Phineas Lambert

The Daily Deal
September 29, 2004

Amadeus Capital Partners' Herman Hauser, one of Britain's most successful venture capitalists, on Wednesday, Sept. 29, announced the back-door listing of British biotechnology startup Solexa Ltd. via its merger with Nasdaq-listed Lynx Therapeutics Inc. — accompanied by a $14.4 million second round of venture capital. Amadeus Capital Partners of London led the funding joined by previous investors Abingworth Management, Schroder Ventures Life Sciences and Oxford Bioscience Partners, all of London. This new round brings Solexa's total venture investment to $40 million since it was formed in 1998.

In tandem with the funding, Cambridge, England- and Menlo Park, Calif.-based Solexa announced a straight stock-for-stock merger with Hayward, Calif.-based Lynx Therapeutics Inc., a developer of genomic analysis technology, that currently trades on the Nasdaq under the LYNX symbol. Following the merger, the company will trade on the Nasdaq SmallCap Market under the symbol LYNX. Solexa's investors will own a "majority" of the company following the completion of the merger, according to Hauser. Details of the share swap accord will be filed shortly with the Securities and Exchange Commission, according to a press statement from Lynx. Lynx's share price has hovered around $2 over the past year.

Seven Hills Partners of San Francisco acted as financial adviser on the deal and provided a fairness opinion to Lynx's board of directors.

The merger and venture funding was "a rare occasion in that Solexa and Lynx are perfect complements," said Hauser prior to a conference call scheduled for after The Daily Deal went to press. "Lynx makes instruments perfectly suited to Solexa's technology." Lynx is a a genomics analysis company. Solexa has developed a new method for mapping the human genome, using a single molecule-based sequencing technology. Solexa's sequencing technology is a ground-breaking development for gene-based medicines, said Hauser. "Solexa has extensive experience in single molecule sequencing and has cracked many of the chemical and enzymatic challenges that have kept others from commercializing it," said Hauser. Lynx, he added, has "an instrument design already in its third generation and the company can rapidly assess the impact of design improvements in large-scale experiments."

Hauser noted that a worldwide project led by the U.S. and U.K. enabling the mapping of the human genome took 10 years to complete with a cost of around $3 billion. "With Solexa, there is now an instrument that could do a complete map in less than a week for less than $100,000," he said. The combined company plans to target organizations that need to sequence large portions of DNA, including whole genomes, at costs well below current levels. "This is a wonderful opportunity to improve gene sequencing," said Hauser. "We expect substantial growth after the instrument is able to launch later this year."

The infusion of capital will be expended to further develop a cost effective analysis of individual genomes, as well as for beginning a global service advertisement campaign for the launch of its instruments at the end of the year or in early 2005.

Current Solexa CEO John West will remain at the post of chief executive at the newly combined company. The combined company's board will consist of West, four venture capital members of the current Solexa board and Lynx chairman Craig Taylor. West had not returned calls for comment by press time.