Affymetrix Rises on Illumina Verdict

Affymetrix Shares Jump on $16.7 Million Patent Verdict Against Rival Illumina

NEW YORK-- Shares of Affymetrix Inc. climbed Wednesday after the company, which makes products used in analyzing genetic information, won a series of patent infringement claims against Illumina Inc.

Affymetrix said Tuesday a Delaware jury awarded it $16.7 million, finding that Illumina's scanners, software, arrays and other products infringed on five Affymetrix patents.
Robert W. Baird & Co. analyst Quintin Lai upgraded the stock to "Outperform" from "Neutral." He said the jury awarded Affymetrix a royalty rate of 15 percent on $111 million in revenue from 2002 to 2005 -- a higher rate than Affymetrix had sought. Illumina says it will appeal the ruling.
"If we assume 15 percent as the forward royalty rate, then Affymetrix stands to benefit from Illumina's current high-growth potential," said Lai. He raised his price target for the stock to $35 per share from $26, and reduced his target for shares of San Diego-based Illumina to $34 from $52.
Shares of Santa Clara, Calif.-based Affymetrix rose $1.99, or 7.5 percent, to $28.61. Illumina stock was up 80 cents, or 2.7 percent, to $29.63. Both stocks trade on the Nasdaq Stock Market.

REMEMBER that gene chips are a powerful tool that researchers use to identify genes are are activated or inhibited in disease states. Basically, DNA sequences are stuck to a slide and disease DNA is passed over it, where alike base pairs bind to each other or not. It's then put in a machine to look for differences. I posted about how this method works; on 9-8-06 you can search for that date and find more indepth info.

AFFX is up in afternoon trading 6.3% (or $1.71 per share ) to 28.36/share. The stock was upgraded as well.