NEW YORK, Nov. 11 (GenomeWeb News) - Shares in Lynx Therapeutics were up 11.6 percent at $2.99 in mid-afternoon Nasdaq trading, two days before the embattled company is to report its third-quarter earnings.
The stock spiked early in the day in heavy trading, reaching $3.10 at one point, as investors reacted on hope that the company's fortunes will turn around after it successfully closes its merger with British sequencing-technology company Solexa.
The run-up in stock price means that the shares surpassed the ground they lost late last month after Lynx disclosed that its financial position was more precarious than originally reported, and that Ernst & Young, its independent auditor, raised "substantial doubts" about the company's ability to remain solvent.
On Oct. 29, Lynx said that Solexa planned to pour additional cash into Lynx in an attempt to speed the development of new sequencing technologies in time for their merger. "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 that day.
Lynx has pocketed at least $2.5 million from Solexa as part of the companies' merger agreement, disclosed in August. Last month's funding means Solexa will give Lynx an additional $500,000 to help it "accelerate development of ... [a new] DNA sequencing instrument, according to BioArray News, a GenomeWeb News publication.
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 Oct. 29 is in addition to this $2.5 million amount.
The new 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.