Utah Center of Excellence Program



February 25, 2005

University of Utah College 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

Third year request: $176,000, five-year cumulative request $790,000

Third year period: 7/1/05 – 6/30/06, five-year period 7/1/03 – 6/30/08

Principal Investigator: (Carl Wittwer):___________________________________________

Office of Sponsored Projects (Elliott C Kukakowski):______________________________

Technology Transfer Office: (Brent Brown):_____________________________________

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 and what antibiotics they are sensitive to. The Center for Homogeneous DNA Analysis is making 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 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 an increase 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”. For example, genotyping of single base changes is shown in the melting curves of Fig. 1. The PCR amplicon is 544 bp long and it melts in two stages or “domains”. The domain that melts first (at a lower temperature) is variable at a single base. Two individuals each of three genotypes are shown. Using this method, we can currently detect single base changes in PCR products of up to 1000 bases in length. Another example of using high-resolution melting analysis for matching transplant recipients to donors is shown in Fig. 12. If highly polymorphic HLA regions are amplified by PCR, the melting curves group into “compatibility” 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 are being 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 sFirst generation software, 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, A the first generation commercial system (HR-1( instrument and LCGreen( I reagent) was available launched commercially in the fall of 2003 in the US, and distributors in Japan and Italy were established. To date, 50 systems have been sold, generating gross revenues of $500,000. In this second year of funding, a 96/384-well high-resolution melting instrument, the LightScanner is being launched. Out-licensing and commercialization of the technology has created twelve new jobs in Utah with an average salary of $58,000. We anticipate that the number of jobs will continue to grow as projected.

With successful licensing of mutation scanning, our Center is focusing on additional areas of technology development. Specifically, these areas are: 1) methods for homogeneous repeat typing, sequencing and matching, 2) software for DNA analysis with the objective of spinning off “DNAWizards” as a dotcom company in the next year, and 3) developing a “digital PCR” chip for real-time PCR and melting analysis in collaboration with Bruce Gale’s Engineering Center of Excellence.

Our Center will demonstrate the value of the technologyproducts through R&Dresearch publications, providing access to analytical software through an academic web server for software analysis (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. 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, such as Roche Diagnostics.

In the years to come, 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 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. The Center anticipates receiving a share of royalties from this revenue through the University of Utah system and plans an NSF Center of Excellence application in the next year. Two Fast Track STTR grants have been funded since the Center’s initiation (1.7M). Development of new technologies in years 3 through 5 will further strengthen the competitive advantage of high resolution melting, and will provide opportunities for new software, service, and device companies in Utah.

1. Background

1.1 Technology Definition. Our technology is based on fluorescent detection and analysis of nucleic acids, during and after PCR. Methods and instruments have been developed to achieve rapid DNA amplification and analyses that are monitored in real-time PCR followed by rapid automated real-time analyses thatand take 10-20 min in their entirety. Because theThe fluorescent indicators that monitor the process (probes or dyes) we use are added before 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, wWe introduced the concept of characterizing PCR products by melting curve analysis to characterize PCR products in 1997. Two fluorescent probes were used for genotyping, known as “adjacent hybridization probes” or “kissing probes”, were used for genotyping. In 2000, we developed a method using only a single labeled probe (SimpleProbe(), greatly simplifying design considerations and cost. RecentlyIn 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 expense 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 gradient high-performance liquid chromatography (dHPLC), high-resolution melting analysis requires only analyzing temperature and fluorescence, the same physical parameters that are used in real-time PCR.

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, and and was licensed to a Utah company. During the second year, we focused on new technologies and perfected SNP typing techniques. We are now pursuing additional promising commercial opportunities for homogeneous DNA analysis, such as our “digital PCR” chip, 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 14 issued US patents on various aspects of rapid PCR and homogeneous DNA analysis in addition to foreign counterparts. About an equal number of additional patents are applied for, but not yet grantedpending. 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 four inventions:

1. Homogeneous sequencing and repeat typing (U-3601).

2. Use of saturating DNA dyes, asymmetric PCR and 3’-blocked oligonucleotides for multiplex amplicon and site specific genotyping (U-3715).

3. Method for parallel amplification and mixing of multiple samples in a closed tube system. (U disclosed 2/11/05).

4. Method for introducing melting domains through primer tailing: application to allele-specific PCR (U disclosed 2/11/05).

We are still working on reducing the first disclosure to practice. The second disclosure is enabled and a utility application has been filed. The last two are recent filings. The following ten items are not limited by options (no company funds were used or the option has expired). The last eight were developed during the first two years 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. Massively parallel primer synthesis, real-time PCR and melting analysis on a chip (U-3570).

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

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

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

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

8. Background removal for oligonucleotide fluorescence vs temperature melting and amplification curves. (U disclosed 10/29/04).

9. Multiplex amplification and melting analysis for HLA matching (U disclosed 2/11/05).

10. Nearest neighbor thermodynamic parameters under real world conditions – superior estimates by eliminating multiple correction factors. (U disclosed 2/15/05).

3. Program History/Status. We have worked on homogeneous DNA analysis for the past 10 years. Our first substantial funding was from a STTR award from the NIH, collaborating 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 now distributed worldwide by Roche. We were also able to attract funding from the Whitaker bioengineering foundation: 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: Fluorescent PCR techniques. Idaho Technology, 7/97-12/02, $950,000. Work during this time was also aided by funds from an endowed chair: 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 focusing 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, 7/02-6/05, $105,000. One of these methods was introduced commercially along with a new instrument, the LightTyper, a second was licensed last year by a Utah company and another is under final negotiation (also by a Utah company). We are now in our second year of Center of Excellence funding from the state of Utah. All of our goals for the first year were met and our progress on second year goals is on target. Mutation scanning was licensed to a Utah company and commercially launched in the fall of 2003, resulting in twelve new jobs. Center for homogeneous mutation scanning, State of Utah, 7/03-6/54, $294,000.

Idaho Technology continues to fund research in my laboratory at the University of Utah for PCR and fluorescent techniques, providing matching funds for the first two years of the Center. When the company contributes funds, they have 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 August of 2004, a Fast-Track STTR to continue commercialization of mutation scanning through a Utah company: Homogeneous mutation scanning, NIH STTR, $850,000, 8/04-1/07 was funded. In February of 2005, another Fast-Track STTR to continue development of an integrated real—time PCR machine with high-resolution melting, A system for rapid PCR, mutation scanning and genotyping, NIH STTR, $850,000, 3/05-9/07 was funded. Allowed amounts will also be used as matching funds.

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.

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 that is used for PCR.

Our first year objective was to commercialize a new mutation scanning technology. This was achieved during the fall of 2003 with licensing to a Utah Company. The company has now sold about 50 instruments ($10K each) and about $40K worth of reagents. Two Fast-Track STTR grants were funded in the second year for further commercialization support. With licensing of this application, no further state funds will be used to further commercialize scanning instuments. All of our initial objectives were achieved. Future state funds will be used to commercialize other aspects of high-resolution melting. Specifically, these areas are: 1) methods for repeat typing, sequencing, and matching 2) software for DNA analysis with the objective of spinning off “DNAWizards” as a dotcom company in the next year, and 3) developing a digital PCR chip for real-time PCR and melting analysis in collaboration with Dr. Bruce Gale’s Center of Excellence (U. of Utah Engineering). We have the following specific aims:

A. Homogeneous Repeat Typing, Sequencing, and Matching. Develop methods for repeat typing, sequencing and DNA matching that discriminate products by melting temperature instead of size. HLA matching is a simple application with broad medical use in transplantation. Initial progress on sequencing will be redirected to repeat typing in order to achieve an easier, more immediate goal. Synthetic oligonucleotides will be used to study the effect of length and sequence, including repeats of 1-5 bases. After work with synthetic oligonucleotides, dideoxynucleotide termination methods will be developed, followed by asymmetric PCR generation of the extension template. Simultaneous asymmetric PCR and dideoxy-termination reactions have recently been reported, suggesting that our approach is feasible (Murphy KM, Berg KD, Eshleman JR. Sequencing of genomic DNA by combined amplification and cycle sequencing reaction. Clin Chem. 2005 Jan;51(1):35-9)

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 absolute 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.

An additional opportunity for software, enabled by the human genome project, is PCR primer design based on human genome sequence data. The most common problem with PCR is compromised specificity from unexpected amplification of random genomic sequences. It is now possible to search the human genome to exclude primers with 3’-ends that are oriented toward each other that might generate undesired PCR products. First, common repeat sequences (e.g., alu repeats) would be excluded. Then, each chromosome could be scanned for undesired PCR products that might be generated from potential primer pairs. Today’s desktop microcomputers are on the edge of being able to handle this previously formidable problem.

Based on our experiments, mathematical models, and algorithms, we are developing a software suite of programs for primer and probe design to simplify SNP typing, exon analysis, and clinical assay design. These programs are initially posted on an academic server (DNAwizards.path.utah.edu). During the 3rd year of Center funding, we will spin off a software company based on this suite of programs.

C. Digital PCR Chip for Real-Time PCR and High-Resolution Melting Analysis. Last year we proposed to develop hardware to amplify and monitor 1-10 nl reactions on a micro-fabricated chip that could be used for highly parallel real-time PCR and high-resolution melting analysis. Although we were able to observe PCR products in 10 nl channels, we have not been able to conceive of a good means of delivering independent PCR reagents (primers) to thousands of different chambers, and sealing these chambers for amplification and melting. Prior art by Affymetrix or Combimatrix could be used to synthesize the oligos on site, but the primers would still need to be detached and isolated in separate compartments. Although not impossible, concerns over preexisting intellectual property and time to market have led us to suggest a different focused product as an alternative.

We propose to develop a digital PCR chip for commercialization. Burt Vogelstein (PNAS, 96:9236-9241, 1999) first coined the term, “digital PCR”, referring to detecting a minor fraction of altered DNA by limiting dilution. DNA is diluted so that only a single copy is present in each reaction volume. After PCR, products are either absent (no DNA) or present (“digital”) in either wild type or mutated form, so the fraction of altered DNA can simply be counted. Of course, many identical reactions must be performed and available 384-well plates required robotics and considerable reagent volume/cost. Our 1 cm digital PCR chip would have 100-500 channels, each 10 microns in across and holding 1 nl of PCR mixture. Amplification with real-time visualization and melting will allow absolute quantification, allele fraction assessment, and haplotyping, problems not easily solved by current methods.

2.2 Program Methods. Technical background on high-resolution melting and applications are given in the following manuscripts with specific methods 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.

3. Willmore C, Holden JA, Zhou L, Tripp S, Wittwer CT, Layfield LJ. Detection of c-kit-activating mutations in gastrointestinal stromal tumors by high-resolution amplicon melting analysis. Am J Clin Pathol. 122:206-16, 2004.

4. Reed GH, Wittwer CT. Sensitivity and specificity of single-nucleotide polymorphism scanning by high-resolution melting analysis. Clin Chem. 50:1748-54, 2004.

5. Zhou L, Vandersteen J, Wang L, Fuller T, Taylor M, Palais B, Wittwer CT. High-resolution DNA melting curve analysis to establish HLA genotypic identity. Tissue Antigens. 64:156-64, 2004.

6. Liew M, Pryor R, Palais R, Meadows C, Erali M, Lyon E, Wittwer C. Genotyping of single-nucleotide polymorphisms by high-resolution melting of small amplicons. Clin Chem. 50:1156-64, 2004.

7. Zhou L, Myers AN, Vandersteen JG, Wang L, Wittwer CT. Closed-tube genotyping with unlabeled oligonucleotide probes and a saturating DNA dye. Clin Chem. 50:1328-35, 2004.

A. Homogeneous Repeat Typing, Sequencing, and Matching. Matching is the simplest of these techniques. For DNA matching, we use polymorphic sequences such as in the HLA region (reference 5 above). Prior work required a nested PCR amplification. We are now using primers that amplify multiple loci (e.g. HLA-A, -B, and –C) at the same time during a single round of PCR. We have just disclosed this greatly simplified method to TTO and will continue development work during the coming year, including blinded parallel studies with our HLA typing laboratory at the University of Utah. Applications in transplantation and identity testing are attractive.

For sequencing, our hope is to 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 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.

We have been using synthetic oligos to demonstrate the feasibility of sequencing by melting. The figure at the right shows melting curves generated by mixing one long oligo with complementary oligos that terminate in one of the four bases, as would be obtained by dideoxy termination. In general, the sequence can be read from left to right, with each peak of the derivative plot indicating an additional base. However, there are regions of ambiguity, even for short sequences. The spacing along the temperature axis is not constant because different base additions contribute differently to stability. Additional software “intelligence” may help, using peak height, peak width, and expected change in temperature.

The problem of unequal spacing along the temperature axis is not a factor in repeat typing. The number of repeats should be directly correlated to the Tm, perhaps with a decreasing effect as the number of repeats grows larger. For this reason, we propose to focus during the next year on this simpler problem. Repeat typing, although not as flashy as sequencing, is a more attainable goal and still commands a large market. 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 standards.

To investigate the limits of repeat typing, we will 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 25-mer from a 26-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 termination reaction. In last year’s proposal, we suggested different methods for adding a dideoxynucleotide terminator after PCR while maintaining a closed-tube system. A recent publication suggests an even simpler method (Clin. Chem. 51:35-39, 2005). In this article, PCR and dideoxy termination were combined into a single homogeneous asymmetric reaction. PCR predominates during early cycles, while single stranded extension and termination occur during later cycles. We will adapt this method to repeat typing. Although a patent application has been filed by the authors (US 20030219770), the claims are limited to sequencing, and do not apply to repeat typing.

With asymmetric PCR, some double- stranded PCR product will be produced and result in a high Tm peak on melting. In general, this peak can be used for calibration and should not interfere with the lower Tms of the extension products.

If successful at repeat typing, we will return to sequencing. In sequencing reactions, one of four dideoxynucleotides is included in each reaction, producing terminated products, on average, every four bases. A double stranded DNA dye is included in each reaction, and four parallel reactions are necessary for full sequencing, one with each dideoxynucleotide. Alternatively, a four-color melting curve could provide complete sequence information if four primers were labeled with different fluorescent dyes 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.

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.. Our parameters come from rapid modern high-resolution fluorescent melting methods as opposed to traditional slow methods requiring high concentrations of DNA..

In our second year, we have discovered and developed a new mathematical background removal method (U-) which has been proven far superior to traditional baseline algorithms which drastically expands the range and accuracy of our melting analysis software beyond that of any competitor. We also derived new explicit representations for entire melting curves from thermodynamic parameters, and of these parameters from information available at any point on these curves. As mentioned before, the thermodynamic models of oligonucleotide hybridization, dimerization, and mispriming we are determining are based on standard PCR and melting conditions, while other state-of-the-art tools require extreme corrections. The new background removal and melting curve modeling techniques provide further advantages. We have incorporated these techniques, as well as prototype implementations of custom duplex weighting factors for heterozygote modeling, real-time dimerization and genome-wide misprime prediction, mixture quantification, clustering and Bayesian classification algorithms into an integrated suite of user-friendly melting curve modeling and analysis software tools for automatic or interactive design and analysis of genotyping experiments. These developments also impact our software for SNP and exon analysis. The primers designed by SNPWizard and ExonWizard have proven superior to those obtained by other methods which maximizes their ability to detect, identify, and quantify mutations. This has numerous applications in both research, clinical, and industrial settings.

Our current software is in LabView, a graphical language with extensive user interface options ideal for commercial software. We have transferred the DNAWizards beta site to a faster and more reliable server and linked it from a new domain, dna.utah.edu for our COE website, and have received regular and positive feedback from users around the world. Accurate Tm estimation and genome-wide primer analysis form the cornerstones of our proposed software development and the commercial viability of a spinoff.

C. Digital PCR Chip for Real-Time PCR and High-Resolution Melting Analysis. Last year we proposed highly parallel real-time PCR and melting analysis on a two-dimensional matrix of micromachined compartments. Although we can observe fluorescence from nanoliter PCR volumes in micromachined chips, setting up thousands of independent reactions with different primers and isolating these compartments during PCR is difficult to achieve. As a result, we are modifying our objective to achieve highly parallel PCR of the same mixture in nanoliter volumes where the number of template molecules approaches zero. Such a process has been called, “digital PCR”, and was popularized by Burt Volgelstein in 1999 (PNAS, 96:9236-9241, 1999) using standard 96/384-well plates. Two patents have issued. US 6,753,147 is limited to molecular beacon detection, while US 6,440,706 requires dilution of nucleic acid template. Because we use melting analysis and will limit the amount of DNA by volume rather than dilution, we believe we are free of this art.

The proposed layout of our digital PCR chip is shown below. A small active area of 1 square cm simplifies optics and temperature control needs. Each channel will contain 1 nl of PCR mixture (10 microns x 10 microns x 1 cm) and have a length to width ratio of 1,000. At the normal template concentrations we use for PCR (15,000 copies per 10 ul), this results in 1.5 copies of human genomic

DNA per channel. One hundred to five hundred channels can easily be placed on a 1 cm2 chip. The sample is loaded into all channels at the same time through a syringe fitting. The chip is thermally cycled for PCR from one side, and imaged on the other side for real-time PCR and melting analysis. Initial work will focus on instrumentation (temperature cycling and imaging) and material compatibility for PCR.

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

|Year |Repeat Typing Matching |Software |Digital PCR |Alliances |

| |Sequencing | | | |

|2004 |Synthetic oligo Multiplexing |Background subtraction |1 nl melting |License unlabeled |

| |feasibility several loci |and Tm parameters |curves |probe technology |

|2005 |Homogeneous HLA transplant |Genome-wide |1 nl real-time |Spin off |

| |repeat typing kits |mis-priming tool. |PCR | |

|2006 |Research kits for Identity |Domain melting |Chip with 100- |Spin off HLA and |

| |repeat typing |prediction |500 channels |repeat typing |

|2007 |Sequencing Forensics |Integrated analysis suites |Methods |Spin off digital PCR |

| | | |development |chip technology |

2.4 Anticipated Results. Our technology is less expensive and much easier to use and implement 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/matching, analysis software, and digital PCR chips and instrumentation. 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 96-384 well instruments and development of digital PCR technology.

Homogeneous repeat typing, sequencing, and matching 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, ca n replace 95-98% of current DNA sequencing. Derivation of nearest neighbor parameters for accurate Tm predictions and genome-wide mis-priming prediction capability will provide a strong competitive advantage for DNAWizards software. This software company will be spun off in the 3rd year of the Center. Commercialization of the digital PCR platform will be a focus in later years of Center funding.

2.5 Impact of COEP support. The major impact of COEP support has been and 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. Dr. Palais is currently teaching a new course based on the mathematics of DNA analysis.

New for this year, we hope to enlist the services of a professional LabView programmer, Sam Buckley, as a consultant. His task will be to take software developed by academics (Palais, Wittwer) and transform it into stable marketable products, in anticipation of spinning off .

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, there are several opportunities for direct commercialization of the technology in the coming years. 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, Sequencing and Matching: These novel alternatives to conventional methods are 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”) currently launched as beta-test instruments with STTR funds. In addition, we anticipate that other companies will develop high-resolution melting instrumentation and have received word that at least one (Corbett Research, Australia) is planning a release this year.

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 transplantation, 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 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 and third years 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.

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.

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.

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 common will be infectious disease identification and genotyping. $100-$500 custom design per assay, $500 software package.

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.

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

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 using homogeneous DNA analysis to perform fast, accurate, and inexpensive clinical assays, specializing in SNP typing, transplantation, repeat analysis, and possibly sequencing of short fragments.

C. Digital Real-Time PCR and High-Resolution Melting Analysis. Digital PCR is a good solution for absolute quantification, relative genotype estimation and haplotyping, common problems in the research and clinical laboratory. Absolute quantification is obtained by counting the number of fluorescent kernels that grow during diffusion limited PCR. Relative genotype estimation quantifies the amount of one sequence in comparison to another reference sequence, and has many applications in oncology and genetics. Haplotyping (establishing which alleles are associated on the same strand) can be obtained by analyzing single strands during digital PCR. Specific products include the digital PCR chips themselves, and an instrument for reading the chips. Estimated price for the bare chips is $10 - $20. The instrument, including capabilities for PCR temperature cycling, real-time monitoring and high-resolution melting analysis is estimated to cost between $20,000 and $60,000.

3.2 Maturity of Technology. The feasibility and certain applications of high-resolution melting analysis have been demonstrated. Further funding is required to develop applications such as repeat typing, sequencing, and matching, to develop a software suite for melting curve prediction, analysis, and assay design, and to create disposables and an instrument system for digital PCR. 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 should be ready in the Center’s third year with several alpha test sites on board. A market launch in 2006 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 third year. We will also complete derivation of nearest neighbor parameters relevant to high-resolution melting analysis. This will provide better Tm estimates at DNAWizards than otherwise available. In addition, a tool to predict and avoid unintended amplification from genomic DNA should provide a strong competitive advantage.

Our initial experience with microvolume PCR suggests that monitoring 1 nl volumes with fluorescence is feasible. Instead of many independent PCRs with different primers, we will focus on a simpler problem: amplifying the same reaction mixture in 100-500 different channels. This project involves collaboration with Dr. Gale in Engineering, an expert in micromachining technology. Critical steps include demonstration of nl real-time PCR and melting analysis for absolute quantification, genotype fraction, and haplotyping.

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 happens after PCR that is complex using 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 base 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. The following table summarizes our competitive advantage in repeat typing, sequencing and matching.

| |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 |30 min |150 min |

|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 |10 ~ 30 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 and third year of funding are being 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.

Other than standard 96 and 384 well amplification platforms, there is no commercial system for digital PCR. As a result, large reaction volumes and automation are required to set up the numerous reactions often used for digital PCR. We hope to reduce sample volumes about 10,000-fold, to enable us to work with 1 nl volumes. EXACT Sciences has licensed Vogelstein’s work, but as previously mentioned, we believe our proposed methods lie outside of his patents. Fluidigm is a startup company with expertise in microfluidic valving that may be introducing a system at a CHI conference on March 20 of 2005.

3.4 Technology Transfer

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

|Product |Organization |Purpose of Evaluation |

|Repeat typing, sequencing, and |Roche Applied Sciences, Germany |Commercial viability and international |

|matching (reagents, software, and | |distribution. |

|ASRs) | | |

| | | |

| |University of Utah, H & I laboratory, core|For use in transplantation and core |

| |sequencing |facilities |

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

| | |clinical research: molecular genetics and|

| | |infectious disease testing. |

| |Mayo Clinic | |

| |Emory University |Infectious disease testing |

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

| |ARUP |Oncology R&D |

|Digital PCR | | |

| |Quest Diagnostics |Haplotyping, quantification |

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 during the emerging phase of the Center’s technologies.

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 future technologies will depend on the Center’s progress and commercial potential.

• 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 2005 and March 2006.

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 could provide rapid custom reagent delivery services that are integrated with Web-based assay design tools. Furthermore, we envision either licensing our digital PCR technology to an existing Utah company or formation of a new microfluidics company to commercialize the disposable chips and instrumentation for digital PCR.

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). Another 5 million assays are performed for fragment analysis to characterize repeat sequences for human identification, gene mapping and linkage analysis[1]. In about 10% of re-sequencing, the stretch of DNA examined is known to harbor a large number of possible sequence variances, the target market for sequencing by melting analysis. Thus, a potential annual market of 10 million assays exists for the Repeat-typing and Sequencing 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 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. The estimated global market size is roughly twice these numbers (80,000 assays).

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 generic software products 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] Demand for the Center’s digital PCR technology does not overlap conventional array technology, but is estimated at 5-10% of this market. Digital PCR can answer questions of quantification, genotype fraction and haplotyping that are not easily answered by conventional real-time or array technologies.

3.6 Market Projections

Mutation Scanning: Based on product sales between October 2003 and January 2005, 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 development of 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 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 digital PCR (microarray) system, based on known economics of similar products. A 3.4% penetration is required for generic reagents, while ASRs require 7% penetration in 2008.

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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. Twelve new jobs were created as a result of the Center’s activity as of Jan 2005.

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

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

• Provide opportunity for infusion of federal funds through SBIR and STTR 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 ($70 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 Principal Investigator (Dr. Carl Wittwer) is a tenured professor of pathology at the University of Utah. He has been at the University for the past 17 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 90 peer-reviewed articles and holds over 18 US 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 120 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 12 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 12 publications and has a Center of Excellence in Biomedical Microfluidics applying for second year funding.

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 algorithm development and software work. Sam Buckley is an expert LabView programmer who will be retained as a consultant. Dr. Gale will be responsible for progress on the chip array system. Scott Sundburg is a graduate student in bioengineering who will work on the digital PCR microarray system.

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 Pryor and Gundi Reed (senior laboratory technologists), Joshua Vandersteen (part-time undergraduate student), and Matt Poulson (graduate student). Measurable milestones for the next year of funding will be: 1) successful repeat typing in a homogeneous system, and 2) new parameters for Tm estimation under PCR and melting conditions.

Software Group: Includes Dr. Bob Palais, Ian Odell (bioinformatics technologist) and Sam Buckley (professional LabView consultant). Measurable milestones for the next year are to post web versions of the software wizards and to complete human genome screening for undesired PCR products.

Microarray Group: Includes Dr. Bruce Gale and a graduate student, Scott Sundburg. The measurable milestone for the next year is to complete instrumentation to demonstrate 1 nl real-time PCR and melting analysis on a micromachined 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. New to this year’s request is consulting time for a professional LabView programmer. This is the reason for the increased budget request for next year and is considered crucial if is to be launched next year.

5. Budget Narrative

1. Original Center Total Budget: We are nearing completion of our second 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 | | | | | |0 |

|Other | | | | | |0 |

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

| | | | | | | |

|Project Income | | | | | | |

|Royalities |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 second year mostly followed our original projections. Granted COEP funds were $144,000, reduced from the requested $160,000 (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. In addition, two fast-track STTR grants have been funded through NIH to advance Center technologies through a Utah company.

3. Current and Pending Support. We have four current sources of funding. The technology commercialization seed grant from the University of Utah is funded through June 30, 2005. The private industry R&D grant from Idaho Technology is funded for at least the next two and a half years. For the next year, it will provide some 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 $144,000 from the State of Utah for our Center of Excellence on Homogeneous DNA Analysis. In addition, we have two funded fast-track STTR grants to commercialize Center technology that will be used as matching funds. These funding sources are listed in tabular format below:

|Title |SNP Typing without Probes |

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

|Dates/Amount |7/03 – 6/05, $70,000 |

|Title |Fluorescent Nucleic Acid Techniques |

|Agency |Idaho Technology |

|Dates/Amount |1/05 – 12/07, $1,050,000 |

|Title |Center for Homogeneous DNA Analysis |

|Agency |State of Utah |

|Dates/Amont |7/04 – 6/05, $144,000 |

|Title |Homogeneous Mutation Scanning |

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

|Dates |8/04 – 1/07 |

|Amount |$850,000 |

|Title |A System for Rapid PCR, Mutation Scanning and Genotyping |

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

|Dates |3/05 – 9/07 |

|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/matching 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 digital PCR 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 first and second years (purple) and over the next three 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 |350,000 |350,000 |350,000 |1,886,000 |

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

|NIH STTRs (University component) | |50,000 |187,500 |375,000 |137,000 |850,000 |

|Sub-total cash funding committed/received |507,000 |439,000 |537,500 |725,000 |487,000 |2,736,000 |

| | | | | | | |

|Cash funding pending | | | | |0 |

| | | | | | | |

|Sub-total cash funding pending | | | | | |0 |

| | | | | | | |

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

|Equipment donated | | | | | |0 |

|Other | | | | | |0 |

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

| | | | | | | |

|Project Income | | | | | | |

|Royalties |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 |539,000 |637,500 |860,000 |687,000 |3,330,500 |

|COEP FUNDING |150,000 |144,000 |176,000 |160,000 |160,000 |790,000 |

|MATCHING RATIO (Matching/COEP) |4.05 |3.74 |3.62 |5.38 |4.29 |4.22 |

|MATCHING RATIO, COMMITTED FUNDS (without royalties or U |3.15 |2.81 |3.05 |4.53 |3.04 |3.35 |

|funds) | | | | | | |

|TOTAL PROJECT FUNDING |757,000 |683,000 |813,500 |1,020,000 |847,000 |4,120,500 |

| | | | | | | |

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

|Personnel |407,000 |445,000 |463,000 |568,000 |512,000 |2,395,000 |

|Capital Equipment |125,000 |19,000 |119,000 |148,000 |70,000 |481,000 |

|General Expense |225,000 |214,000 |196,500 |304,000 |265,000 |1,204,500 |

|Subcontracts |0 |5,000 |35,000 |0 |0 |40,000 |

|USE OF PROJECT FUNDS--TOTAL |757,000 |683,000 |813,500 |1,020,000 |847,000 |4,120,500 |

| | | | | | | |

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

|Personnel |120,000 |120,000 |120,000 |130,000 |130,000 |620,000 |

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

|General Expense |30,000 |19,000 | 21,000 |30,000 |30,000 |130,000 |

|Subcontracts |0 |5,000 |35,000 |0 |0 |40,000 |

|USE OF COEP FUNDS--TOTAL |150,000 |144,000 |176,000 |160,000 |160,000 |790,000 |

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 toward commercialization in Utah.

4. University’s Financial Support. In the second 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 graduate 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 |

|Scott Sundberg (Eng) |Instrumentation |50 |15,000 |

|Total | | |120,000 |

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 in Engineering and technology transfer to commercial partners.

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 are a natural match for implementing the technique development and wet chemistry components of the project. She will work closely with two senior laboratory technologists, one part-time medical student, and two part-time undergraduate students (all funded through matching sources).

For the next year we are requested $35,000 in subcontracts. The major subcontract is for $30,000 to Sam Buckley, a professional LabView programmer. This subcontract is necessary to translate our academic software into professional programs. Mr. Buckley has over 5 years of professional LabView experience and is currently an independent contractor. In addition, a subcontract to Dale Meier of for web design of the DNAWizards site in the University of Utah department of Pathology is requested. This will reserve Dr. Palais time for more scientific work.

General expenses ($21,000 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. 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. 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 and 3rd years of Center operation should break even during the 4th – 5th 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, sequencing and matching 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, sequencing, and matching. 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 dot com 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 is a high-risk challenge. The potential returns are significant and can only be extrapolated. The worldwide real-time PCR market is estimated at 500M, growing at 10% a year. If we can obtain a 2% market share in 5 years with our digital PCR system, this would be 16M/year. Options for commercialization include forming a new Utah company, licensing to an existing Utah company or partnering with an existing array company. All options will be considered, but the first priority is a working system at reasonable cost with an open market niche.

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[1] Market Analysis: Crestwood Technology Inc.

[2] Biomedical Sciences Group, 2002

[3] Affymetrix financial report

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Scott Sundburg

Web Design

Dale Meier ()

Software - Algorithms Bob Palais, PhD

Ian Odell

Sam Buckley

Method Development Luming Zhou, PhD

Rob Pryor

Joshua Vandeersten

Matt Poulson

Engineering/Microfluidics

Bruce Gale, PhD

Fig.1. Two pairs of matched siblings at the HLA locus for transplantation

[pic]

Project Coordination

Carl Wittwer, MD, PhD

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