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A gene prediction method which combines sequencing error models and codon usages in a hidden Markov model to improve the prediction of protein-coding region in short reads. The performance of FragGeneScan was comparable to Glimmer and MetaGene for complete genomes. But for short reads, FragGeneScan consistently outperformed MetaGene (accuracy improved ∼62% for reads of 400 bases with 1% sequencing errors, and ∼18% for short reads of 100 bases that are error free). When applied to metagenomes, FragGeneScan recovered substantially more genes than MetaGene predicted (>90% of the genes identified by homology search), and many novel genes with no homologs in current protein sequence database.