Looking to expand opportunities for its bead-based technology, Illumina Inc. is acquiring privately held CyVera Corp., in a $17.5 million transaction that will add CyVera's digital microbead platform to Illumina.

Bill Craumer, director of corporate communications for Illumina, said 100 percent of Illumina's revenues come from the research markets, and "that's not going to change in the future. But, with CyVera's technology, we can build tools that will enable us to enter the diagnostic world, as well."

Following the acquisition, expected to close in March, CyVera, of Wallingford, Conn., will be a wholly owned subsidiary of Illumina. The $17.5 million deal includes about $2.3 million to cover CyVera's liabilities at closing, as well as about 1.5 million shares of Illumina common stock. The exact number of shares will depend on the average share price before closing, but subject to a 10 percent collar around the 10-day average price on the date of the agreement.

Illumina's shares (NASDAQ: ILMN) fell 86 cents Wednesday to close at $8.77.

Illumina develops tools for large-scale analysis of genetic variation and function. The company's BeadArray technology allows genomic researchers to analyze data points, quickly and at low-cost, which could lead to individualized medicine, Craumer said.

Illumina is one of five U.S firms participating in the International HapMap project, and will be responsible for mapping haplotypes in nearly 15 percent of the human genome, Craumer said, adding that Illumina's technology is being used by other companies working on HapMap, as well.

The company has several products on the market, including its single nucleotide polymorphism genotyping product line, its BeadLab production-scale genotyping system. In mid-2003, Illumina introduced the Sentrix BeadChip configuration, a gene-expression technology designed to help researchers analyze a focused set of genes across eight to 96 samples on a single array, and later launched Sentrix BeadChips for whole-genome gene expression and genotyping.

Last month, Illumina introduced its DASL assay for generating reproducible gene-expression profiles from formalin-fixed, paraffin-embedded samples and other samples containing partially degraded RNA. The DASL assay is designed to allow researchers to measure RNA abundance of more than 500 genes in parallel per sample.

The technology being developed by CyVera will be integrated into Illumina's platform, Craumer said. CyVera is developing a bead technology that uses a holographic imprinting approach, adding a digital address to each of the beads, which are potential sites for a biological assay. Both Illumina's and CyVera's beads can support nucleic acid and protein probes, though CyVera's is expected to provide fewer markers - between 10 and 1,000 - than Illumina's, making them more fitting for the diagnostic market.

CyVera also has developed the Virtual Cytometer scanning system for its bead technology, designed to let microbeads move from standard microtiter plate formats to a cell, where they self-align into randomly ordered arrays.

Craumer said CyVera's work still is being developed, and products based on the company's technology likely will not be available until 2006.

"We don't expect any revenue impact from CyVera in 2005," he told BioWorld Today.

San Diego-based Illumina expects to seek partners and collaborators when it moves into the diagnostic market, just as they have done in the research market the past several years. Craumer said the three major sources of revenue for Illumina are the manufacture and sale of oligo sequences, sale of its systems and gene-expression scanners and laboratory services.

The company signed an agreement in September to conduct a two-phase genotyping study for the North American Rheumatoid Arthritis Consortium to identify genes associated with the disease. The first phase will involve genetic mapping of more than 3,125 samples using the company's standard Linkage IV SNP panel, and Illumina said it could generate more than 25 million genotypes overall.

In its fourth-quarter earnings, Illumina reported revenues of $14.8 million for the quarter ending Jan. 2, and a net income of $3.2 million, though the company had a net loss of $6.2 million for the year. As of Jan. 2, Illumina had about $67 million in cash.