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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Rocketman who wrote (5408)	8/2/1998 2:19:00 PM
From: Vector1	Read Replies (2) \| Respond to of 9719

Rman what are your thoughts on the following: -------------------------------------------------------------------------------- 08:24am EDT 31-Jul-98 Deutsche Bank Securities (To/Medina 212 469-5694) AFFX NV The Week Ahead In Biotech In recent months, the investment community has begun to pay more attention to Affymetrix's patent dispute with Incyte Pharmaceuticals. In this dispute, Affymetrix claims that Incyte's DNA array technology infringes its fundamental patent on its GeneChip System. Affymetrix was recently granted a new patent (patent # 5,744,305) that puts it in a stronger position to win this dispute. In our view, however, the real potential benefit from this legal crossfire could be to force these companies to rethink their respective business strategies, specifically, their pricing strategy for their DNA chips. If these two companies can reach an agreement, and if Incyte will have to pay Affymetrix royalties on the chips they sell in the future, it could also serve to prevent Incyte from under-pricing its own DNA chips. This would be a major victory for both companies. We have already witnessed how under-pricing in the genomics industry has left a large sum of money on the table. In our opinion, it would be a pity if the gene chip companies go through similar competitive, price-discounting strategies before the commercial development of the industry sector is barely underway. Therefore, we think these patent discussions, in the best case scenario, could serve to stabilize gene chip pricing and force all companies involved to carefully think about their business strategies.