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With its stock suffering on Wall Street’s aversion to money losing biotech companies, San Diego, Calif.-based Illumina Inc. announced a stockholders’ rights plan May 4 designed to stave off unsolicited bargain hunters. As is typical of poison pill provisions, the plan would take effect once any one party’s interest crossed a certain ownership threshold, in this case 15 percent. At that point, current shareholders would be able to purchase additional shares at a steep discount, effectively ballooning the total number of outstanding shares and the price a hostile bidder would have to pay. Illumina CFO Tim Kish classified the move as a good way to maintain long-term value for shareholders, but would not comment on whether any companies have expressed interest in acquiring Illumina. The company has developed a fiber optic array technology that allows for genetic analysis testing of thousands of discreet microscopic samples each affixed to the ends of individual fibers in a bundle, thus allowing for more effective and dense testing of genetic products. Through March 31, the company had $113.6 million in cash. When its stock bottomed out at $5.69 on April 6, the company’s valuation was dragged down to $166.4 million. Given the company’s proprietary technology and its healthy pile of cash, the company that just months earlier boasted a market cap north of $1.5 billion found itself as an attractive target. Illumina reported a loss of $4.9 million on $600,000 in sales for the first quarter 2001. “They realized their technology would be going for a low price, so they moved to protect it,” said Lawrence Neibor, an analyst with Robert W Baird Co. in Milwaukee, Wisc. He doesn’t expect the company to turn a profit until 2003. Before it went public, the company received more than $36 million in venture funding from the Tisch Family Fund, Lombard Odier & Cie, State Farm Automobile Insurance Company, Chase Capital Partners, PE Corp., The Dow Chemical Co., Chevron Technology Ventures, Venrock Associates, ARCH Venture Partners, CW Group and Tredegar Investments. The company sold 6 million shares at $16 to raise $96 million in its initial public offering in July 2000. Within three months, the company’s stock topped $50 per share before beginning its descent to a low of $5.69 in early April. But Illumina is not the only young biotech company that has taken a shellacking from Wall Street. Aclara Biosciences Inc., a Mountain View, Calif., maker of biochemical analysis tools, has seen its shares drop from a high in July of $66 to $5.45 Friday. Genomica Corp. a Boulder, Colo., developer of drug development and discovery software that went public in October 2000, has fallen from its high of $23.38 to $4.05. Illumina shares closed down 2 cents to $8.98 Friday. Copyright (c)2001 TDD, LLC. All rights reserved.

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