By Mary Welch

Lynx Therapeutics Inc. became one of the biggest casualties to date of the fickle biotech market as the company withdrew is proposed offering of 1.5 million shares of stock.

"The market conditions are just really inappropriate to go out and try to raise money," said Norrie Russell, the company's president and CEO. "There's nothing complicated about that. It's very straightforward."

Edward Albini, Lynx's chief financial officer, said he believes that "this valuation does not reflect the true worth of the company. We have enough cash to proceed, and we will wait until the market stabilizes before proceeding."

The Hayward, Calif.-based company filed the stock offering on March 14. On March 13, its stock closed at $66. At that price, the company would have raised $99 million.

However March 14 is the day of biotech infamy when President Bill Clinton and British Prime Minister Tony Blair said that scientists worldwide should have free access to research on the mapping of human genes. The news rocked the market and Lynx's stock fell 21 points before the company even filed the registration statement. It made the announcement and the stock closed at $46.25, down $19.75. At the March 14 closing price, Lynx would have raised. $69.37 million - a decline of almost $29.63 million in less than 24 hours. (See BioWorld Today, March 16, 2000, p. 1.)

As an example of how erratic the stock has been, only two weeks earlier, on March 3, Lynx closed at $94.687. It closed Thursday at $24.0625.

The company, which develops and applies novel technologies for the discovery of gene expression patterns and genomic variations, intended to use the proceeds for its ongoing commercial research and development activities as well as for working capital. The money would have allowed the company to operate through 2001, the registration statement said. (See BioWorld Today, March 16, 2000, p.1.)

The company's technologies are based on Megaclone, its proprietary cloning procedure, which transforms a sample containing millions of DNA molecules into one made up of millions of micro-beads. Each micro-bead carries about 100,000 copies of one of the DNA molecules in the sample.

Based on Megaclone, the company has developed an array of applications that have the potential to enhance genomics and genetics research programs, it said.

The three basic applications of Megaclone are Massively Parallel Signature Sequencing (MPSS), Megasort and Megatype. MPSS generates simultaneously sequence information that uniquely identifies a sample's DNA molecules without the need for individual conventional sequencing reactions. Megasort enables researchers to focus on potential target genes by permitting, from a single experiment, the direct physical isolation of nearly all the genes differentially expressed between samples.

Megatype should enable a single experiment to yield directly, without individual genotyping, those disease- or trait-associated single nucleotide polymorphisms, or SNPs, that differentiate large populations of genomes, the company said.

Lynx also intends to develop products internally and then license or sell gene targets, validated gene targets, genetic associations, genomic maps and other products. For example, the company is pursuing projects directed to gene discovery and target validation in immunopathology and, through BASF, central nervous system disorders.

Lynx closed 1999 with $12.9 million in revenue and a net loss of $4.3 million. As of Dec. 31, it had $30.8 million in cash. The company has about 11.3 million shares outstanding.

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