Seeking to capitalize on a growing market for microarray testing of DNA, Paradigm Genetics has launched a new business line based on that concept.

The biotechnology firm announced Wednesday it would work with Agilent Technologies as part of the new effort.

The microarray market is predicted to exceed $1 billion a year by 2007, according to marketing analysis firm Kalorama Information.

“This microarray business is a natural outgrowth of our expertise in gene-expression profiling, evidenced by our work for NIEHS,” said Heinrich Gugger, Paradigm’s president and chief executive officer.

Paradigm recently won a $23.8 million contract from the National Institute of Environmental Health Science for toxicogenomics study. As part of that deal, Paradigm will use its gene expression profiling platform to process DNA microarrays.

“We’re already providing microarray services for the federal government, and it’s the logical next step to extend those services to meet the demand of the larger marketplace,” Guggeer said in a statement. “We are now launching a microarray services business, leveraging Agilent’s technologies and referrals, which we will become a source of immediate revenue for Paradigm.”

Paradigm (Nasdaq: PDGM) rallied on the news, climbing 13 cents to 50 cents a share.

Microarray studies measure DNA over time to detect changes, including those caused by medication or other substances.

Agilent’s sales force will provide referrals of companies seeking microarray processing services to Paradigm, and Paradigm in return will be a service provider of Agilent products.