The other cautionary tale is Affymetrix, the company that used to dominate DNA chips.
Below is a chart showing the trailing twelve month trading history for Affymetrix, Inc.
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Prominent biologists at places like the Massachusetts Institute of Technology are using Affymetrix chips.
Affymetrix's SNP chips are used by gene hunters at the Broad Institute and Translational Genomics in Phoenix.
The company rushed out its first SNP chip in May 2005 with 100, 000 SNPs on it, months behind Affymetrix.
And for investors seeking an investment bet on potential takeovers, Alexion and Affymetrix may well be big gainers, too.
FORBES: Alexion and Affymetrix: Attractive Takeover Candidates in Life Sciences Space
Banc of America Securities analyst Jim Reddoch says Affymetrix still has the vast majority of the DNA chip market.
Affymetrix sells for 59 times estimated 2003 profits of 45 cents per share.
Drug company researchers may use Affymetrix chips, but many academics make their own.
More quietly, it presented genetic studies using Affymetrix DNA chips that tried to identify why some patients were helped and others weren't.
Perlegen, a spinoff of Affymetrix, a DNA chip pioneer, is taking advantage of the fact that any two humans are 99.9% genetically identical.
Affymetrix invented DNA chips in 1989 and long dominated the field.
What the company offers is compatibility between its technology and that provided by partners like Affymetrix and PE Biosystems peb (nyse: peb - news - people).
For purpose of comparison, Affymetrix (nyse: AFFX - news - people ), the leading manufacturer of such chips, sold 280, 000 of them in its last full year.
Perlegen, a spinoff of DNA chip pioneer Affymetrix (nasdaq: AFFX - news - people ), is taking advantage of the fact that any two humans are 99.9% genetically identical.
With the case of Illumina, while Jay Flatley is without question an outstanding CEO, much credit is also due to the revolutionary microarray-technology that enabled Illumina to grow on the turf of Affymetrix.
Some Affymetrix investors believe Dr. Witney was hired by Affymetrix not only to reinvigorate the company but to prepare it for a possible sale at a price much higher than its current stock price.
FORBES: Alexion and Affymetrix: Attractive Takeover Candidates in Life Sciences Space
Affymetrix is also burdened by high operating costs.
FORBES: Alexion and Affymetrix: Attractive Takeover Candidates in Life Sciences Space
He spent 14 years at Affymetrix, Inc.
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Meanwhile, competition between Affymetrix of Santa Clara, Calif. and upstart Illumina in San Diego led to rapid declines in the cost of SNP-measuring chips, glass slides on which tiny pieces of DNA are affixed like bits of Velcro.
Many genomics companies such as Celera (nyse: CRA - news - people), Incyte (nasdaq: INCY - news - people) and Affymetrix (nasdaq: AFFX - news - people) make their money by helping larger drugmakers identify genes involved in disease.
Alan Trounson at Melbourne, Australia-based Monash University, a leader in the field, says that even if a cloned baby's genome was checked gene by gene with DNA microarrays such as those made by Affymetrix (nasdaq: AFFX - news - people ), there could be no assurance that the baby would be healthy.
By 2003 Illumina scientist Kevin Gunderson invented a chemical process that allowed Illumina to get more-accurate results, even as it packed more DNA on a chip. (Instead of the lithography that Affymetrix uses, Illumina affixes DNA to tiny glass beads packed in the chip.) "I've been in the analytical sciences for 30 years, and I've never seen anything this accurate, " says John W. Hooper, chief executive of Quebec gene-finding firm Genizon, an Illumina customer.
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