Utah Center of Excellence Program



February 20, 2004

University of Utah School of Medicine

Center for Homogeneous DNA Analysis

Carl T. Wittwer, MD, PhD

Department of Pathology

50 N. Medical Drive

University of Utah

Salt Lake City, UT 84132

Phone: 581-4737

FAX: 581-4517

Email: carl.wittwer@path.utah.edu

Second year request: $160,000, five-year cumulative request $740,000

Second year period: 7/1/04 – 6/30/05, five-year period 7/1/03 – 6/30/08

Principal Investigator: (Carl Wittwer):___________________________________________

Office of Sponsored Projects (Amy Sikalis):______________________________________

Technology Transfer Office: (Jayne Carney):_____________________________________

Executive Summary

Imagine analyzing your DNA in 15 minutes. Imagine finding out your risk for cancer or drug reactions while you wait in a doctor’s office. Imagine testing for microorganisms, and within an hour, knowing what strain of bacteria or virus is present so you can effectively treat your infection. The Center for Homogeneous DNA Analysis can make this happen.

The Human Genome Project has completely sequenced the human DNA, but it is difficult to use this knowledge in routine medical practice because the methods to screen DNA are expensive and complex. Only when costs are significantly lowered and the methods dramatically simplified will DNA screening be used in every day clinical practice for effective risk assessment, disease detection and better treatment.

Our Center proposes to address this challenge by use of new technology that makes DNA screening significantly simple and cost effective. We will leverage the expertise of the University of Utah team who, during the past decade, modified the Nobel-prize winning technique, polymerase chain reaction (PCR), and made the process ten times faster so that DNA can be amplified over a million–fold within 15 minutes. When a fluorescent dye is added to the reaction, one can also “watch” the DNA as it is amplifying at that speed. This process called “real-time” PCR is able to tell if the target (for example, HIV) is present by increases in fluorescence signal. How much is present can also be determined automatically without any additional work.

In medical applications and many other uses, we need to amplify a certain segment of DNA and know if the DNA is one of several different types (e.g. normal versus disease-causing mutant). Therefore, some form of final analysis for typing (“genotyping”) is required. The method pioneered by our team uses thermal melting of DNA as a simple and elegant way to genotype. Two strands of DNA fall apart or “melt” as the sample is gradually heated from 40°C to about 90°C. Exactly how they melt depends on the genotype. We have recently found that high-resolution melting of DNA is more powerful than previously imagined. We can easily tell the difference between genotypes that differ in only a single base (the basic unit of DNA sequence). High-resolution melting takes only 1-2 minutes and can be performed in the same tube as real-time PCR, without any additional cost.

High-resolution melting is similar to high-definition TV or satellite imaging. The ability to collect high-density information allows us to magnify images and reveal greater detail by using software algorithms that focus on important characteristics. The “images” of DNA-melting are simple fluorescence vs temperature plots, or “melting curves”. Using this method, we can currently detect single base changes in PCR products of up to 1000 bases in length. An example of using high-resolution melting analysis for genotyping is shown in Fig. 1. Seventeen members of a Utah family were analyzed. A highly variable region important for transplantation (HLA) was used. The melting curves group into clusters. Family members who are compatible for transplantation have melting curves in the same cluster. The same principle can be applied to forensic medicine or microbe identification. High-resolution melting is a powerful genetic analysis technique that is the cornerstone of our Center’s technology.

DNA melting is a fundamental property of DNA that is in the public domain. However, our methods, software, instruments, and fields of application can be patented. Competitive advantages of homogeneous DNA analysis include: 1) everything is done in solution (no physical separations are required), 2) the system is closed tube (no contamination risk), 3) only PCR is required (no expensive probes), and 4) the method is simple (no need for automation, reagent additions, or intermediate purification).

In the first year of Center funding, we focused on the development of high-resolution melting to scan DNA for mutations. Patent rights were assigned to the University of Utah. Basic software[Carl, this is confusing – I thought they didn’t license any of the software. I’m worried this might confuse the reader. They won’t realize that you are talking about inventions outside of the COE funding], reagents and instruments were licensed to a Utah company in Research Park (Idaho Technology Inc) which also provided the matching funds. In the fall of 2003, the first commercial system (HR-1( instrument and LCGreen( I reagent) was available in the US, and distributors in Japan and Italy were established. To date, 20 systems have been sold, generating a gross revenue of $210,000. Out-licensing and commercialization of the technology at this early stage created six new jobs in Utah (two engineering, two production, one biochemist, one marketing) with an average salary of $56,000. We anticipate that the number of jobs will double in the next year and that this business will continue to grow as projected.

With successful licensing of mutation scanning, our Center proposes additional areas of technology development. Specifically, these areas are: 1) methods for homogeneous repeat typing and sequencing, 2) software for DNA analysis with the objective of spinning off “DNAWizards” as a dotcom company in the next two years, and 3) developing a highly parallel hardware platform for real-time PCR and melting analysis in collaboration with a new Center of Excellence being proposed by Dr. Bruce Gale (U. of Utah Engineering).

Our Center will demonstrate the value of the technology through research publications, providing access to analytical software through an academic web server (DNAWizards.path.utah.edu), and alpha-site testing at leading clinical diagnostic laboratories as well as domestic and foreign academic centers. Idaho Technology and Roche Diagnostics closely follow our work, and Idaho Technology committed initial funds of $1.65 million to match Center funding. The Center will consider both the out-licensing of the newer technologies, and the formation of a new service/manufacturing company in Utah which may or may not be independent of the new software company, . [Proximity between the Center and commercial sites will be beneficial, particularly during technology transfer and the early commercial phases.][I would remove this sentence, or change it. You cannot use the UU server once this has gone commercial. What do you mean by proximity?] Product sales and distribution is best done through regional distributors or alliance partner(s) with existing presence and global reach to the R&D and diagnostic markets, Roche Diagnostics being one example.

After rapid commercial success of one application in our first year, our Center will continue to develop advanced methods, software and hardware for homogeneous DNA analysis to increase the breadth and penetration of this simple and powerful technology. These steps will require further innovation, but if successful, the methods will ultimately eliminate 95-99% of high-cost conventional DNA sequencing. The global market for the Center’s technology is around $400 million today (instrumentation and reagents combined) growing at 9-10% year. Annual revenue of $24 million (4% share) in 2008 is achievable for the technology suites generated by the Center’s first year activities. The Center anticipates receiving a share of royalties from this revenue through the University of Utah royalty sharing system as a source of matching funds [no UU or state money can be used as matching funds]and eventual independence. Development of newer technologies through years 2 through 5 will further strengthen competitive advantage of high resolution melting, and will provide the possibility of setting up a new software company in Utah.

1. Background

1.1 Technology Definition. Methods and instruments have been developed to achieve rapid DNA amplification and analyses that are monitored in real-time and take 10-20 min in their entirety. The fluorescent indicators that monitor the process (probes or dyes) are added prior to PCR, and therefore, no additional post-PCR processes such as membranes, arrays, or gels are necessary. Our DNA analysis method “high-resolution melting” greatly simplifies the process, and provides significantly more accurate information which allows one to rapidly detect, quantify and characterize DNA sequences.

In 1997, we introduced the concept of characterizing the PCR products by melting curve analysis. Two fluorescent probes, known as “adjacent hybridization probes” or “kissing probes”, were used for genotyping. In 2000, we developed a method using only a single labeled probe, greatly simplifying design considerations and cost. In 2002, we discovered a method that does not require any probes for genotyping. A new dye is added before amplification and a high-resolution melting curve is obtained after PCR is complete. No labeled oligonucleotides are necessary, adding very little cost to the cost of PCR itself. The only addition is a generic fluorescent dye that stains all PCR products. This dye is added before PCR and the tube is never opened during amplification or analysis. Such a “closed-tube” method is important to avoid PCR product contamination of future reactions. Best of all, high resolution melting analysis can be performed in only 1-2 minutes. Instead of analyzing the sample by some other complex method like sequencing or denaturing high-performance liquid chromatography (dHPLC), high-resolution melting analysis requires only the same parameters that are used in real-time PCR, temperature and fluorescence.

In the first year of funding, we applied high-resolution melting to detect subtle DNA differences between the two copies of DNA present in diploid cells. This provided a method to scan PCR products for unknown mutations, which has just been licensed to a Utah company. We are now focused on additional promising commercial opportunities for homogeneous DNA analysis and these new targets form the basis of our ongoing efforts and renewal application.

1.2 Technology Rights. Our Center specializes in new techniques, instruments, and software for homogeneous DNA analysis up to the point of commercialization. We have 1The University has 13 issued US patents on various aspects of homogeneous DNA analysis in addition to foreign counterparts. About an equal number of additional patents are pending. Some of the technology rights for homogeneous DNA analysis have already been licensed to Utah companies. Listed below we consider only the patents and invention disclosures that have not yet been licensed. Idaho Technology has provided matching funds for our Center grant and has a limited-time option on the following two inventions disclosed during the first year of Center funding:

1. Homogeneous sequencing and repeat typing (U-3601), optioned to Idaho Technologies through July 2004.

2. Massively parallel primer synthesis, real-time PCR and melting analysis on a chip [According to our records this is entitled “Integrated Primer Synthesis and Target Amplification on Arrays”](U-3570), optioned to Idaho Technologies through May 2004.

We are still working on proof-of-principle for these disclosures and anticipate filing patent applications during the next year. The following six items are not limited by options (no company funds were used or the option period has expired). The last four were developed during the first year with Center funds.

1. Homogeneous multiplex hybridization by color and Tm (US patent #6,772,156).

2. Simultaneous screening and identification of sequence alterations from amplified target (published US patent pending 2002-0142300).

3. SNPWizard – Design and optimization of primers for amplification and homogeneous analysis of DNA having mutations in one or few bases (U-3701).

4. ExonWizard – Design and optimization of primers for amplification and homogeneous analysis of DNA exons and splicing regions (U-3702).

5. Automatic clustering and classification of homozygotes and heterozygotes by high-resolution melting curve similarity (U-3703).

6. Logistic quantification of initial copy number from the plateau height, linear growth rate, and maximum second derivative of PCR amplification curves (U-3704).

3. Program History/Status. We have worked on homogeneous DNA analysis for the past 10 years. Our first funding was from a Technology Innovation Grant from the University of Utah: Instrumentation for quantitative rapid cycle PCR, Technology Innovation Grant. University of Utah Research Foundation, 7/94-6/96, $90,000.This was followed by a STTR award from the NIH. We collaborated with the small business, Idaho Technology, who licensed the technology: Continuous monitoring of rapid cycle PCR. NIH STTR Phase I and Phase II Grants, 9/94-9/98, $600,000.

The above funding allowed us to build the prototype LightCycler, now a popular real-time PCR instrument distributed worldwide by Roche. We were also able to attract funding from the Whitaker national biomedical engineering foundation for similar research: Temperature cycling by adiabatic compression. Biomedical Engineering Grant. Whitaker Foundation, 12/95-11/98, $210,000. Idaho Technology then became interested in partial funding of my laboratory at the University. We had created a market for rapid fluorescent analysis of DNA, but there were many obvious opportunities to develop additional techniques and applications: Fluorescent PCR techniques. Idaho Technology, 7/97-12/02, $950,000. Work during this time was also aided by funds from an endowed chair. I was the first (rotating) holder of the Watkins endowed chair of Pathology at the University of Utah: Endowed Chair of Pathology. University of Utah, 1/99 – 12/01, $180,000. In addition, we were successful in obtaining more NIH funds through another STTR grant. This grant focused on using DNA melting temperature (Tm) to characterize DNA: Homogeneous multiplex PCR by color and Tm. NIH STTR Phase I and II Grant, 4/1/99-2/03, $620,000.

Recently, we obtained further seed money from the University of Utah to develop new methods for SNP typing. Single-labeled probes for real-time PCR and SNP typing without probes. Technology Commercialization Projects. University of Utah Research Foundation, 7/02-6/04, $70,000. These methods have just been licensed by a Utah company and introduced commercially along with a new instrument, the LightTyper, currently distributed by Roche.

We are now in our first year of Center of Excellence funding from the state of Utah. All of our goals for the first year have been met. Mutation scanning was licensed to a Utah company and commercially launched in the fall of 2003, resulting in six new jobs. Center for homogeneous mutation scanning, State of Utah, 7/03-6/04, $150,000.

Idaho Technology continues to fund research in my laboratory at the University of Utah for PCR and fluorescent techniques. These funds were used as the required 2:1 matching funds for the first year of the Center, and will also be used in the second year. When funding comes in part from Idaho Technology, they have an option to license the technology by research contract. In the second year of Center funding, Idaho Technology has an option to license two of the six invention disclosures. When the company contributes funds, they deserve a right of first refusal. This arrangement has worked well in the past, and we anticipate it will work well in the future. Fluorescent PCR techniques. Idaho Technology, 1/03-12/07, $1,650,000.

In the fall of 2003, I applied for a Fast-Track STTR to continue commercialization of mutation scanning through the Utah company: Homogeneous mutation scanning, NIH STTR, $850,000, 7/04-12/06 (pending). Although second and third generation instruments were described in the original Center of Excellence grant, no state funds will be used to develop further scanning instrumentation. Only new technology, not yet licensed will be included in future work funded by the state. This new work includes: 1) homogeneous sequencing and repeat typing, 2) software for DNA analysis leading to formation of a new Utah company, and 3) collaboration with another Center to develop highly parallel real-time PCR and high-resolution melting on a chip format.

2. Program Rationale

1. Program Objectives. Our overall objective is to develop DNA analysis techniques that are simple and homogeneous. In the past, gels have been used to discriminate DNA fragments by size. Agarose gels stained with ethidiuim bromide and sequencing separations in capillaries are two common examples of DNA analysis that require separation. These non-homogeneous methods include multiple steps that require either manual handling or automation to perform. Amplified products are also exposed to the environment with risk of contamination of future reactions. Instead of size discrimination, our Center technology is based on using melting temperature as a means to differentiate different DNA fragments. DNA melting is a basic physical property of DNA, and we have developed methods to melt DNA very precisely (high-resolution melting analysis). DNA melting is homogeneous, requires no separation steps, and can be performed in the same tube used for PCR.

Our first year objective was to commercialize a new mutation scanning technology. This was achieved during the fall Fall of 2003 with licensing to a Utah Company. The company has now sold about 20 instruments ($10K each) and about $10K worth of reagents [is this confidential?]. A Fast-Track STTR grant is pending for further commercialization support. With licensing of this application, no further state funds will be used to further commercialization of scanning applications. All of our first year objectives were achieved. Future state funds will be used to commercialize other aspects of high-resolution melting for DNA analysis. Specifically, these areas are: 1) methods for homogeneous repeat typing and sequencing, 2) software for DNA analysis with the objective of spinning off “DNAWizards” as a dotcom company in the next two years, and 3) developing a highly parallel hardware platform for real-time PCR and melting analysis in collaboration with a new Center of Excellence being proposed by Dr. Bruce Gale (U. of Utah Engineering). We have the following specific aims:

A. Homogeneous Repeat Typing and Sequencing. Develop methods for repeat typing and sequencing that differentiate products by melting temperature instead of size. Initially, synthetic oligonucleotides will be used to study the effect of length and sequence. For repeat typing, this will include repeats of 1-5 bases. Can different poly A runs be genotyped? How long can the repeats be and still allow homogeneous genotyping? For sequencing, the questions are similar: How long of a run can be sequenced before the melting temperature differences are too small? What is the effect of sequence? After work with synthetic oligonucleotides, dideoxynucleotide termination methods will be developed, followed by asymmetric PCR generation of the extension template.

B. Software. DNA duplex melting prediction is based on nearest-neighbor thermodynamic theory, that is, the melting temperature (Tm) of a duplex can be predicted by considering the stability of adjacent base pairs. There are only a limited number of adjacent base pairs, and stability parameters of adjacent base pairs have been tabulated. Currently available parameters are based on 1M NaCl, no Mg++, and other conditions far away from a PCR environment. As a result, predicted Tms are not very accurate (+/- 2(C if you are lucky). By monitoring melting with fluorescence, we will determine nearest-neighbor parameters under PCR conditions relevant to high-resolution melting. Using this data as the central core, we will develop a software suite of programs for primer and probe design to simplify SNP typing, exon analysis, and clinical assay design. These programs will initially be posted on an academic server (DNAwizards.path.utah.edu). During the 3rd year of Center funding, we will spin of a software company based on this suite of programs.

C. Arrays for Real-Time PCR and High-Resolution Melting Analysis. Current instrumentation for high-resolution melting is limited to analysis of one sample at a time. Generic real-time instruments using 96- or 384-well plates are available, but do not have the precision necessary for high-resolution melting. We will develop hardware to amplify and monitor 1-10 nl reactions on a micro-fabricated chip that can be used for highly parallel real-time PCR and high-resolution melting analysis.

2.2 Program Methods. Technical background on high-resolution melting is given in the following manuscripts and specific methods are described below:

1. Gundry CN, JG Vandersteen, GH Reed, RJ Pryor, J Chen, and CT Wittwer. Amplicon melting analysis with labeled primers: A closed-tube method for differentiating homozygotes and heterozygotes. Clin. Chem. 49:396-406, 2003.

2. Wittwer CT, GH Reed, CN Gundry, JG Vandersteen, and RJ Pryor. High-Resolution Genotyping by Amplicon Melting Analysis using LC Green, Clin. Chem., 49:853-60, 2003.

A. Homogeneous Repeat Typing and Sequencing. [Carl – this section requires that the reader understands the importance of repeat typing. Actually, your reviewers probably will, but some of the decision makers may need more clarification as to what/how/why it is needed] For both repeat typing and sequencing, we will use chain extension with dideoxynucleotide termination similar to conventional Sanger sequencing. Instead of denaturing the extension product and separating the single strand on a matrix for size determination, we will use high-resolution melting to directly determine the Tm of the duplex extension product. The degree of extension correlates to higher melting temperatures because longer products have greater Tms. For example, consider dinucleotide typing of a CA repeat. The opposite strand is provided as a template (for example, by asymmetric PCR) and the 3’-end of a primer is placed immediately adjacent to the repeat region. Deoxynucleotides are included for the repeat (dCTP and dATP) and a dideoxynucleotide (ddGTP) included so that termination occurs at the first G past the repeat. Repetitive temperature cycling (similar to cycle sequencing) produces extension products whose size (and Tm) is determined by the length of the repeat. High-resolution melting analysis is performed to determine the Tm of the extension products and the number of repeats is determined by comparison to a set of standards. An example of this method, using a synthetic oligonucleotide template is shown in Fig. 2.

We will first use synthetic templates to determine the lengths of extension products that can be accurately distinguished. For example, using a poly A template, can a 10-mer be distinguished from an 11-mer? How about a 26-mer from a 25-mer? Is it better to use a primer with similar GC content to the repeat, or does a primer with a different GC content produce a different domain that can be distinguished from the repeat region and used as an internal temperature control? Can heterozygotes be easily identified? What about small fractions of a repeat allele as might be seen in cancer?

We plan on producing the extension template by asymmetric PCR. Our goal is to find robust conditions for coupling asymmetric PCR to the cycle sequencing reaction. To produce extension products, a dideoxynucleotide terminator is usually added after amplification. A sequencing primer may also be added if the amplification primers are removed or consumed. In order to keep the reaction “closed-tube”, reagents can be “added” without opening up the sample container if it is layered on top of a PCR reaction in a capillary with an oil barrier between. The oil separates the PCR from the sequencing reagents during amplification, and centrifuging the tube mixes the reagents for the termination reaction. Such a system (used for nested PCR) has already been described (Berg J et al., J. Clin. Virol. 2001, 20:71-5). Another option for a completely homogeneous reaction (without an oil layer) is direct exponential amplification and sequencing (DEXAS, Motz M, et al.,Nucleic Acids Res. 2003 31:e121). In this method, two polymerases are present in the reaction, a normal polymerase for incorporation of deoxynucleotides for exponential amplification, and a polymerase that is activated by heat during PCR that incorporates dideoxynucleotides for termination.

Any double-stranded PCR product will produce a high Tm peak on melting. In general, this peak can be used for calibration and should not interfere with the lower Tm of the extension products. However, if it does interfere, one strand can be digested with lambda exonuclease (Epicentre Technology) that digests DNA strands with a 5’-phosphate. In this case, the strand to be digested is primed (during PCR) with a 5’-phosphorylated primer and the exonuclease could be placed in the top layer above the oil with the extension reagents.

For sequencing reactions, one of four dideoxynucleotides is included in each reaction, producing terminated products, on average, every four bases. Four parallel reactions are necessary for full sequencing, one with each dideoxynucleotide. LCGreen I is included in each reaction, a double stranded DNA dye that detects multiple duplexes during melting analysis (reference 2 above). Alternatively, a four-color melting curve could provide complete sequence information if four primers were labeled with different fluorescent dyes (reference 1 above) and paired with the four dideoxynucleotides in separate reactions. Finally, a single reaction would be possible if labeled dideoxynucleotides with different fluroescent dyes were used. In all cases, the four ddNTP-terminated melting curves are lined up against each other by temperature to read the sequence, aided by computer analysis, similar to current sequencing techniques that discriminate by size or electrophoretic elution.

B. Software. Analysis software is mandatory for any high-resolution technique, whether it is satellite imaging or high-resolution melting analysis. In addition, design software to suggest the appropriate primers and methods to meet the task at hand is a common need in research and medical diagnostics. Central to melting analysis software is the accurate modeling of melting temperatures by nearest-neighbor thermodynamics. Existing parameters for Tm estimates were derived under conditions very different from those in high-resolution melting experiments. Furthermore, the outdated methods of parameter estimation with absorbance required high concentrations of DNA and many hours to perform a single experiment. We will determine nearest neighbor parameters using modern fluorescent methods and rapid, high-resolution melting analysis.

Our current software is in LabView, a graphical language with extensive user interface options ideal for commercial software. In addition to Tm modeling (using existing parameters), we have developed software for automatic melting curve classification and primer design software for SNP and exon analysis. Integrated utilities for such tasks include sequence manipulation, subsequence location, primer mis-priming analysis, interactive mutation and primer editing, and sequence input, display, and recording.

An example of primer design software is SNPWizard (U-3701), developed during the first year of the COE for genotyping of single nucleotide polymorphisms by high resolution melting analysis of small amplicons. We have recently submitted a manuscript that refers to DNAWizards.path.utah.edu where this and other programs may be remotely beta-tested by referees and other researchers. The primers designed by SNPWizard proved superior to those obtained by other methods in performing the necessary amplification and differentiation of SNP genotype by high resolution melting analysis.

Another useful primer design package is ExonWizard (U-3702), which selects PCR primers to amplify exons and splicing regions of target DNA in which functional mutations may occur. This can maximize the ability to detect, identify, and quantify the DNA involving these mutations, which has numerous practical and commercial applications in both research, clinical, and industrial settings. Like SNPWizard, the primers designed by ExonWizard have consistently led to successful amplifications and analyses where those provided by other means have failed.

C. Arrays for Real-Time PCR and High-Resolution Melting Analysis. Real-time PCR and detection of nucleic acids on arrays are two methods that are usually considered separately and are always performed in different instruments. Arrays allow highly parallel analysis but have a limited sensitivity, accuracy and dynamic range. Real-time PCR is very sensitive, accurate, and has a great dynamic range, but it requires a single compartment for each reaction. We will investigate highly parallel real-time PCR on a two-dimensional matrix of micro-machined compartments.

To date, we have only performed high-resolution melting in a single sample instrument. Why would anyone want to perform a lot of parallel PCR reactions? One visionary suggests that a cornerstone of future medical diagnostics will be “personal” whole genome sequencing, at a cost of about $10,000 US (Nature, 42, 444-448, 2003). With a 1 kb sequencing read length, this would require 3 million PCR reactions to generate sequencing templates. If our interest is limited to the 30,000 human genes with an average of 10 exons each, this is still 300,000 PCR reactions. Although this volume of sequencing is conceivable, the automation required for the downstream steps after PCR (PCR clean-up, reagent addition, cycle sequencing, reaction clean-up, introduction of sample into a separation matrix, data acquisition, and analysis) is an extreme challenge. However, high-resolution melting can be used to “re-sequence” DNA to identify any changes in sequence.

Consider scanning all 300,000 exons in the human genome in 1 nl reaction volumes. The dimensions of one cubic compartment would be 0.1 mm on a side and the entire chip 6 cm in linear dimension. If human genomic DNA is included at 15 copies per compartment, a total of 300 ul of PCR solution and 15 ug of DNA would be required. This is ambitious, but possible. The chip could be heated on one side with a Peltier device and monitored by epi-fluorescence through a clear top seal with a CCD camera.

Obstacles to overcome include deposition of the primers in each compartment, microfluidic introduction of the sample/PCR master mix to all cells, sealing each compartment so that neighboring cells do not intermix during amplification, and prevention/control of bubbles during thermal cycling and high resolution melting analysis by surface imaging. Deposition of 600,000 primers into the correct compartments is a formidable problem. An elegant solution is to synthesize the oligonucleotides primers on the array, using techniques developed by Affymetrix or Combimatrix. These synthesis techniques create about 1 fmol of oligonucleotide per spot. When diluted in 1 nl of PCR solution, the primer concentration is 1 uM, just about right for amplification. The attachment chemistry of the oligonucleotides to the chip could be modified so that the primers would be freed into solution by introduction of the PCR/template mixture.

Initial work will focus on the feasibility of amplifying and monitoring PCR and high-resolution melting in small (1-10 nl) volumes. Once successful, microfluidic means to distribute a master solution to multiple cells would be perfected. Before genome-wide analysis will be attempted, an intermediate application will be the 27 exons of cystic fibrosis, a popular genetic test in current clinical practice.

2.3 Program Schedule. The following table lists major milestones of the program, beginning in the second year. It is extensively revised from the first year schedule:

|Year |Repeat Typing |Sequencing |Software |Arrays |Alliances |

|2004 |Determine length and sequence dependence using |Establish nearest |Demonstrate |License repeat |

| |synthetic oligonucleotides |neighbor |1-10 nl real-time PCR |typing and sequencing |

| | |parameters | | |

|2005 |Generic Kits for research and clinical markets |Software suite |Microfluidic |Spin off |

| | |ready for marketing |distribution | |

| | | |developed | |

|2006 |Determine minimum |Labeled primers, |Domain melting |Cystic Fibrosis |Partner with |

| |allele fraction |ASRs |prediction |Chip |Affymetrix or |

| | | | | |Combimatrix |

|2007 |Chimerism |Labeled |Integrated human |Genome-wide |Global |

| |and forensic kits |dideoxy-terminators |genome analysis |exon analysis |Distribution |

4. Anticipated Results. Our technology is less expensive and much easier than current commercial alternatives. This is evidenced by our rapid ability to license and commercialize our initial application, DNA scanning, in the first year of the Center. We are now focusing on three further paths toward commercialization, homogeneous repeat typing/sequencing, analysis software , and solution array development. Our goal is to make high resolution melting analysis a common tool in even small laboratories, similar to a spectrophotometer or a centrifuge. Many laboratories only need to process a few samples a day. High throughput needs do exist in some laboratories, and will be covered by development of an array instrument that is more amenable to core laboratories and genome centers.

Homogeneous repeat typing and sequencing that requires only PCR, a generic DNA dye, and a melting instrument is so simple and inexpensive that we anticipate it, along with our scanning technology, can replace 95-98% of current DNA sequencing. Derivation of nearest neighbor parameters under high-resolution melting conditions will greatly increase the precision of Tm predictions and provide a strong competitive advantage for DNAWizards software. This software company can be spun off in the 3rd year of the Center. Commercialization of the array platform will be a focus of later years of Center funding.

It is conceivable that an additional business can be started in Utah based on services using the technologies developed through the Center for Homogeneous DNA Analysis; while a company such as Idaho Technology can manufacture the equipment and reagents required to perform the tests, one of our visions is to create a service company, much like ARUP, but specializing in patient genotyping [or whatever you think can/should be the future of your ideas]. Such a company would not compete directly with Myriad, nor with ARUP, but would provide yet another valuable gene-identification service for clinical specimens. [Elaborate if you’d like!]. We believe that this Newco can be created within the next 3 years.

5. Impact of COEP support. The major impact of COEP support will be to provide the catalyst for Drs. Wittwer (Pathology), Palais (Mathematics), and Gale (Engineering) to work together. COEP support will make successful commercialization a priority and greatly increases the chance of converting successful scientific projects into successful economics, that is, more jobs in Utah and an expanded biotechnology base. Besides focusing key personnel on commercialization, COEP support will provide partial funds for prototype development and travel funds directed towards commercialization. In addition, COEP funds will attract additional public and private funding.

In addition to a new company for software commercialization, the future development of faster, more accurate and economical DNA analysis will create new jobs in clinical testing laboratories. Improvements in diagnostics inevitably lead to improvements in therapy and education. The chair of the mathematics department, (Distinguished Professor) Graeme Milton, has recently invited Dr. Palais to develop a new course curriculum around the mathematics of DNA analysis.

3. Commercialization Plan

3.1 Definition of Products Anticipated Based on the Center’s Technology.

Based upon successful development and anticipated evolution of our techniques and data analysis methods, several opportunities for direct commercialization of the technology in the coming years are apparent. The Center for Homogeneous DNA Analysis will produce methods (kits), software and instruments that target different segments within the applied and basic R&D markets as well as the clinical laboratory market.

A. Repeat Typing and Sequencing: This is a novel alternative to conventional repeat typing and sequencing based on melting temperature instead of size. We will rely on existing instrumentation from the commercial sector to provide the instrument base. This includes Idaho Technology’s single sample instrument (HR-1, developed in the first year of Center funding) and a 96/384-well platform (The “LightScanner”) to be developed in the next year with STTR funds. In addition, we anticipate that other companies will develop high-resolution melting instrumentation that can be use for repeat typing and sequencing. Please note the potential for the array instrument we propose to build for repeat typing and sequencing when throughput requirements are massive.

A commercial partner or spin-off company will provide generic research reagents ($0.5/assay) and software for repeat typing ($1,000 per license) and sequencing ($1,000/license). Generic reagents are required for repeat typing and sequencing. Potential formats include a 10X dye, an optimized dye/buffer combination, and freeze dried PCR master mixes. We anticipate good patent protection on the method (melting analysis after dideoxynucleotide termination) and analytical software (alignment and comparison of melting curves).

Analyte specific reagents designed for specific clinical assays will be sold to major diagnostic laboratories. First generation ASRs will be for infectious disease identification and typing (hepatitis C virus, bacterial identification by ribosomal DNA). These will be ready to market starting 2006 through 2008. Price: $20-40 per assay.

B. Software: Starting in the 3rd year, we are planning to spin off an online DNA analysis software and service company. The software and service enterprise, , will serve research, clinical, and commercial users by providing analysis services and distributing analysis software and educational materials for clients to use themselves. Specific software packages will include:

1. TmWizard: The core melting temperature prediction tool central to many of our programs. We will use the second year of Center funding to derive nearest neighbor parameters relevant to high-resolution melting conditions. This will give us a competitive advantage over other software because our predictions will be more accurate than existing methods. Free web use, $100 software package [don’t you mean free web trial, say 2-3 tests?].

2. SNPWizard: Identification of PCR primers for SNP assays using amplicon and/or probe melting. Free web use, $25 custom design per assay, $100 software package [ditto – and wouldn’t the software be closer to $1000? Or perhaps all the software packages can be bundled together for a $1500 pricetag?].

3. ExonWizard: Identification of PCR primers to identify exons and splice sites with sequence alterations. Free web use, $100 custom design per gene, $200 software package [ditto].

4. DxWizard: Identification of PCR primers for diagnostic assays that require a comparison of multiple sequences for similarity within species, and differentiation between species. Analysis is based on allele-specific PCR, amplicon Tm and/or probe Tm. Most commonly will be infectious disease identification and genotyping. $100-$500 custom design per assay, $500 software package [ditto].

5. CTWizard: Identification of fractional cycle numbers for quantification of real-time PCR curves using advanced analysis methods superior to thresholding or second derivative maximum techniques. Free web use, $200 software package [ditto].

6. TypeWizard: Automatic clustering and classification of melting curve data. Free web use, $100 software package [ditto].

Another unique opportunity for commercial integration with Utah companies is to partner with a business that synthesizes PCR primers. DNAWizards, in collaboration with such a company, could deliver assay designs and primers to the customer the next day. Further down the road would be a service laboratory (Newco) using homogeneous DNA analysis to perform fast, accurate, and inexpensive clinical assays, specializing in SNP typing, repeat analysis, and sequencing of short fragments [I’d like to see you emphasize this company. The software company will not be terribly interesting to the reviewers. Neither is anything that Idaho will be licensing. But if you consider a service company that then takes what Idaho manufactures, and use it as a service organization, THAT would be powerful].

C. Arrays for Real-Time PCR and High-Resolution Melting Analysis. Although array products are only expected to appear near the end of Center funding, the niche to be filled is highly parallel analysis. Specific products include the bare chips themselves, analyte-specific chips, and an instrument for reading the chips. Estimated price for the bare chips (requiring user spotting of analyte-specific reagents) is $10. The cost of analyte-specific chips will depend on the number of parallel reactions on the chip. For example, a 100 well chip (e.g. for cystic fibrosis testing) might cost $30, while a human genome exon chip (300,000 wells) could easily demand $1,000. For massively parallel analysis, partnering with a company capable of in situ primer synthesis would solve problems of storage and spotting of a large number of primers. The instrument, including capabilities for PCR temperature cycling, real-time monitoring and high-resolution melting analysis is estimated to cost between $50,000 and $70,000.

3.2 Maturity of Technology. The feasibility and application of high-resolution melting analysis has been demonstrated. Further funding is required to develop applications such as repeat typing and sequencing, to develop a software suite for melting curve prediction, analysis, and assay design, and to create an instrument system for highly parallel analysis. Once available, the Center will place methods, software and systems at alpha testing sites, and promote technology acceptance by key opinion leaders in the scientific and medical communities. Methods for repeat typing and sequencing should be ready in the Center’s second year with several alpha test sites on board. A market launch in 2005 is feasible.

We have initial versions of most of the software programs mentioned and they are being placed on a public web server, DNAWizards.path.utah.edu. They will undergo extensive testing and modification to meet user demands during the Center’s second year. We also need the second year to derive nearest neighbor parameters relevant to high-resolution melting analysis. This will provide better Tm estimates at DNAWizards than otherwise available.

Beginning progress with high-resolution melting analysis on solution arrays (as opposed to tethered arrays) will develop during the second year of Center funding. This project involves collaboration with Dr. Gale in Engineering, an expert in micromachining technology. Critical steps include demonstration of nl real-time PCR, microfluidics for distribution of PCR solution, and containment of each cell during temperature cycling.

3.3 Uniqueness of Technology. Simplicity is what sets our technology apart from other existing methods of DNA analysis. Most methods, including ours, require that the DNA is first amplified by PCR. It is what you do after PCR that is complex with other technologies. The Center’s technology is completed in a matter of 1-2 minutes without ever having to open the sample tube. Despite its simplicity, our technology is sensitive enough to detect the existence of a single difference in the nucleic acid sequence compared to a reference material. Because the method is simple, the instrumentation can be small and inexpensive. Small footprint and low cost is particularly important for penetration into low-to-medium volume research laboratories. However, a system based on highly parallel arrays can address the needs of high throughput and Core laboratories. The following table summarizes our competitive advantage in repeat typing and sequencing.

| |Center’s |Competition |

| |Technology | |

| | |Pyrosequencing |Sequenom |ABI |

| | |Pyrophosphate release, | |Capillary electrophoresis |

|Method |Melting analysis |Chemiluminescence |MALDI-TOF | |

| | | |Extension (cleavage), |Two cleaning steps, |

| | |Single strand isolation and |clean up, mix with matrix |cycle-sequencing, and |

|Sample transfer after | |injection | |injection onto separation |

|PCR |None | | |media |

|Analysis time after PCR | | | | |

| |1-2 minutes |60 min | |150 minutes |

|Instrument |$10,000 ~ $60,000 |$80,000 |$200,000 ~ $500,000 |$125,000 ~ $250,000 |

|Price | | | | |

|Number of samples |1 to 1000s |96 |1 |16 ~ 48 |

|Fit with low volume lab |Yes |Yes |No |No |

|Fit with high-throughput|Yes |No |Yes |Yes |

|lab | | | | |

|Read Length |1-30 bases? |1-30 bases |1 – 30 bases |1-700 bases |

|Cost per assay |30 ~ 50 cents |20-50 cents |$4 |$1.8 ~ $3.0 |

There are over 30 online oligonucleotide design web sites that offer free primer/probe design on-line. Perhaps the most widely used is Primer 3 from the Whitehead institute. Several of the sites are linked to oligonucleotide synthesis services (IDT, EPOCH, Genscript, TATAA). Some commercial software is at least partly specific to a platform (ABI primer express - $5,000, or Roche primer/probe software $1,000). Other commercial software is general purpose with a wide range of features and prices, including Primer Premier 5 (Premier Biosoft Int - $885), Oligo 6.0 (MBI - $2,700, and Vector NTI 7.0 – $4,500). Some companies offer design services, ranging from simple PCR primers (Synthegen - $35) to complex probe systems (Fluoresentric, negotiable).

What will be unique about DNAWizards? First, our software is focused on high-resolution melting applications. Software for SNP typing, exon analysis, repeat typing, and sequencing based on melting temperature is not currently available. Because our techniques do not require probes and are less expensive, we believe they will eventually win in the marketplace, given adequate design and marketing support. Secondly, our second year of funding will be used to empirically determine better parameters for Tm estimation that are specific to PCR and high-resolution melting conditions that will allow more precise prediction. Current methods are good to only +/- 2(C, and we believe we can decrease this to +/- 0.5(C, giving us a competitive advantage over even the most sophisticated programs available today.

There is no commercial array system for parallel real time PCR. Chip arrays use tethered (fixed) oligonucleotides, and do not easily support solution chemistries. The closest real-time PCR gets to arrays is parallel analysis in 96 or 384 microtiter trays. ABI sells a “Card” with primers and probes freeze-dried in 384-well format for parallel analysis of 96 targets for use with their $100,000 Prism 7900HT instrument. The cards cost $200 each for a cost of just over $2/assay and individual sample volumes are 1-2 ul. We hope to reduce sample volumes about 1000-fold, to enable us to work with 1-10 nl volumes. The approach is to have specific reagents in each cell and to flood the system with the PCR/sample solution, enabling highly parallel analysis on a genome-wide scale.

3.4 Technology Transfer

The following sites will be approached for early evaluation (alpha testing) of our products.

|Product |Organization |Purpose of Evaluation |

|Midi-Sequencing & Repeat typing suites|Roche Applied Sciences, Germany |Commercial viability and international |

|(reagent & software) | |distribution. |

| |University of Utah, Core sequencing |For use in core facility |

| |facility | |

| |ARUP Laboratories |For use in clinical production and |

|Midi-Sequencing & Repeat typing suites| |clinical research: Molecular Genetics and|

|(reagent & software) and ASRs | |Infectious Disease testing. |

| |Mayo Clinic | |

| |Emory University |Infectious disease testing |

|Software products () |University of Utah Dept. of Human Genetics| |

| |Laboratory Corp of America |High-throughput clinical R&D |

|Array System | | |

| |Quest Diagnostics |Compare with MassArray system for |

| | |clinical R&D |

Positive feedback from these opinion leaders will ensure earlier diffusion and adoption of the technology. We expect that a significant amount of work will be published in scientific journals as well as presented at key scientific conferences. These will all be important at the emerging phase of the Center’s technology.

Commercialization Strategy: Idaho Technology Inc. (Salt Lake City, UT) and Roche Diagnostics (Indianapolis IN, Alameda CA, and Penzberg Germany) have expressed interest in acquiring commercial rights for products developed under this program if those products prove robust and competitively viable.

• Idaho Technology has a proven track record in the commercial development of instrumentation, software, and biological reagents. The company has also committed funds to the Center’s program. The company has licensed products that resulted from the Center’s first year’s program, and has already realized commercial income from those products. Licensing of other technologies will depend on the Center’s progress during the 2004-2005 year.

• Roche Diagnostics has a multinational distribution network into the R&D and clinical diagnostic markets, which are the targets of this technology. The decision by Roche to enter into an alliance with the Center will depend on the outcome of review meetings scheduled for October 2004 and March 2005.

Independently from the above possible alliances with existing companies, it is also the intention of the Center to form a new company () in Utah specializing in software development and software distribution for DNA analysis. Alliances with custom oligonucleotide companies will be formed to provide rapid custom reagent delivery services that are integrated with Web-based assay design tools.

3.5 Market Analysis

The assumption for the size of the market for Mutation Scanning (Center’s first year technology) remains unchanged at $400 million, growing at 9-10% per year. As of 2004, an estimated 46 million assays are performed worldwide to re-sequence genes in search of novel or previously known mutations of which nearly 80% are changes at the single nucleotide level (SNP). In about 10% of those cases, the stretch of DNA examined is known to harbor a large number of possible sequence variances. This is the target market for sequencing by melting analysis (or “Midi-sequencing”). Another 5 million assays are performed for fragment analysis to characterize repeat sequences for human identification, gene mapping and linkage analysis[1]. Thus, a potential annual market of 10 million assays exists for the Midi-sequencing & Repeat-typing Suites of the Center’s new technology.

The ASR market for clinical testing is estimated from current volume of viral genotyping (HIV and HCV) as well as HLA sequencing performed in US reference laboratories. A combined total of 360,000 assays are performed each year for HIV and HCV genotyping. HLA sequencing is performed less frequently at about 25,000 assays per year (includes oligotyping). The estimated global market size is roughly twice these numbers (800,000 assays).1

No good data exists for market size of molecular biology software products. Most of the current high-end software products are platform dependent and distributed by the companies that supply the instrument platforms, while many of the generic software are provided by small companies that are privately held.

The current microarray market consists of instrumentation and bioinformatics estimated to be $600 million and $110 million, respectively, in 2005.[2] Affymetrix, who has 50% of the microarray market, reported 20% annual growth in sales, and an install base of 970 microarray analysis systems as of Jan 2004.[3] Whether a comparable market exists for the Center’s technology depends on the breadth of its use, and whether specific applications, such as pharamcogenomics, infectious disease testing, cancer risk assessment and treatment stratification can be established and how long it will take to gain customer acceptance.

Competition: See Section 3.3.

3.6 Market Projections

Mutation Scanning (Center’s first year technology suite): Based on product sales between October 2003 and January 2004, this technology suite is well on track to realize net sales of ~$24 million in 2008 as originally projected. This, however, is contingent on continued involvement by the Center to develop 2nd and 3rd generation products based on R&D funding by the licensee (Idaho Technology), the University of Utah Research Foundation grants, royalty income, and possibly through NIH-STTR grant(s). No additional state funds will be used for this activity.

New Technologies (Second– fifth year technology suite): Most of the Center’s new technologies are emerging and their market value during the early years is still elusive. The financial analysis sheet (below) assumes that the new technologies are commercialized by a Center-derived new company. Based on this analysis, the amount of sales required for break-even of operation in 2008 are modest and achievable. R&D costs shown here exclude Center expenses for the Mutation Scanning suite. Gross margin was estimated at 95% for software products, 80% for reagents, 75% for ASRs, and 60% for the array system, based on known economics of similar products. A 3.4% penetration is required for generic reagents, while ASRs require 7% penetration in 2008.

[pic]

3.7 Economic Impact

The existence of the Center will provide the following economic benefits to the state of Utah:

• Attract and retain highly skilled technical workforce by creating new jobs in Utah to support the Center’s activity, either by a newly formed company or additions in workforce at the alliance partner, Idaho Technology Inc. Six new jobs were created as a result of the Center’s activity as of Jan 2004.

• Provide a healthy royalty return to the University of Utah.

• Attract possible out-of-state investment to fund the Center’s activity

• Provide opportunity for infusion of federal funds through SBIR, STTR, and ATP programs to further develop the technology

• Attract visiting scholars for collaborative studies and international conferences in the field of Homogeneous DNA Analysis, thus expanding the scientific infrastructure of Salt Lake City.

• The Center can be a resource to local employers such as ARUP Laboratories ($60 million in annual payroll), and Myriad Genetics ($70 million in annual payroll) who provide DNA analysis services as a significant part of their clinical diagnostics business. Early access to the Center’s technology and specialized technique developments can provide these companies with competitive advantage over out-of-state competitors.

4. Project Management/Key Personnel

1. Background of Key Personnel.

The Principle Investigator (Dr. Carl Wittwer) is a tenured professor of pathology at the University of Utah. He has been at the University for the past 16 years, was the first holder of an endowed chair in pathology, and is the Associate Editor of Clinical Chemistry that handles manuscripts on molecular diagnostics. His passion is fluorescence analysis of DNA. He has published over 80 peer-reviewed articles and holds over 16 patents (an additional 12 are pending), all assigned to the University of Utah. In the early 1990s he developed rapid cycle PCR and co-founded the company Idaho Technology (now in Salt Lake City) to commercialize this technology. In the mid 1990s, through NIH STTR funds and Biowhitaker Engineering Foundation support, he developed the LightCycler, one of the leading real-time PCR platforms available today for research and diagnostics. This platform, including instrumentation, software, and fluorescence chemistry is licensed to Idaho Technology and Roche Diagnostics, with current worldwide sales approaching $100M/year. This Utah company now employs over 100 people and continues to expand with government contracts for bio-warfare defense. Dr. Wittwer enjoys the interface between research and commercial application. He prefers to invent at the University of Utah and transfer these inventions to small local companies or generate new companies.

Dr. Bob Palais is an Associate Professor of Mathematics at the University of Utah. Trained at Harvard and Berkeley, he has extensive experience in clustering algorithms for biological applications. Additional interests include, mathematical modeling, variation methods and optimization, inverse problems, theoretical and computational optimal design, scientific computation, singularity formation, mathematics education, fluid dynamics and mathematical biology, financial mathematics, and numerical simulation. He is also an expert computer programmer and is very interested in practical applications of mathematics.

Dr. Luming Zhou is a Research Associate in the department of Pathology. She is a molecular geneticist with over 15 years of experience, working most recently with Dr Ray White, Bob Weiss, and Frank Fitzpatrick. She holds 2 patents and over 10 publications. She is an expert in current genetic techniques and technologies and also has a strong interest in clinical medicine and commercialization. Drs. Wittwer, Palais, and Zhou have collaborated on projects since 2002.

Dr. Bruce Gale is an Assistant Professor of Engineering at the University of Utah. He will provide expertise in microfluidics and micromachining. He has one patent and over 10 publications and is applying for a new Center of Excellence this year in Biomedical Microfluidics. Whether or not his center is funded, he will be involved in development of the array platform.

4.2 Responsibilities of Key Personnel. Dr. Wittwer will manage the overall project, and will coordinate the method, instrument, and software development. He will work with Dr. Zhou and team to develop the necessary techniques and applications for DNA analysis. Dr. Palais will develop and guide the software work. Dr. Gale will be responsible for progress on the chip array system. Ms Reed, as well as being an accomplished biochemist, will provide market intelligence.

4.3 Organizational Structure ( salary supported by the Center):

4. Program Coordination. Our program is coordinated through weekly laboratory meetings that everyone attends. Progress for the past week is discussed and plans for the future week are made. In addition, Dr. Wittwer participates in quarterly meetings with Idaho Technology and Roche Applied Systems, for possible international marketing of research products, and with Roche Molecular Systems once a year concerning possible clinical applications. Ad hoc meetings are also arranged as needed. Composition and milestones for the next year of the project for each group are:

Method Group: Includes Dr. Luming Zhou, Rob Prior (senior laboratory technologist), Joshua Vandeersten (part-time undergraduate student), and Matt Petterson (graduate student). Gundi Reed (senior laboratory technologist) will also provide market intelligence. Measurable milestones for the next year of funding will be to: 1) determine the length and sequence dependence of melting analysis for repeat typing and sequencing, and 2) obtain new parameters for Tm estimation under PCR and melting conditions.

Software Group: Includes Dr. Bob Palais, Ian O’Dell (part time undergraduate student) and Allison Jarstad (part-time undergraduate student). Measurable milestones for the next year are to post web versions of the six software wizards listed as products.

Array Group: Includes Dr. Bruce Gale and a graduate student (to be named). The measurable milestone for the next year is to demonstrate 1-10 nl PCR reactions on a micro-machined chip substrate.

4.5. Additional Personnel Needed. The major reason for this Center of Excellence grant is to encourage collaboration between molecular biology (Wittwer/Zhou), mathematics (Palais), and engineering (Gale) for the purpose of commercialization. This will generate new licensable technology and develop current projects up to the point of commercialization. The remaining personnel are from Dr. Wittwer’s research laboratory, are supported by matching funds and have been working as an integrated group for over 10 years. Outside of the faculty salary support requested, no additional personnel are needed.

5. Budget Narrative

1. Original Center Total Budget: We are nearing completion of our first year of Center funding. Our original Center budget is outlined below:

|CENTER FOR HOMOGENEOUS DNA ANALYSIS | | | |

| | | | | | | |

|Cash funding committed/received | 7/03-6/04 | 7/04-6/05 |7/05-6/06 |7/06-6/07 |7/07-6/08 |Total |

| | | | | | |0 |

|Idaho Technology Inc |472,000 |354,000 |236,000 |236,000 |118,000 |1,416,000 |

|Sub-total cash funding committed/received |472,000 |354,000 |236,000 |236,000 |118,000 |1,416,000 |

| | | | | | | |

|Cash funding pending | | | | | |

|University of Utah Research Foundation |35,000 | | | | |35,000 |

|Idaho Technology | |118,000 |236,000 |236,000 |236,000 |826,000 |

|Sub-total cash funding pending |35,000 |118,000 |236,000 |236,000 |236,000 |861,000 |

| | | | | | | |

|Non-cash funding | | | | | | |

|Equipment donated [Carl – what about some of the repeat | | | | | |0 |

|typing – are you going to use an HR-1 to do that? Will | | | | | | |

|you be purchasing it?] | | | | | | |

|Other | | | | | |0 |

|Sub-total non-cash funding |0 |0 |0 |0 |0 |0 |

| | | | | | | |

|Project Income | | | | | | |

|Royalities [won’t be considered as matching funds] |100,000 |80,000 |100,000 |135,000 |200,000 |615,000 |

|Sub-total project income |100,000 |80,000 |100,000 |135,000 |200,000 |615,000 |

| | | | | | | |

|TOTAL MATCHING FUNDS |607,000 |552,000 |572,000 |607,000 |554,000 |2,892,000 |

|COEP FUNDING |200,000 |200,000 |200,000 |150,000 |100,000 |850,000 |

|MATCHING RATIO (Matching/COEP) |3.04 |2.76 |2.76 |4.05 |5.54 |3.38 |

|MATCHING RATIO, COMMITTED FUNDS |3.04 |2.17 |1.68 |2.47 |3.18 |2.39 |

|TOTAL PROJECT FUNDING |807,000 |752,000 |772,000 |757,000 |654,000 |3,742,000 |

| | | | | | | |

|II. USE OF TOTAL PROJECT FUNDS | | | | | | |

|Personnel |408,400 |443,000 |463,000 |448,000 |392,000 |2,134,400 |

|Capital Equipment |125,600 |19,200 |19,200 |19,200 |12,800 |196,000 |

|General Expense |265,000 |281,800 |281,800 |281,800 |241,200 |1,351,600 |

|Subcontracts |0 |0 |0 |0 |0 |0 |

|USE OF PROJECT FUNDS--TOTAL |807,000 |752,000 |772,000 |757,000 |654,000 |3,742,000 |

| | | | | | | |

|III. USE OF COEP FUNDS | | | | | | |

|Personnel |150,000 |150,000 |150,000 |110,000 |70,000 |630,000 |

|Capital Equipment |0 |0 |0 |0 |0 |0 |

|General Expense |42,000 |42,000 |42,000 |32,000 |22,000 |180,000 |

|Subcontracts |0 |0 |0 |0 |0 |0 |

|USE OF COEP FUNDS--TOTAL |200,000 |200,000 |200,000 |150,000 |100,000 |850,000 |

2. Changes in Financial Support: Center funding for the first year mostly followed our original projections. Granted COEP funds were $150,000, reduced from the requested $200,000 (budget constraints). Pending cash funding from the University of Utah Research Foundation ($35,000 – Technology Commercialization Grant) and royalties distributed to the Department of Pathology ($100,000) were received as expected.

3. Current and Pending Support. We have three current sources of funding. The technology commercialization seed grant from the University of Utah is funded through June 30, 2004. We expect to obtain an additional year of funding (35K) next year. The private industry R&D grant from Idaho Technology is funded for the next three and a half years. For the next year, it will provide the matching funds for the Center grant. Idaho Technology licensed our Center’s scanning technology in the first year of our Center and no further funding for mutation scanning is being requested through the Center. All Center efforts are being directed to new innovation that can create new Utah companies and/or be independently licensed. For the current year, we received $150,000 from the State of Utah for our Center of Excellence on Homogeneous DNA Analysis. These funding sources are listed in Tabular format below:

|Title |SNP Typing without Probes |

|Agency |Univ. of Utah Res. Found. (Tech. Commercialization Project) |

|Dates |7/03 – 6/05 |

|Amount |$70,000 |

|Title |Fluorescent Nucleic Acid Techniques |

|Agency |Idaho Technology |

|Dates |1/03 – 12/07 |

|Amount |$1,652,000 |

|Title |Center for Homogeneous DNA Analysis |

|Agency |State of Utah |

|Dates |7/03 – 6/04 |

|Amount |$150,000 |

In November or 2003, we applied for a Fast Track NIH STTR award to continue commercialization of homogeneous mutation scanning. In addition, we will apply for another Fast Track NIH STTR by April 1, 2004 to combine amplification and scanning applications on a 32-sample instrument. These anticipated federal funds can also be used as matching funds if necessary and are listed below:

|Title |Homogeneous Mutation Scanning |

|Agency |NIH STTR (Phase I and II) |

|Dates |7/04 – 12/06 |

|Amount |$850,000 |

|Title |Integrated Amplification and Mutation Scanning |

|Agency |NIH STTR (Phase I and II) |

|Dates |1/05 – 6/07 |

|Amount |$850,000 |

The University component of these two fast-track STTR NIH grants have been incorporated into our new budget as potential matching funds. Our preferred commercialization outcome for our dinucleotide repeat/sequencing technology is to form a new company or license to a Utah company, probably in the next year. We also plan on spinning off the software company in the 3rd year of Center funding. Commercialization of our array technology is longer term, but we hope to make enough progress to see this through in the 4th and 5th year of Center funding.

5. Total New Budget and COEP Request. Our projected budget for the Center for Homogenous DNA Analysis for the current year (purple) and over the next four years is shown below:

|CENTER FOR HOMOGENEOUS DNA ANALYSIS | | | |

| | | | | | | |

|Cash funding committed/received |7/03-6/04 |7/04-6/05 |7/05-6/06 |7/06-6/07 |7/07-6/08 |Total |

| | | | | | |0 |

|Idaho Technology Inc |472,000 |354,000 |236,000 |236,000 |118,000 |1,416,000 |

|University of Utah Research Foundation |35,000 | | | | | |

|Sub-total cash funding committed/received |507,000 |354,000 |236,000 |236,000 |118,000 |1,451,000 |

| | | | | | | |

|Cash funding pending | | | | | |

|University of Utah Research Foundation | |35,000 | | | |35,000 |

|Idaho Technology | |118,000 |236,000 |236,000 |236,000 |826,000 |

|NIH STTRs (University component) | |194,000 |375,000 |281,000 | |850,000 |

|Sub-total cash funding pending | |347,000 |611,000 |517,000 |236,000 |1,711,000 |

| | | | | | | |

|Non-cash funding | | | | | | |

|Equipment donated [ditto as above] | | | | | |0 |

|Other | | | | | |0 |

|Sub-total non-cash funding |0 |0 |0 |0 |0 |0 |

| | | | | | | |

|Project Income | | | | | | |

|Royalties [ditto as above] |100,000 |100,000 |100,000 |135,000 |200,000 |615,000 |

|Sub-total project income |100,000 |100,000 |100,000 |135,000 |200,000 |615,000 |

| | | | | | | |

|TOTAL MATCHING FUNDS |607,000 |801,000 |947,000 |888,000 |554,000 |3,797,000 |

|COEP FUNDING |150,000 |160,000 |160,000 |160,000 |110,000 |740,000 |

|MATCHING RATIO (Matching/COEP) |4.05 |5.01 |5.92 |5.55 |5.04 |5.13 |

|MATCHING RATIO, COMMITTED FUNDS |4.05 |2.21 |1.48 |1.48 |1.07 |1.96 |

|TOTAL PROJECT FUNDING |757,000 |961,000 |1,107,000 |1,048,000 |664,000 |4,537,000 |

| | | | | | | |

|II. USE OF TOTAL PROJECT FUNDS | | | | | | |

|Personnel |407,000 |645,000 |663,000 |668,000 |412,000 |2,795,000 |

|Capital Equipment |125,000 |19,200 |119,200 |48,200 |10,800 |322,400 |

|General Expense |225,000 |291,800 |324,800 |331,800 |241,200 |1,414,600 |

|Subcontracts |0 |5,000 |0 |0 |0 |5,000 |

|USE OF PROJECT FUNDS--TOTAL |757,000 |961,000 |1,107,000 |1,048,000 |664,000 |4,537,000 |

| | | | | | | |

|III. USE OF COEP FUNDS | | | | | | |

|Personnel |120,000 |130,000 |130,000 |130,000 |90,000 |600,000 |

|Capital Equipment |0 |0 |0 |0 |0 |0 |

|General Expense |30,000 |25,000 | 30,000 |30,000 |20,000 |135,000 |

|Subcontracts |0 |5,000 |0 |0 |0 |5,000 |

|USE OF COEP FUNDS--TOTAL |150,000 |160,000 |160,000 |160,000 |110,000 |740,000 |

COEP funds will provide crucial supplements to committed funds from private industry, University, and NIH STTR funds in the categories of personnel, general expense, and subcontracts with a focus of commercialization in Utah. In the last year, our expenditures decrease in counterpoint to more private industry involvement and royalty returns to the Center.

4. University’s Financial Support. [You can ask Mike Keene, but last year, no state funds, including UU funds, could be used as matching funds. I doubt they’ve changed their minds, but you can ask. I’d leave this in anyway, but they may want you to remove it from the matching funds ratio.]For the first year of Center funding, my department provided $100,000 out of department royalty shares for use by the Center. These royalties resulted from prior commercialization success of our technologies. In addition, the University of Utah Research Foundation provided $35,000 through a Technology Commercialization Project. For next year, my department chairman has committed $100,000 of additional department royalty shares and I expect the department will continue to return royalties to the Center, with an increased return in later years as additional technology is successfully commercialized.

| |7/03-6/04 |7/04-6/05 |7/05-6/06 |7/06-6/07 |7/07-6/08 |

|Personnel |80,000 |80,000 |60,000 |80,000 |120,000 |

|Equipment |20,000 |19,200 |10,000 |20,000 |10,000 |

|Sucontracts |0 |0 |0 |0 |0 |

|General Exp. |35,000 |35,800 |30,000 |35,000 |70,000 |

|Total |135,000 |135,000 |100,000 |135,000 |200,000 |

5.7 Budget Justification. Center of Excellence funds will be used for personnel, general expenses, and subcontracts that are focused on commercialization within Utah. The most crucial component is salary support to allow committed time to specifically work on advancing the technology towards commercialization. In addition, the interface with Engineering and Dr. Bruce Gale is best done through half time support of a Ph.D student. The following time commitments are proposed:

| |Role |Percent Effort |Salary and Benefits |

|Dr. Carl Wittwer |PI |10 |20,000 |

|Dr. Bob Palais |Mathematician |50 |50,000 |

|Dr.LuMing Zhou |Genetics |50 |35,000 |

|Gundi Reed |Business/BioChem |15 |10,000 |

|Grad Student (Eng) |Instrumentation |50 |15,000 |

|Total | | |130,000 |

Dr. Wittwer (Professor, Pathology), the principal investigator, will coordinate the project and be responsible for achieving commercialization goals. Additional responsibilities include an interface with Dr. Bruce Gale and Engineering and technology transfer to a commercial partner.

Dr Palais (Assoc. Professor, Mathematics) will provide mathematical algorithms and programming. His expertise in data reduction and clustering algorithms is necessary to convert the high resolution melting data into simple, meaningful results. A 50% commitment will allow adequate time away from his other teaching and academic duties. Two part time undergraduate students will work with Dr. Palais (from matching funds).

Dr. Zhou (Res. Associate, Pathology) brings genetics leadership to our group with over 15 years experience in molecular human genetics. Her prior experience in related technologies is a natural match for implementing the technique development and wet chemistry components of the project. She will work closely with one senior laboratory technologist, one part-time medical student, and two part-time undergraduate students (all funded through matching sources).

General expenses ($25,000 next year) for the Center include biochemistry reagents, engineering supplies and travel costs. Laboratory supplies include oligonucleotides, PCR reagents, sample tubes, DNA dyes, disposables, and reprint costs. Engineering supplies include optical components (filters, mirrors, lenses), electronic parts (LEDs, photodiodes, amplifiers) and costs for micromachining. Travel costs include scientific meetings for presentation and costs for exhibits and discussions with potential national and international collaborators/licensees. For the next year we are requested $5,000 for a subcontract to Dale Meier of for web design of the DNAWizards site in the Unversity of Utah department of Pathology. This will reserve Dr. Palais time for more scientific work.

Additional expenses, including all equipment, will come from matching funds or departmental support. We anticipate that there will be significant contributions to the project from our commercial partner (in addition to the matching funds). Therefore, we have not included any contingency for additional subcontracts. Required funds from the State for the Center of Excellence are projected to decrease in the last year as commercial expenditures increase and royalty returns offset some costs to the Center. In reference to the total budget, a project of this magnitude requires significant expenditures. Our largest cost is personnel; the chemistry, software and equipment development are all labor intensive. All capital equipment in the budget is from department support.

5.7 Financial Plan. The new projects initiated in the 2nd year of Center operation should break even during the 4th year. (see 3.7: Market Projections). This is an aggressive, but possible schedule. Crucial seed money from matching funds, Center of Excellence funds, and departmental commitment will allow us to convert our technology into successful business.

Licensing of homogeneous repeat typing and sequencing is expected during the next year, most likely to Idaho Technology, the source of the matching funds. However, if this does not occur, we will approach Roche directly for licensing. We suspect that during the next year, the technology position will become strong enough that one or both companies will commit to licensing. Alternatively, we will license the technology from the University and form a new Utah company based on homogeneous repeat typing and sequencing. Assuming commercial licensing or company launch during the next year, we expect that related generic reagents can be released the same year. The 4th and 5th years will focus on increasing market penetration with continued development of reagents for additional specific targets. Generic reagent and ASR revenue become substantial in the 4th and 5th years, reaching 2-3M/year.

We plan on spinning off the software company DNAWizards during the 3rd year of Center operations. Expenses are low and projected revenues after 5 years are 200-300K/year. Additional income will be dependent on partnering with oligonucleotide synthesis companies or other business arrangements. Funding would come from private sources, including business partners from prior ventures. Only if this does not prove feasible would other companies be approached.

Our chip platform will take time to develop and commercialize, but we project that instruments and disposables can be ready for the market during the last year of Center funding. Our projection includes sale of 10 instruments at $60,000 each during the final year. Adapting real-time PCR to a chip for parallel analysis of many reactions is a high-risk challenge. The potential returns are also great and can only be extrapolated in this rapidly developing market. The worldwide real-time PCR market is estimated at 500M/year, growing at an annual rate of 10%. If we can obtain a 5% market share in 5 years with our high-throughput array system, this would be 40M/year. Licensing and/or partnering with an existing array company may be necessary. Our hope is that a combination of DNAWizards (low risk), repeat typing and sequencing (moderate risk) and real-time chip PCR (high risk) will provide an effective mixture of options to expand the economic and scientific infrastructure within Utah.

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[1] Market Analysis: Crestwood Technology Inc.

[2] Biomedical Sciences Group, 2002

[3] Affymetrix financial report

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Graduate Student

Web Design

Dale Meier ()

Software - Algorithms Bob Palais, PhD

Ian O’Dell

Allison Jarstad

Method Development Luming Zhou, PhD

Rob Prior

Joshua Vandeersten

Matt Petterson

Engineering/Microfluidics

Bruce Gale, PhD

Fig.1. HLA-A Typing by High-Resolution Melting

[pic]

Project Coordination

Carl Wittwer, MD, PhD

Business/Marketing Guidance

Gudrun Reed, MBA

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