7
Calipher Technologies, Inc.
geared more toward customers with
high-horsepower needs, the Bioana-
lyzer is designed for everyday labora-
tory requirements. The function of the
Bioanalyzer is to miniaturize and
automate commonly performed gen-
eral-purpose lab experiments. But the
chip applications can also include
DNA and RNA quantification and
analysis.
Regarding competition among
those selling miniaturized experimen-
tation equipment, there are currently
none today other than Caliper/Agilent
with a similar product on the market -
- and thus no direct competition ex-
ists. The two companies are unique in
this respect. However, Caliper/Agilent
are not alone in the DNA/RNA ana-
lytical instrument business, where
they will be operating along with es-
tablished instrument manufacturers
and specialty reagent suppliers.
Instrument manufacturers selling
DNA analyzers eventually will be
competing against the Personal Lab
System. Such companies represent the
established technology in the field and
provide a range of applications for
DNA and RNA analysis and quantifi-
cation. Caliper/Agilent, with the in-
troduction of new DNA and RNA
analytical tests, will overlap more and
more with these companies in their
product offerings. And, when the ca-
pability to analyze whole cells is
achieved by Caliper, it will begin to
compete against companies selling
flow cytometry equipment. Due to the
decreased volume usage of reagents
afforded by the use of LabChip Sys-
tems, companies selling specialty rea-
gents could begin to feel some pres-
sure over the long term. However,
widespread adoption of the Personal
crofluidics utilizes such small
amounts of reagents that enables ex-
periments to be done at significantly
reduced cost. In short, Caliper's Lab-
Chip System shrinks a whole labora-
tory to a PC-sized box.
Caliper's LabChip technology
currently includes high-throughput
screening and personal lab systems
that contain all the hardware and soft-
ware necessary to perform lab analy-
ses, and application-specific chips.
In September 1999, Caliper intro-
duced its first product line to the mar-
ket, Personal Laboratory System,
which is being sold in collaboration
with Agilent Technologies
("Agilent") as Agilent 2100 Bioana-
lyzer ("Bioanalyzer"). Agilent manu-
factures the Bioanalyzer, while Cali-
per manufactures the chips used in
this instrument and "sipper chips" for
its high-throughput systems. Under
the terms of the agreement between
Agilent and Caliper, Agilent is re-
sponsible for manufacturing and mar-
keting the Personal Lab System in-
struments. Caliper manufactures the
chips and sells them to Agilent at a
transfer price that is essentially equal
to Caliper's cost of goods for the
chips. Agilent sells the chips and in-
struments to Personal Lab System
customers, sharing the gross margin
with Caliper. In addition to the gross-
margin split, Caliper will receive on-
going research and development fund-
ing from Agilent.
With Agilent as its
partner, Caliper has formed multiyear
collaborations with Sugen, Neuro-
crine, Millennium Pharmaceuticals,
Amgen, Eli Lilly and Roche Bio-
sciences.
Caliper announced on April 11,
2001 that the company has been
awarded ISO 9001 certification for
the design and manufacturing of its
chips and reagents. This certification
affirms that Caliper's chips, reagent
design and manufacturing processes
meet customers' product quality re-
quirements and service expectations.
The purpose of this designation is to
avoid limited manufacturing capacity
for LabChip System products and to
prevent variability in manufacturing
yields for chips.
The placement of instruments
will provide a source of revenue to
Caliper, but the system's real value
lies in chip usage. In general, chips
are a higher-margin product and Cali-
per receives a larger share of the
gross-margin split from Agilent on
these sales. By 2002, sales derived
from disposable chips are expected to
be the single largest source of revenue
for the Personal Lab System business.
Thus, it is important for Caliper to
introduce new chips such as the one
that will be shipped in early May of
this year, the DNA 1000 LabChip kit
used for the automated analysis of
DNA fragments to determine their
size and concentration. The new
member of the LabChip family, which
is designed for use with the Agilent
2100 Bioanalyzer, allows molecular
biologists to analyze PCR products
and small restriction digests with
speed and precision.
The Personal Lab System is com-
prised of an instrument reader the size
of a bread box, a personal computer,
software, disposable chips, and related
reagents. The system is capable of
performing many types of laboratory
experiments, depending on the type of
chip used. Unlike Caliper's high-
throughput instruments that are
BioTech Sage Report, May 2001
