BusinessWeek: January 10, 2000

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Gene Logic May Be Splicing a Deal

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Gene Logic May Be Splicing a Deal

CHART: In Line for a Partner?


Is there some logic behind the sudden rush in Gene Logic (GLGC), whose shares have shot up from 3 7/16 in late June to 22 by Dec. 28? Part of the jump stems from investors' discovery of the promise of genomics and the few players in the field. In the case of Gene Logic, which is building a massive database of gene profiles from human and animal tissues, an added factor was speculation that the company was to sign a major deal with at least one drug company--the first partnership for its GeneExpress database. The database carries gene profiles of tissues that have been treated with a variety of compounds to study how they can be targeted by drugs.

Gene Logic is in final talks with three companies that subscribe to GeneExpress, all of which should be completed by the end of the first quarter, says Robertson Stephens analyst Michael King. Some money managers believe Pharmacia & Upjohn may partner with Gene Logic. Gene Logic CEO Michael Brennan confirms that talks are "in their final stages" with three companies, but he wouldn't name them.

The company's goal is to help hasten the discovery of drugs for specific diseases by providing drugmakers with vital gene information. It uses the powerful GeneChip technology of Affymetrix in creating its database. Since Affymetrix, which makes chips for studying DNA, and Gene Logic work closely together, merger speculation has swirled. Trading at 160 a share, Affymetrix has a market value of $4.1 billion. Brennan declined comment on the talk.

King expects Gene Logic to post revenues of $36 million in 2000 and $47.5 million in 2001, vs. 1999's $18.5 million. He sees the company becoming profitable in 2002.

By Gene G. Marcial

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