Lynx Therapeutics, Inc. (Nasdaq:LYNX) today announced the signing of an original equipment manufacture (OEM) development agreement with U.K.-based Solexa, Ltd. whereby Solexa will provide additional funding to Lynx to accelerate development of the next generation DNA sequencing instrument. The intent of the agreement is to accelerate the integration of both companies' technologies prior to completing the proposed business combination of Lynx and Solexa. This agreement follows last April's announcement of the joint acquisition of proprietary DNA cluster technology by Lynx and Solexa and last month's announcement of a definitive agreement providing for the combination of Lynx and Solexa with the expectation of building a leading company in the area of future DNA sequencing technologies.

Funding related to the OEM agreement is in addition to $2.5 million in loans received by Lynx from Solexa. Additional terms of the agreement were not disclosed.

"The OEM development agreement announced today indicates our high level of cooperation and commitment to successfully completing the proposed business combination with Solexa," said Kevin Corcoran, Lynx's president and chief executive officer. "Additionally, it reflects the tremendous near-term market potential we envision by accelerating integration of the cluster technology to facilitate our entry into the next generation sequencing market."

Lynx's ability to complete the business combination with Solexa will be subject to, among other things, receipt of approval by Lynx's stockholders and acceptance of Lynx's offer by the requisite shareholders of Solexa. Lynx expects to file a registration statement on Form S-4 regarding the business combination with the Securities & Exchange Commission (SEC) before November 1, 2004. The Form S-4 will include Lynx's proxy statement relating to its annual meeting and will be available at www.sec.gov or from the "Investor Resources" section of the Lynx Web site at www.lynxgen.com.

Lynx further reported as required under Nasdaq Rule 4350(b), the filing with the SEC of an amendment on Form 10-K/A to Lynx's Annual Report on Form 10-K for the year ended December 31, 2003. The amendment includes an explanatory paragraph from Ernst & Young LLP, Lynx's registered independent public accounting firm, in its audit report referring to Lynx's financial statements as of December 31, 2003. This explanatory paragraph refers to Lynx's losses since inception, including a net loss for the six months ended June 30, 2004, and states that Lynx will require additional funding to continue its business activities through at least December 31, 2005 and raises substantial doubt as to Lynx's ability to continue as a going concern.

For further information regarding Lynx's liquidity and capital resources, see Lynx's Annual Report on Form 10-K, as amended, which is available from the SEC's Web site at http://www.sec.gov or the "Investor Resources" section of the Company's Web site at http://www.lynxgen.com.

Lynx is a leader in the development and application of novel genomic analysis solutions. Lynx's MPSS(TM) instruments analyze millions of DNA molecules in parallel enabling genome structure characterization at an unprecedented level of resolution. As applied to gene expression analysis, MPSS(TM) provides comprehensive and quantitative digital information important to modern systems biology research in the pharmaceutical, biotechnology and agricultural industries.