By Frances Bishopp

In two separate alliances, Hyseq Inc. has entered into collaborations with Perkin-Elmer Corp. to develop new genetic research tools and with Chiron Corp. to develop disease therapeutics, giving each company an equity stake in Hyseq of more than 5 percent.

The Perkin-Elmer collaboration focuses on combining Hyseq's DNA HyChip technology and Perkin-Elmer's DNA analysis technology and is aimed at developing a "universal" chip that can assay any genetic target through the use of specially designed reagents and software.

Besides the equity investment, the agreement calls for Perkin-Elmer, of Norwalk, Conn., and Hyseq to invest additional undisclosed research funds in Hyseq's DNA HyChip technology, Edward Bloch, communications consultant with Perkin-Elmer, told BioWorld Today.

The collaboration is slated for five years and will be extended automatically thereafter until both companies agree to termination.

On June 13, Sunnyvale, Calif.-based Hyseq filed for an initial public offering of 2.75 million shares at a price between $12 and $14 per share, which could yield estimated proceeds of $33 million to $38 million.

Both the Perkin-Elmer and Chiron deals are tied to Hyseq's IPO.

Perkin-Elmer already has made a $5 million equity investment in Hyseq and has agreed to purchase another $5 million in stock concurrent with the IPO.

In total, Perkin-Elmer will acquire for its $10 million investment more than 5 percent of Hyseq and will receive exclusive worldwide rights to commercialize sequencing systems using Hyseq's technology. Perkin-Elmer's Foster City-based Applied Biosystems Division will distribute the products developed under the collaboration.

"This is a great combination of our intellectual property with Hyseq's good patent position in DNA chip array technology," Bloch said.

In the Chiron collaboration, Hyseq has entered into a three-year alliance with the Emeryville, Calif.-based company, where Chiron will pay Hyseq $19.5 million to develop therapeutics, diagnostic molecules and vaccines related to a specified disease area, which was undisclosed.

Under the agreement, Chiron has a guaranteed payment of a minimum of $8.5 million in the first year and $5.5 million in each of the two years thereafter in connection the Hyseq's research on Chiron tissue sample libraries.

The agreement requires Hyseq to generate data at a specified level per year, which, if not met, could result in Hyseq's breach of contract.

Chiron has the right to commercialize any disease area products resulting from the collaboration and Hyseq will receive royalties on any products.

Chiron also has made a $5 million equity investment and agreed to buy another $2.5 million worth of stock concurrent with the IPO.

Hyseq uses its DNA array technology to develop gene-based therapeutic product candidates and diagnostic products and tests. As of March 31, Hyseq reported $4.7 million in cash on hand.

To protect its technology, Hyseq has filed a patent infringement lawsuit in U.S. District Court in California seeking an injunction and damages against Affymetrix Inc., of Santa Clara, Calif. The suit alleges Affymetrix incorporated into its GeneChip system Hyseq's sequencing by hybridization method of decoding genetic information.

Affymetrix denies the allegations. *