By Matthew Willett

Lynx Therapeutics Inc. gave Japanese company Takara Shuzo Co. Ltd. rights to its proprietary sequencing, cloning, sorting and microarray content technologies in a multimillion dollar, five-year deal.

Financial details were not disclosed, but the deal includes technology access fees for Lynx and royalties on microarray sales and genomics discovery services. Tokyo-based Takara also will make an equity investment in Lynx, and make payments based on sales of the proprietary reagents used in Lynx's technologies.

The agreement gives Takara exclusive rights to use Lynx's Megaclone, Megasort and Massively Parallel Signature Sequencing (MPSS) technologies for five years in Japan, Korea, China and Taiwan.

The deal calls for Takara to hold non-exclusive rights to those technologies after the five-year term of the deal. Takara also takes non-exclusive worldwide rights to manufacture and sell microarrays using Lynx technology-identified content.

Norrie Russell, Lynx's president and CEO, said the deal represents an opportunity to take advantage of a sophisticated emerging market in the East. "It's a measure of how significant we view the Japanese marketplace to be," Russell told BioWorld Today. "There are a number of biotech companies that have already made some arrangements with the Japanese market, and that represents an increasing recognition of the importance and significance and sophistication of that marketplace. We've been looking into how best to tap into it, and Takara, for its imminence and established business structure, seemed like the perfect partner for us."

This deal is the latest Eastern expansion for Lynx, founded in 1992. In October the company, of Hayward, Calif., agreed to provide gene expression analysis services using its Megasort and MPSS technology to The Institute of Molecular and Cell Biology, an affiliate of the University of Singapore, for technology access fees and joint ownership of the results.

Johnathan Ashcroff, analyst for Dain Rauscher Wessels, said the deal is a big one for Lynx, not only as a stock booster in the near term, but as a limited risk deal with immediate returns.

"Lynx has three deals that produce no revenue, so this is more exciting since it's one where revenue changes hands immediately. This is one of Lynx's six revenue-generating deals," Ashcroff said. "It's a five-year deal with royalty payments, and it's more likely to have an impact in the near term, since they're not waiting for a pharmaceutical product to go through clinical trials and the FDA approval process. They're not waiting for biological success; they're looking to find genes that are differentially regulated and then put those genes on a microarray that can be commercialized in the near term."

The licensed technology includes Megaclone, which uses microbead technology to clone DNA molecules for analysis, and Megasort, which identifies differentially expressed genes or DNA fragments in a sample.

Lynx's sequencing technology, MPSS, generates sequence information from millions of DNA fragments while eliminating individual sequencing reactions and physical separation of DNA fragments.

Lynx's stock (NASDAQ:LYNX) closed at $18.06 Thursday, up $1.56.

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