Preparing to move its genome resequencing technology to the market by the end of the year, Solexa Inc. is bringing in $65 million through a private placement.

The Hayward, Calif.-based company agreed to sell 10 million shares of common stock at $6.50 per share and will issue warrants to purchase about 3.5 million shares at an exercise price of $7.50 per share. Of those, 3.9 million shares and 1.3 million warrants will be issued in a first closing, set for today, with the remaining 6.1 million shares issued in a second closing upon stockholder approval. The financing will give Solexa net proceeds of about $61 million.

"We've said that we needed to raise money to fund operations through the end of 2006," said Chief Financial Officer Linda Rubinstein, "and this financing certainly does that."

Shares of Solexa (NASDAQ:SLXA) fell $1, about 11 percent, Monday to close at $7.90.

The company last raised money in July, when it completed a private equity placement for $24 million in the final closing of a $32.5 million placement announced in April. That financing included the sale of about 6 million shares of common stock at $4 per share, plus warrants to purchase 3 million additional shares at $5 each. (See BioWorld Today, April 25, 2005.)

Proceeds from the recent placement will be used to fund operations and "accelerate our commercial efforts," said John West, CEO of Solexa, which plans to introduce its first product by the end of 2005.

The Sequencing-By-Synthesis (SBS) technology is a genetic analysis instrument system designed to perform whole-genome resequencing, gene-expression analysis and micro-RNA analysis. Its most significant promises include the ability to analyze 1 billion bases of DNA at a time and to lower the cost of resequencing to $100,000 or less per sample, West said.

The genome analyzer will run with a small device, about the size of a microscope slide, so that a sequence of a billion DNA bases can fit on one slide, he told BioWorld Today. "From a number of those, we expect to be able to determine a whole human genome sequence," a capability that will "transform biological research."

Just a few years ago, genome sequencing was a major undertaking, and worldwide projects relied on billions in funding.

"We expect [the SBS system] to become something that will be routinely accessible at a large number of laboratories around the world," West said, causing "the cost to come down very dramatically.

"It's really a major step forward in the way genomics will be able to be used on an every day basis," he added.

Last month, Solexa released data showing that its reversible-terminator chemistry and Clonal Single-Molecule Array technology could be applied to resequence human DNA, based on scientists' success in sequencing a human bacterial artificial chromosome. The results were presented at the GSAC 2005 Genomes, Medicine and the Environment Conference in Hilton Head, S.C.

"I think at that point people began to really realize what was happening here and that our product was working well and would be commercialized in 2006," West said. "That led to a lot of excitement around the company, and the financing will certainly help us deliver on that."

The SBS system was designed at the company's California headquarters - formerly those of Lynx Therapeutics Inc., which merged with Solexa in 2004 in a $56 million deal - with the biochemistry side of the technology emerging from the Cambridge, UK-based laboratory. The technology incorporates some of the capabilities offered in an earlier generation system, Massively Parallel Signature Sequencing (MPSS), a method for sequencing, determining genome structure and performing epigenomics analysis. Solexa will continue to offer the MPSS system on a service basis until SBS goes commercial.

In addition to being faster and more cost-efficient, SBS also offers one more advantage: It is an "instrument that customers can use in their own laboratories," West said, rather than requiring Solexa to complete the sequencing on a service basis. "I expect that most customers will be interested in purchasing the instrument outright."

Solexa expects to report its first revenues from SBS sales after the first half of 2006.

The company reported a net loss of $10.8 million, or 43 cents per share, for the third quarter of 2005. As of Sept. 30, Solexa had cash and cash equivalents totaling $19.1 million.