For the Lynx, the merger--and especially the additional cash infusion--appears to be its only lifeline: The floundering gene expression-analysis company today said that its independent auditor, Ernst & Young, recently raised "substantial doubts" about its ability to stay solvent. Lynx said it reported this announcement to the US Securities and Exchange Commission in an amended filing to its 2003 year-end earning report.
In a paragraph attached to the amended report, Lynx said the company's "losses since inception, including a net loss for the six months ended June 30 ... [indicates that the company] "will require additional funding to continue its business activities through at least December 31, 2005 and raises substantial doubt as to Lynx' ability to continue as a going concern."
Lynx has pocketed at least $2.5 million from Solexa as part of the companies' merger agreement, disclosed in August. Today's announced means Solexa will give Lynx an additional undisclosed sum to help it "accelerate development of ... [a new] DNA sequencing instrument.
"The intent of this [new funding] is to accelerate the integration of both companies' technologies prior to completing" the merger, the firms said in a statement.
As GenomeWeb News reported in September, Lynx and Solexa signed a definitive merger agreement. As part of the merger, which is expected to be completed later this year, Lynx will issue up to 29.5 million shares in exchange for all of the outstanding shares and share options of Solexa. The combined company will continue to operate both in the
Under a separate agreement, Lynx has received $1.25 million in loan advances from Solexa. It will receive another $500,000 following the merger agreement and $750,000 in October. The cash infusion announced today is in addition to this $2.5 million amount.
The mew company plans to develop novel DNA sequencing technology, based on molecular arrays, and to release its first commercial instrument for whole genome resequencing and for gene-expression analysis by sequencing next year.
Solexa's $14.4 million financing round was led by Amadeus Capital Partners. Existing investors Abingworth Management, Schroder Venture Life Sciences, and Oxford Bioscience Partners also participated. Including the Series B round, Solexa has raised $40 million in total.