West Coast Editor

The pinchpenny public market is pushing more firms to take the route of Solexa Inc., which gained a pledge for $75 million in a stock equity financing from busy Azimuth Opportunity Ltd.

"We don't have an immediate need," noted Linda Rubinstein, chief financial officer of Hayward, Calif.-based Solexa, which had about $58 million in cash and cash equivalents as of June 30.

Azimuth, aboard for a two-year commitment, would buy stock from Hayward, Calif.-based Solexa at what Rubinstein described as "a very modest discount" to the market price, and Solexa gets to decide when and how many shares. SEC paperwork shows the discount is between 3.62 percent and 5.37 percent, based on the stock price, near the cost of hiring a placement agent or underwriter.

Solexa plans to use proceeds to push its Genome Analysis System to market, and for general corporate purposes. The system combines Clonal Single-Molecule Array technology and Reversible Terminator chemistry, putting together sequence data at an expected scale of more than 1 billion bases per run and making human genome resequencing possible at less than $100,000 per sample.

Three units already have been shipped to two customers as part of an early access program, Rubinstein said, adding that the company would be "tweaking anything we need to. As we get comfortable with that, we'll be selling more broadly over the fall."

Based on today's spending, the market is about $1 billion, Rubinstein said. "I'm not saying that's all of sequencing or expression profiling," she said, but the amount represents those applications that Solexa can satisfy, and there might be more.

Others recently to tap Azimuth for similar deals include Acusphere Inc., of Watertown, Mass., which could get about $19.5 million in the sale of as many as 5.8 million shares at $3.39 apiece. Last month, Sunnyvale, Calif.-based Pharmacyclics Inc. signed an 18-month deal for the sale of as much as $20 million in stock to Azimuth.

Corgentech Inc., of South San Francisco, also has an agreement with Azimuth, entered in June. Over a 24-month period, the firm can sell as much as $30 million worth of stock to the overseas firm. (See BioWorld Today, June 21, 2006.)

But the biggest Azimuth line holder is Palo Alto, Calif.-based CV Therapeutics Inc., which in the spring entered a deal to potentially raise up to $200 million - an arrangement under which Azimuth could become CV's largest shareholder. (See BioWorld Today, April 20, 2006.)

Rubinstein said Azimuth, a designated fund from the well-known Acqua Wellington group, works with issuers that have a primary shelf registration in place.

"It's similar to Kingsbridge [Capital Ltd.], but with a different structure," she said. "Fundamentally, the goal is the same." Kingsbridge's deals call for the issuer to file a resale S-3 with the SEC.

Solexa investigated Azimuth carefully before making the deal. After making a buy, Azimuth "typically hold[s] the shares for a while," Rubinstein said. "They've been very transparent and willing to work with management." Other issuers "say [Azimuth] has behaved very responsibly," she added.

Solexa's shares (NASDAQ:SLXA) closed Wednesday at $8.54, up 5 cents.