Lipshutz) in an entrepreneurial/academic environment
– Board of directors : Paul Berg (Nobel laureate), Vernon Loucks (Baxter CEO), John Young (Hewlett-Packard CEO)
3. Birth of the microarray industry n …and substantial funding
Private funding 21 M$ (1st round) 39 M$ (2nd round)
Government funding 30 M$
IPO (1996) 90 M$
3. Birth of the microarray industry
n 1994: First commercial DNA microarray prototype
n 1996: First GeneChip system sold
n GeneChip system = chip + scanner + bioinformatics software
3. Birth of the microarray industry n 1994: Commercial microarray
scanner, manufactured by Molecular Dynamics for Affymetrix
n 1997 : Microarray scanner, manufactured by Hewlett-Packard for Affymetrix
n 2003 : Affymetrix GeneChip Scanner 3000
4. Pricing strategies and their consequences n Initial setup: cheap GeneChip system,
revenues expected from downstream royalties (from drug development) – But… cash flow problem
n A new model: The “razor blade” (1995) n Mixed customers’ reactions (pharmaceutical
companies / researchers)
4. Pricing strategies and their consequences n The birth of an alternative technology
– Pat Brown, Stanford University, 1995-96 – Incyte Genomics
n How did Affymetrix eventually overcome the threat, and retain its monopoly ?
4. Reclaiming the monopoly
n 1. Intellectual Property Management – Litigations and their settlement
• Hyseq vs. Affymetrix (1997) • Affymetrix vs. Incyte • Oxford vs. Affymetrix
– IP portfolio • 105 patents (end 2000) ==> more than 200 (end 2005)
4. Reclaiming the monopoly
n 2. Maintaining ties with the academic community – Research environment and activity – Marketing through references – Targeting researchers as early adopters – Managing the tension between being a biotech
toolmaker, and a forefront scientific team
4. Reclaiming the monopoly
n 4. Setting a standard – The comparability problem.
n Made possible by cost plunge, and advances in genomics (through HGP)
5. Reaping the benefits
• 1999: 100 000 GeneChips sold
• 2001: Affymetrix is leading supplier (top pharmaceutical companies, biotech firms and academic institutions)
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