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Lynx Delays Vote on Solexa Merger Until March; Expects Compliance with Nasdaq Regs


Lynx Therapeutics moved its delayed annual shareholders' meeting back, setting the new date for March 1, the company announced this week.

The Hayward, Calif.-based gene-expression services firm had initially chosen Feb. 17 for the first meeting of its shareholders since 2003. It is hoping to amass enough votes at the shareholder meeting to secure its merger with Solexa, an Essex, UK-based DNA-sequencing products developer, with whom it signed a definitive merger pact in September (see BAN 10/6/04).

According to a spokesperson for Lynx, the meeting has been rescheduled following the approval of its S-4 registration statement by the US Securities and Exchange Commission.

Mary Schramke, Lynx' acting CEO, said in a Jan. 7 press release that her company did not want to incur more costs by holding two shareholders' meetings back to back.

The spokesperson clarified the decision."They knew they'd have to hold another meeting for the pending Lynx-Solexa agreement, so they decided to postpone their meeting instead of having two," she said.

In a public statement this week, Schramke suggested that Lynx shareholders approve the merger.

"We urge our stockholders, regardless of the number of shares they hold, to vote in favor of the proposals ... including the items relating to the proposed Solexa combination," Schramke said in the statement.

"We believe joining forces will provide strategic and financial benefits to Lynx stockholders, particularly in reducing the cost and time to develop and commercialize our jointly owned technology."

Lynx's CEO also promised stockholders that following the meeting Lynx would "again be in full compliance with Nasdaq listing requirements." Lynx received a Nasdaq Staff Determination letter in early January that informed the company that its securities were subject to delisting from the Nasdaq SmallCap Market because the company failed to hold an annual meeting of its stockholders in 2004.

Lynx subsequently appealed the Nasdaq decision, gaining a stay until the matter is heard before the Nasdaq Listing Qualifications Panel on Feb. 9.

The staff determination letter is the latest setback for the financially struggling company, which was transferred to Nasdaq's SmallCap market in May 2003, as the firm's equity of $8.1 million at the time was too low to maintain its position on the market.

Before it formally merges with Solexa, Lynx must also meet a requirement that its stock trade above $4 for 90 trading days preceding the merger. The company's stock had been hovering below the $4 threshold since mid-December, but has experienced a climb in the past week. It closed at $4.16 on Monday, up $.09.

The company has said in SEC filings that it intends to do a reverse split of its stock. The spokesperson said that shareholders would vote on a reverse split at the meeting. The company completed a similar reverse split of its stock using a 1:7 ratio in January 2003 (see BAN 5/28/03).

One possible reason for the upswing in the company's stock is that it appears that the merger with Solexa may finally be consummated, five months after the two companies came to an agreement. In those five months Solexa has provided Lynx with substantial financial support, advancing the company $1.25 million prior to the initial merger agreement in September, another $1.25 million in October, and an additional transfusion of $500,000 in November (See BAN 11/03/04).

Lynx also received a $3 million bank loan from Silicon Valley Bank in December.

Simon Bennett, Solexa's business development director, told BioArray News that his company regards Lynx's Nasdaq woes as a "formality" in the merger process. "There is little anxiety, [and] we are regarding it as a formality," he said.

"Our first priority is that the merger goes smoothly, and we are integrating the teams," Bennett added.

According to Bennett, the company has already decided on a new brand name, which he would not disclose, for a combined product that it plans to launch within the next 12 to 15 months. He noted that the product would be based on the cluster technology that the company and Lynx jointly purchased from Swiss firm Manteia in March 2004.

The first product will be an ultrahigh-throughput platform aimed at resequencing the whole genome and providing genome-wide transcriptome analysis, he said.

The firms have yet to announce a new name for the combined entity.

-- JP

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