West Coast Editor

Illumina Inc. pulled down net proceeds of about $83.6 million through a public offering of 3.5 million shares of common stock at $25.50 per share, and aims to use the money partly to boost diagnostics work.

"You can see the direction we're going by the DeCode deal we announced [last] Monday," said Jay Flatley, president and CEO of San Diego-based Illumina. With DeCode Genetics, of Reykjavik, Iceland, Illumina plans to co-develop and commercialize DNA-based diagnostic tests in several major disease areas, including heart attack, diabetes and breast cancer.

The deal will use Illumina's platform for high-multiplex single-nucleotide polymorphism genotyping to develop tests for gene variants deCODE has investigated. Under the terms, Illumina gets access to disease-related biomarkers for joint validation as diagnostic panels to be sold by Illumina on its forthcoming BeadXpress platform. The companies will share development costs and split the profits from sales of the tests.

Flatley noted that there is a trend toward tests geared to determine patients for whom drugs will work best, and "that's exactly what's happening here," he said.

On Thursday, DeCode started patient enrollment in the pivotal Phase III trial for DG031, the company's lead compound for the prevention of heart attack. The trial will be randomized, double-blind, placebo-controlled and will enroll 3,400 patients with a history of recent myocardial infarction.

"They enriched their trial population using the markers we're developing the tests for," Flatley said, calling the DeCode deal an "add-on to the traditional business" for Illumina, which develops and markets new tools for the large-scale analysis of genetic variation and function.

The DeCode agreement is "certainly going to keep us busy, but we have others that we're talking about," he said. "If our business plans are met, we would be sufficiently cash-flow positive that we would not have to raise money in any time frame we could think about," he added.

Money from the current offering also will go toward general corporate purposes. Before the offering, as of April 2, Illumina had about $49 million in cash and cash equivalents.

Goldman, Sachs & Co. and Merrill Lynch & Co., both of New York, are acting as joint bookrunning and co-lead managers of the offering. Cowen and Co., also of New York, is co-lead manager of the offering. Robert W. Baird & Co., of Chicago, is co-manager. Illumina's stock (NASDAQ:ILMN) closed Friday at $26.69, up 79 cents.

In other financing news:

• Arteriocyte Inc., of Cleveland, gained a $600,000 grant from the State of Ohio to further the development of its technology. The company is conducting a Phase I clinical trial for an adult, bone-marrow-derived stem cell therapy designed to generate new blood vessels in ischemic tissues. The funding, received as part of an $8 million Third Frontier award to Cleveland's Center for Stem Cell and Regenerative Medicine, will help fuel Arteriocyte's collaboration with other CSCRM researchers.

• Solexa Inc., of Hayward, Calif., filed a shelf registration to offer securities worth up to $100 million, with the proceeds to go for general corporate purposes. As of March 31, Solexa, which develops genetic analysis technologies, had about $68.7 million in cash and cash equivalents. In January, Solexa completed the second closing of a private placement for about $40 million following approval at a special meeting of its stockholders, representing the final closing of a $65 million financing with a group of institutional investors disclosed in November. (See BioWorld Today, Nov. 22, 2005.)