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Applied DNA announces government deal

James Hayward

James Hayward Credit: Newsday, 2011 / Thomas A. Ferrara

Applied DNA Sciences Inc. does not make a profit, and its stock sells for pennies a share. But that is only part of the story. The other part, the part that some analysts believe could one day put the Stony Brook-based company on the map, can be summed up in a word — counterfeiting.

The World Customs Organization estimates counterfeiting will double to about $1.2 trillion by 2014, from a few years ago. So bring on the anti-counterfeiting companies.

Applied DNA Sciences announced Tuesday a significant agreement with a U.S. government agency that it declines to name to demonstrates the advantage of using its unique technology to block counterfeit computer chips in what it calls “mission-critical government supply chains.”

Company chief executive James Hayward said the agreement is largely secret for security reasons. But Applied DNA Sciences’ technology has been attracting attention. Simply put, the company’s technology extracts DNA from plants, scrambles it into unique genetic codes that are unlike anything in nature, and imprints it on product labels and other items, or even onto the product itself.

Jeff Kessler, managing director for the investment-banking firm Imperial Capital, who has studied the industry, now considers Applied DNA Sciences a “leader” in the anti-counterfeiting business. “DNA seems to be about the only way we have been able to mark these products and technologies that is virtually permanent and is not clone-able,” Kessler said.

Hayward said the importance of the new government contract is its future potential. While Applied DNA Science has provided its DNA markers on apparel, pharmaceutical products and cosmetics, the need for anti-counterfeiting on chips is enormous.

“This [counterfeiting of chips] is a global issue that affects governments and corporations alike,” Hayward said.

Applied DNA Sciences is stashed away in on the campus of Stony Brook University, and does not often make news. That may change. Kessler does not offer a rating on the company. But, he said, Applied DNA Sciences has entered a new phase from research and development -- that of selling its products.

“That doesn’t mean they’re home free, but they’re no longer just an R&D freak,” Kessler said.

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