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Solexa Ltd. and Lynx Combine as Solexa, Inc.; Shop Plans Gene-Analysis Platform this Year


Solexa Limited has completed its previously announced merger with Lynx Therapeutics, and will follow the deal with the release of a multi-faceted gene-analysis platform later this year, the new company announced this week.

The new entity, to be called Solexa, said that it had incorporated itself in the US as Solexa, Inc., and that Solexa Ltd. has become its wholly owned UK subsidiary. The company received approval for listing on the Nasdaq SmallCap Market and began trading March 7 under the ticker symbol SLXA.

Nasdaq deemed the combination a “reverse acquisition” according to Solexa, and the company is now publicly traded.

The new company will be led by top brass from Solexa and Lynx. John West, Solexa’s former CEO, will retain his title at the new Solexa, which will be based in Lynx’ former headquarters in Hayward, Calif., while Mary Schramke, who has been acting-CEO of Lynx since December 2004, has taken the position of vice president of genomic solutions.

The new board of directors will include members from the pre-closing boards of both companies, and Craig Taylor, Lynx’ former chairman, will stay on in this capacity at Solexa.

According to Simon Bennett, Solexa’s director of business development, the company’s UK office in Cambridge “will run pretty much as it does now.” Bennett also said that the Cambridge office would continue to staff 60 employees, “most of which are engaged in research and development, and in refining the technology.” The UK office will also be home to Solexa’s European sales and marketing team, Bennett added.

Solexa’s US headquarters will take advantage of Lynx’ technical team and sequencing capabilities, Bennett said.

“Few people recognize that Lynx has a suite of sequencing machines that really equals the sequencing capacity of a major genome center,” he added.

Bennett also stressed that Solexa would continue to provide Lynx customers with the same technology it had offered in the past, under the Solexa brand name.

Solexa’s new genetic-analysis platform will be launched later this year, according to the company. The technology, which will be based on Solexa’s Sequencing-by-Synthesis and molecular arrays, will support DNA sequencing, gene expression, SNP genotyping, and microRNA analysis, according to Solexa.

Solexa stated that its new technology would be suitable for researchers studying mutations in cancer or looking for potential markers in everything from agriculture to infectious diseases. The company also said that the technology, which hasn’t been named yet, would reduce the cost of genetic analysis to a few thousand dollars per sample.

Solexa reported that its primary strategy was to focus on the research market of DNA sequencing, gene expression, and genotyping. Altogether, the company estimated the scope of the current market for the product to be close to $1 billion.

According to Bennett, the company also “will need about $35 million over the next two years” but has no plans to initiate a new round of fundraising.

The company had previously predicted it would incur losses due to the cost of merging with Lynx, as well as from the development and launch of the new technology.

“We have not announced terms of any specific financing, and financing amounts, and other terms can be expected to be subject to negotiation and market conditions at the time of the financing,” Bennett said.

Lynx reported in an SEC filing in January that Solexa had cash or cash equivalents of $12.2 million as of Sept. 30, 2004, which, when combined with Lynx’ cash and cash equivalents of $1.7 million, gives Solexa a foundation of about $14 million in cash, cash equivalents, and short-term investments — or less than half of what Bennett said the company would need.

Bennett said that the company had received an additional $4 million in private funding , but that the financial figures for the combined firms as of Dec. 31, 2004, have not been disclosed.

“Updates of our financial situation will be made in due course, in line with SEC disclosure guidelines,” said Bennett.

A Long Road

The companies announced the closure of the merger six days after Lynx’ March 1 shareholders meeting at which 97 percent of stockholders voted in favor of the merger and agreed to as much as a one-for-four reverse stock-split.

Lynx’ board later agreed to a one-for-two reverse split, and, on March 3, Lynx changed its Nasdaq ticker from LYNX to LYNXD. Its stock closed at $9.60 on March 4.

The split was executed to meet the Nasdaq SmallCap Market initial listing requirement of a $4 per-share minimum bid price for the 90 trading days preceding the merger, according to Lynx. However, acting-CEO Schramke said the reverse-split “improved [the stock’s] marketability and liquidity.”

As part of the merger, Lynx issued approximately 14.75 million post-split shares of its common stock for all of Solexa Ltd.’s issued and outstanding shares and options. Solexa Ltd.’s shareholders now own 80 percent of the combined company, to the 20 percent owned by Lynx’ former shareholders.

Solexa and Lynx first began to collaborate after they jointly purchased technology for generating DNA colonies from Manteia in March 2004. (see BAN 3/31/2004)

They signed a definitive merger pact in September 2004, (see BAN 10/6/2004) but the merger was put off until Lynx could assemble its shareholders for a vote. Lynx also faced increasing pressure from Nasdaq requirements, and was in the process of appealing a staff determination letter from Nasdaq that threatened to delist the company for failing to hold its annual shareholder’s meeting.(see BAN 2/2/2005)

A panel review was scheduled for Feb. 9 to address the issues, but a spokesperson for Lynx was unable to confirm or deny whether the meeting actually took place.

— JP


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