By Gene G. Marcial
Tiny CombiMatrix (CBMX), a developer of biochips that perform DNA diagnostics and detect hazardous chemicals, went public on Dec. 16 at 4.20 a share. It now trades at 2.90. But it has attracted drugmaker Roche, the Defense Dept., and NASA. Roche has a 15-year pact to commercialize the made-to-order semiconductor-based technology that identifies genes, gene mutations, and proteins. Ivonne Marondel of Gerard Klauer Mattison estimates the deal is worth $30 million. So far, Roche has paid $8.5 million and plans to launch the first CombiMatrix products later in 2003. Marondel rates the stock "outperform," with a 12-month target of 5. She sees CombiMatrix posting profits in 2006. The Pentagon is after its DNA probes for monitoring chemical and biological agents. CombiMatrix will get $3.6 million from the 2003 U.S. Defense Budget, says CEO Amit Kumar. In 2002, CombiMatrix got $1 million to develop a pocket-size prototype of a system for detection of agents such as anthrax and nerve gas. In 2001, NASA signed a pact to buy the biochips for the space station for research on how DNA behaves in space. CombiMatrix is also set to sign a pact with a defense contractor, says a source close to the company, "that will dwarf the $3.6 million from the Defense budget." Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.