A Medical Device Daily

Caliper Life Sciences (Hopkinton, Massachusetts) reported that it has issued to Affymetrix (Santa Clara, California) a non-exclusive license to use a portion of its micro-fluidics patents with Affymetrix’s GeneChip microarray technologies. The license extends to the manufacture and sale of GeneChip products in all areas of application, including research, diagnostics and applied genomics applications.

In exchange, Affymetrix will pay up-front licensing fees and royalties on future products but the deal value was not disclosed.

Deal scope includes nucleic acids processing and handling associated with GeneChip arrays, but excludes the right to use LabChip with products intended primarily to perform nucleic acid separations as a discrete, non-integrated quality control step.

Caliper said the agreement is the second since it began a program to out-license its intellectual property portfolio. The new “LabChip Driven” program was put in place, it said, to support microfluidics adoption and accelerate the availability of new technologies and products in life science and diagnostics.

Merging the technologies is “an important option for us,” said Alan Sherr, director of licensing for Affymetrix. He noted that the two companies have partnered for the past year and can now “extend the scope of our relationship with Caliper to this new area of potential value and importance . . . “

Kevin Hrusovsky, Caliper president and CEO, said, “Incorporating our technologies – first laboratory automation and now the potential for Caliper’s microfluidics technologies – into these vital areas of human health is important to our corporate ideals and to our future as a key technology provider to the industry.”

Caliper uses its liquid handling and LabChip systems for drug discovery, disease diagnosis and scientific research. Caliper has R&D, operations and manufacturing facilities in Mountain View, California, and sales, service and applications support throughout the world.

Affymetrix invented the first microarray in 1989 and began selling the first commercial microarray in 1994. It reports shipping more than 1,200 systems around the world. The company has manufacturing facilities in Sacramento, California, and Bedford, Massachusetts.

In other financing news: Solexa (Hayward, California) has entered an agreement to sell privately $32.5 million in stock and warrants to institutional investors in an initiative to launch its Sequencing-By-Synthesis molecular array platform by the end of this year and pay back a $3 million loan,

“It’s possible this would be our last financing,” said John West, CEO of Solexa, noting that the company’s formal guidance doesn’t specify that, but that the cash on hand is expected to take Solexa well into 2006, and revenues from the array system are likely by then.

Solexa will sell about 8.1 million shares of common stock at $4 per share and issue warrants to buy about 4.1 million shares of common stock at a price of $5 each. About 2.1 million shares of common stock and 1.1 million warrants will be issued in the closing, the balance to be issued on the same terms in a second closing, subject to stockholders’ approval at the 2005 annual meeting.

All of Solexa’s previous venture capital investors will be putting in a total of about $10.8 million at the second closing and have agreed to vote in favor of the deal at the meeting. Those investors included funds affiliated with Abingworth Management (London); Amadeus Capital Partners (London); Oxford Bioscience Partners (Boston); and SV Life Sciences (Boston/London/San Francisco).

The transaction is led by ValueAct Capital (Boston/San Francisco). Partner Mason Morfit has been appointed to Solexa’s board, bringing its membership to eight.

Solexa last made major news this past September, when it was based in Cambridge, UK, with word of its plan to merge with Lynx Therapeutics (Hayward, where operations now are based) in a $56.4 million deal. At the time, the company closed a $14.4 million financing round. The loan to be repaid, from Silicon Valley Bank (Santa Clara, California), was taken out early in the year by Lynx for general working capital, and the firms completed their merger in March.

“It was basically a bridge loan, and [repaying it] is a pretty modest part of the overall financing,” West said.

Solexa’s Sequencing-By-Synthesis (SBS) platform is expected to support many types of genetic analysis, including DNA sequencing, gene expression, genotyping and micro-RNA analysis, the company said, pointing out that the technology can generate more than a billion bases of DNA sequence from a single experiment with a single sample preparation.

SBS represents a “pretty dramatic performance improvement,” West said, and a second system is expected to follow “a little while after” the first. The firm’s molecular array platform creates “a form of array, but the size of the spots are determined by the lengths of the molecules themselves – typically a tenth of a micron long – and that gives us a huge data density,” he said.

“The challenge [for a platform-based firm] is to stay on the cutting edge of the technology,” he said. “It’s easy for people to become complacent and not innovate anymore.”

Solexa’s approach already is drawing notice.

“We see some big institutions being interested, like the cancer genome initiative,” West told Medical Device Daily’s sister publication, BioWorld Today. Officially known as the Human Cancer Genome Project, that government effort is expected to be larger than the Human Genome Project, mapping the sequence of thousands of tumor samples and costing about $1.4 billion over nine years.

“We have an almost perfect product for that,” West said.