The bead goes on at Lynx therapeutics, as the company continues to build up its roster of collaborators for its microbead-based Megaclone DNA detection technology and to increase its revenues from these collaborations.
July 18 the company reported second-quarter revenues of $4.4 million, up 57 percent from the $2.8 million in revenues reported during the same period last year.
But even with an $11.1 million cash infusion received from a private financing round completed in late May, resources are still tight enough at the Hayward, Calif., company to leave some wondering whether it will burn out before it sees the light of profitability.
At the end of June, Lynx had $15.8 million in cash, but burned through $7 million during the quarter, meaning that it would run out of cash in the beginning of 2002 if it continues on course.
Chief financial officer Ed Albini said in Lynxs second quarter conference call that the companys financial health going into 2002 depends on how much cash we can generate from customer and collaborative relationships, though he added that he expected there would be a point when these relationships will provide the lions share of our cash needs.
Lynx CEO Norrie Russell meanwhile assured investors that for the second half of the year, we dont anticipate burning anywhere near [the cash] we burned during the first half of the year.
Additionally, Albini and Russell said, second-quarter revenues do not yet reflect the spate of new collaborations the company has signed in the first and second quarters of this year.
Since the beginning of 2001, we have added seven new collaborators, said Russell. This is a very healthy time for us in terms of the message being appreciated. Were on a wave.
In the second quarter Lynx signed collaborations with animal genomics company AniGenics and marine genomics company GenoMar, in addition to signing a second agreement with AstraZeneca for disease gene expression analysis.
The company also announced July 18 that it was extending a license for Megaclone to BASF-LYNX, its minority-owned joint venture with German chemical giant BASF, through 2007. Under the agreement, BASF-LYNX will pay Lynx a multimillion-dollar sum for the license.
These agreements add to the first-quarter collaborations the company began with AstraZeneca for asthma SNP detection, with Celera for gene expression data, with prostate cancer biotech company UroGene to identify cancer genes; and with plant genomics company Phytera to identify anti-oxidant polyphenol synthesis genes.
During the year, the company also signed on five academic collaborators for Megaclone-based technology.
Megaclone uses microbeads to sort millions of DNA molecules according to sequence. Each different molecule binds to a microbead, with each bead being able to hold up to 100,000 identical molecules. Fluorescent tags on each bead indicate how much of a particular DNA molecule is on the bead.
Lynx has developed several Megaclone applications, including Megasort, which uses Megaclone to measure comparative gene expression levels in different samples; Massively Parallel Signature Sequencing (MPSS) technology, which can identify genes by a 16 to 20 base signature sequence and can detect the levels of gene expression in cells; and MegaType SNP detection technology.
Additionally, Lynx is developing Protein Profiler, a microbead-based protein profiling technology for proteomics experiments.
Protein Profiler is in the late stages of development, Russell said. The interest generated has been enormous, and we are committed to commercialize the project by the end of the year.
Russell also said that the company has a healthy pipeline of conversations and discussions and negotiations for future Megaclone-based collaborations.
The extension of Lynxs technology license agreement with BASF-LYNX, allows the Heidelberg, Germany-based joint venture to continue to use Lynxs MPSS and Megasort technologies in its neuroscience, toxicology, and microbiology programs through the end of 2007.
The companies also separately agreed to increase the capital reserves of BASF-LYNX, in which Lynx has more than a 40 percent stake.
Lynxs operating expenses for the second quarter, which Albini said focused on development of Megatype and Protein Profiler technologies and on internal discovery projects, as well as on higher personnel and facility related expenses rose to $9.0 million, from $6.2 million for the year-ago quarter. These included $1.2 million in costs related to service fees, up from $953,000; $5.9 million in R&D expenses, up from $3.8 million, and $2 million in general and administrative expenses, up from $1.5 million for the second quarter of 2000.
Albini said new collaborations signed this year will be kicking in or ramping up their work in the latter half of this year, and will be important in getting us toward our revenue targets, which he estimated at $5.5 to $6 million for the third quarter, and $20 to $25 million for the year.
Meanwhile, the companys losses for the quarter widened to $4.6 million, or 37 cents per share, but beat Wall Streets expectations of 40 cents per share based on a survey of three brokers conducted by First Call/Thomson Financial.
If the companys new collaborations do not completely cover its costs by the end of the year, Albini said. we will look for opportunities to finance [the company] in other ways.