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Genetic products company, Affymetrix Inc. (AFFX - Analyst Report), recently inked a ‘Powered by Affymetrix’ (“PbA”) Program agreement with Singapore-based molecular diagnostics company, PathGEN Dx Pte. Ltd.

Per the terms of the deal, PathGEN Dx will adopt a contract manufactured GeneChip microarray from Affymetrix and use its own proprietary PathGEN PathChip kit along with an automated software package to develop an in-vitro diagnostic (“IVD”) test for pathogen detection.

Management at Affymetrix are optimistic about the collaboration with the award-winning PathGEN Dx, a start-up company founded by researchers from the Genome Institute of Singapore, under the Agency for Science, Technology and Research (“A*STAR”) to develop cutting-edge molecular diagnostic tests.

The resulting IVD test should help researchers detect the entire range of bacteria and viruses in their samples and enable quick disease detection followed by proper treatment.

The PathGEN PathChip Kit is PathGEN Dx’s front-line pathogen detection device, which can be flexibly used in various research and diagnostic organizations including pharmaceutical companies. By utilizing Affymetrix’s GeneChip microarray, the device will be able to identify as many as 70,000 infectious genomes from a wide range of human samples as well as accurately interpret genomic information and detect co-infecting pathogens.

The ‘Powered by Affymetrix’ Program is an initiative by Affymetrix which allows other companies to gain access to its GeneChip technology in order to develop new microarray products and solutions. The PbA Program agreement with PathGEN Dx allows additional access to Affymetrix’s distribution network.  Apart from PathGEN Dx, the company shares its technology with Roche Diagnostics and Pathwork Diagnostics.
    
Neutral on Affymetrix

We currently have a Neutral recommendation on Affymetrix, which carries a short-term Zacks #2 Rank (Buy). Affymetrix holds a leading position in the gene expression products and services market. Along with Illumina Inc. (ILMN - Analyst Report), it is one of the two major providers of microarray technologies, primarily used in the field of genetic research.

Affymetrix is shifting its research and development (R&D) focus from the discovery and exploration markets to the faster-growing validation and routine testing markets. The company reckons cytogenetics and cancer research as promising areas for expansion, representing market opportunities of roughly $200 million and $500 million, respectively.

However, the company is operating in an intensely competitive industry and faces risks associated with lower microarray demand and R&D spending by its customers due to a weak economy and government actions including budget cuts.

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