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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
   FORM 10-K/A Amendment No. 2
  x
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2003 OR  o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-22570 LYNX THERAPEUTICS, INC.  Delaware
    
    94-3161073(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 25861 Industrial Blvd., Hayward, CA 94545
(Address of principal executive offices, including zip code) (510) 670-9300
(Registrants telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value per share Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes o No x State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the Registrant computed by reference to the
price at which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the registrants
most recently completed second fiscal quarter: $10,920,824.1 The number of shares of common stock of the Registrant outstanding as of
March 9, 2004, was 6,199,245. The aggregate market value of the common stock of
the Registrant held by non-affiliates of the Registrant, based upon the closing
price of the common stock reported on the Nasdaq National Market on March 9,
2004, was $30,264,929.2      1
    
    Based on a closing price of $3.79 per share on June 30, 2003 and
4,654,245 shares outstanding (as adjusted to reflect the Registrants
reverse stock split effected in January 2003). Excludes 1,772,761 shares
of the Registrants common stock held by executive officers, directors and
stockholders whose ownership exceed 5% of the common stock outstanding at
June 30, 2003.2
    
    Based on a closing price of $6.30 per share on March 9, 2004 and
6,199,245 shares outstanding. Excludes 1,395,288 shares of the
Registrants common stock held by executive officers, directors and
stockholders whose ownership exceed 5% of the common stock outstanding at
March 9, 2004.




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DOCUMENTS INCORPORATED BY REFERENCE None. EXPLANATORY NOTE Lynx Therapeutics, Inc. is filing this Amendment No. 2 on Form 10-K/A to our
Annual Report on Form 10-K, initially filed with the Securities and Exchange
Commission on March 30, 2004, as amended by Amendment No. 1 on Form 10-K/A
filed with the Securities and Exchange Commission on April 29, 2004, solely for
the purpose of amending and restating certain portions of such Annual Report on
Form 10-K, as amended. Each of the following sections of the Annual Report is
amended and restated in its entirely, and current as of June 30, 2004: Part IV, Item 15. Exhibits, Financial Statements Schedules and Reports on Form 8-K. In addition, we have filed the following exhibits herewith:  21.1
    
    List of Subsidiaries23.2
    
    Consent of Ernst & Young AG, Independent Auditors.31.5
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.31.6
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.32.2
    
    Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section
1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350). Except as specifically indicated herein, no other information included in the
Annual Report on Form 10-K is amended by this Amendment No. 2 on Form 10-K/A.




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LYNX THERAPEUTICS, INC. FORM 10-K/A ANNUAL REPORT
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2003  
 TABLE OF CONTENTS PagePART IV
    
    4Item 15. Exhibits, Financial Statements Schedules and Reports on Form 8-K
    
    4SIGNATURESEXHIBIT 21.1EXHIBIT 23.2EXHIBIT 31.5EXHIBIT 31.6EXHIBIT 32.2
  3.




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PART IV 
 Item 15. Exhibits, Financial Statements Schedules and Reports on Form 8-K.  (a)
    
    Financial Statements, Schedules and Exhibits  (1)
    
    The following index, Report of Ernst & Young LLP, Independent
Auditors, and financial statements set forth on pages 33 through 59 of
this report have been previously filed:  (i)
    
    Report of Ernst & Young LLP, Independent Auditors.(ii)
    
    Consolidated Balance Sheets as of December 31, 2003 and 2002.(iii)
    
    Consolidated Statements of Operations for the years ended
December 31, 2003, 2002 and 2001.(iv)
    
    Consolidated Statements of Stockholders Equity for the years
ended December 31, 2003, 2002 and 2001.(v)
    
    Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001.(vi)
    
    Notes to Consolidated Financial Statements.  (2)
    
    All schedules, other than Schedule A, Axaron Bioscience AG
Heidelberg Annual Financial Statements as of December 31, 2003, are
omitted because they are not required, are not applicable or the
information is included in the consolidated financial statement or
notes thereto.(3)
    
    The following documents are being filed as part of this report: Exhibit No.
    
    Description of Document2.1
    
    Acquisition Agreement, dated as of February 4, 1998, by and between
the Company and Inex Pharmaceuticals Corporation, incorporated by
reference to the indicated exhibit of the Companys Current Report on
Form 8-K filed on March 24, 1998.3.1
    
    Amended and Restated Certificate of Incorporation of the Company,
incorporated by reference to the indicated exhibit of the Companys
Form 10-Q for the period ended June 30, 2000.3.1.1
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company, incorporated by reference to the
indicated exhibit of the Companys Form 10-K for the period ended
December 31, 2002.3.2
    
    Bylaws of the Company, as amended, incorporated by reference to the
indicated exhibit of the Companys Form 10-Q for the period ended
June 30, 2000.4.1
    
    Form of Common Stock Certificate, incorporated by reference to
Exhibit 4.2 of the Companys Statement Form 10 (File No. 0-22570), as
amended (see the Statement Form 10).10.1
    
    Form of Indemnity Agreement entered into between the Company and its
directors and officers, incorporated by reference to Exhibit 10.7 of
the Companys Statement Form 10.10.2**
    
    The Companys 1992 Stock Option Plan (the Stock Option Plan),
incorporated by reference to Exhibit 10.8 of the Companys Statement
Form 10.10.3**
    
    Form of Incentive Stock Option Grant under the Stock Option Plan,
incorporated by reference to Exhibit 10.9 of the Companys Statement
Form 10.
 4.




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Exhibit No.
    
    Description of Document10.4**
    
    Form of Nonstatutory Stock Option Grant under the Stock Option Plan,
incorporated by reference to Exhibit 10.10 of the Companys Statement
Form 10.10.5
    
    Agreement of Assignment and License of Intellectual Property Rights,
dated June 30, 1992, by and between the Company and ABI, incorporated
by reference to Exhibit 10.11 of the Companys Statement Form 10.10.6
    
    Amended and Restated Investor Rights Agreement, dated as of November
1, 1995, incorporated by reference to Exhibit 10.30 of the Companys
Form 10-K for the period ended December 31, 1995.10.7+
    
    Technology Development and Services Agreement, dated as of October 2,
1995, by and among the Company, Hoechst Aktiengesellschaft and its
subsidiary, Hoechst Marion Roussel, Inc., incorporated by reference
to Exhibit 10.28 of the Companys Form 10-K for the period ended
December 31, 1995.10.7.1+
    
    Amended and Restated First Amendment to Technology Development and
Services Agreement, dated May 1, 1998, by and between the Company and
Hoechst Marion Roussel, Inc., incorporated by reference to Exhibit
10.36 of the Companys Form 10-Q for the period ended June 30, 1998.10.7.2+
    
    Second Amendment to Technology Development and Services Agreement,
dated March 1, 1999, by and among the Company, Hoechst Marion
Roussel, Inc. and its affiliate Hoechst Schering AgrEvo GmbH,
incorporated by reference to the indicated exhibit of the Companys
Form 10-K/A filed on August 24, 2001 for the period ended December
31, 2001.10.7.3+
    
    Third Amendment to Technology Development and Services Agreement,
dated December 20, 1999, by and among the Company, Aventis
Pharmaceutical Inc. and its affiliate Aventis CropScience GmbH,
incorporated by reference to the indicated exhibit of the Companys
Form 10-K/A filed on August 24, 2001 for the period ended December
31, 2001.10.7.4+
    
    Fourth Amendment to Technology Development and Services Agreement,
dated March 31, 2002, by and between the Company and Aventis
CropScience GmbH, incorporated by reference to the indicated exhibit
of the Companys Form 10-Q for the period ended March 31, 2002.10.7.5+
    
    Fifth Amendment to Technology Development and Services Agreement,
dated as of September 30, 2002, by and between the Company and Bayer
CropScience GmbH, incorporated by reference to the indicated exhibit
of the Companys Form 10-Q for the period ended September 30, 2002.10.10
    
    Lease, dated as of February 27, 1998, by and between the Company and
SimFirst, L.P., Limited Partnership, incorporated by reference to
Exhibit 10.35 of the Companys Form 10-Q for the period ended March
31, 1998.10.11**
    
    The Companys 1998 Employee Stock Purchase Plan (the Purchase
Plan), incorporated by reference to Exhibit 99.1 of the Companys
Form S-8 (File No. 333-59163).10.12+
    
    Research Collaboration Agreement, dated as of October 29, 1998, by
and between the Company and E.I. Dupont de Nemours and Co.,
incorporated by reference to Exhibit 10.13 of the Companys Form
10-K/A filed on August 24, 2001 for the period ended December 31,
2001.10.12.1+
    
    Letter Amendment, dated March 1, 2002, to Research Collaboration
Agreement by and between the Company and E.I. DuPont De Nemours and
Co., incorporated by reference to the indicated exhibit of the
Companys Form 10-Q for the period ended March 31, 2002.
 -5-




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Exhibit No.
    
    Description of Document10.13
    
    Master Loan and Security Agreement, dated as of October 26, 1998, by
and between the Company and Transamerica Business Credit Corporation,
incorporated by reference to Exhibit 10.14 of the Companys Form
10-K/A filed on August 24, 2001 for the period ended December 31,
2001.10.14
    
    Promissory Note No. 7, dated as of September 29, 2000, issued by the
Company to Transamerica Business Credit Corporation, incorporated by
reference to Exhibit 10.15 of the Companys Form 10-K/A filed on
August 24, 2001 for the period ended December 31, 2001.10.15+
    
    Collaboration Agreement, dated as of September 30, 1999, by and
between the Company and Hoechst Schering AgrEvo GmbH, incorporated by
reference to Exhibit 10.1610.16**
    
    Employment Agreement, dated as of October 18, 1999, by and between
the Company and Norman John Wilkie Russell, Ph.D., incorporated by
reference to Exhibit 10.13 of the Companys Form 10-Q for the period
ended September 30, 1999.10.17+
    
    Collaboration Agreement, dated as of October 1, 2000, by and between
the Company and Takara Shuzo Co., Ltd. incorporated by reference to
Exhibit 10.18 of the Companys Form 10-K/A filed on August 24, 2001
for the period ended December 31, 2001.10.17.1+
    
    Amendment No. 1 to Collaboration Agreement, dated December 19, 2002,
by and between the Company and Takara Bio Inc., incorporated by
reference to the indicated exhibit of the Companys Form 10-K for the
period ended December 31, 2002.10.17.2+
    
    Amendment No. 2 to Collaboration Agreement, dated June 30, 2003, by
and between the Company and Takara Bio Inc., incorporated by
reference to the indicated exhibit of the Companys Form 10-Q for the
period ended September 30, 2003.10.18
    
    Securities Purchase Agreement, dated as of May 24, 2001, by and among
the Company and the investors listed therein, incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form
8-K, filed on June 4, 2001.10.19
    
    Registration Rights Agreement, dated as of May 24, 2001, by and among
the Company and the investors listed therein, incorporated by
reference to Exhibit 10.2 of the Companys Current Report on Form
8-K, filed on June 4, 2001.10.20
    
    Form of Warrant issued by the Company in favor of each investor
thereto, incorporated by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K, filed on June 4, 2001.10.21+
    
    Joint Venture Agreement, dated as of June 29, 2001, by and between
the Company and BASF Aktiengesellschaft, incorporated by reference to
Exhibit 10.18 of the Companys Form 10-Q for the period ended June
30, 2001.10.22+
    
    First Amendment to Joint Venture Agreement, by and between the
Company and BASF Aktiengesellschaft, dated as of August 14, 2001,
incorporated by reference to Exhibit 10.22.2 of the Companys Form
10-Q for the period ended September 30, 2001.10.23+
    
    Technology License Agreement, dated as of June 1, 2001, by and
between the Company and BASF-LYNX Bioscience AG, incorporated by
reference to Exhibit 10.19 of the Companys Form 10-Q for the period
ended June 30, 2001.10.24
    
    Common Stock Purchase Agreement, by and between the Company and
Takara Shuzo Co., Ltd., dated as of October 1, 2001, incorporated by
reference to Exhibit 10.24 of the Companys Form 10-Q for the period
ended September 30, 2001.
 -6-




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Exhibit No.
    
    Description of Document10.25+
    
    Purchase Agreement, dated as of March 5, 2002, by and between Geron
Corporation and Lynx Therapeutics, Inc., incorporated by reference to
the indicated exhibit of the Companys Current Report on Form 8-K
filed on March 18, 2002.10.26+
    
    Common Stock Purchase Agreement, dated as of March 5, 2002, by and
between Geron Corporation and Lynx Therapeutics, Inc., incorporated
by reference to the indicated exhibit of the Companys Current Report
on From 8-K filed on March 18, 2002.10.27
    
    Form of Securities Purchase Agreement by and among the Company and
the investors listed therein, incorporated by reference to the
indicated exhibit of the Companys Current Report on Form 8-K, as
amended, filed on April 30, 2002.10.28
    
    Form of Registration Rights Agreement by and among the Company and
the investors listed therein, incorporated by reference to the
indicated exhibit of the Companys Current Report on Form 8-K, as
amended, filed on April 30, 2002.10.29
    
    Form of Warrant issued by the Company in favor or each investor party
to the Securities Purchase Agreement and Friedman, Billings, Ramsey &
Co., Inc., incorporated by reference to the indicated exhibit of the
Companys Current Report on Form 8-K, as amended, filed on April 30,
2002.10.30**
    
    Employment Agreement, dated as of June 3, 2002, by and between the
Company and Kevin P. Corcoran, incorporated by reference to the
indicated exhibit of the Companys Form 10-Q for the period ended
June 30, 2002.10.31**
    
    Employment Agreement, dated as of June 10, 2002, by and between the
Company and Thomas J. Vasicek, Ph.D., incorporated by reference to
the indicated exhibit of the Companys Form 10-Q for the period ended
June 30, 2002.10.32**
    
    Letter Agreement, dated as of July 9, 2002, by and between the
Company and Norman John Wilkie Russell, Ph.D., incorporated by
reference to the indicated exhibit of the Companys Form 10-Q for the
period ended June 30, 2002.10.33
    
    Common Stock Purchase Agreement, dated as of September 25, 2002, by
and between the Company and Takara Shuzo Co., Ltd., incorporated by
reference to the indicated exhibit of the Companys Form 10-Q for the
period ended September 30, 2002.10.34
    
    Loan and Security Agreement, dated October 23, 2002, by and between
the Company and Comerica Bank-California, incorporated by reference
to the indicated exhibit of the Companys Form 10-Q for the period
ended September 30, 2002.10.35
    
    Common Stock Purchase Agreement, dated as of December 26, 2002, by
and between the Company and Takara Shuzo Co., Ltd., incorporated by
reference to the indicated exhibit of the Companys Form 10-K for the
period ended December 31, 2002.10.39
    
    Securities Purchase Agreement by and among the Company and the
investors listed therein, incorporated by reference to the indicated
exhibit of the Companys Form 8-K filed on September 25, 2003.10.40
    
    Form of Warrant issued by the Company in favor of each investor,
incorporated by reference to the indicated exhibit of the Companys
Form 8-K filed on September 25, 2003.10.41+
    
    Services Agreement, by and between E.I. DuPont de Nemours and Company.
 -7-




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Exhibit No.
    
    Description of Document10.42
    
    Securities Purchase Agreement by and among the Company and the
investors listed therein, incorporated by reference to the indicated
exhibit of the Companys Form 8-K filed on January 2, 2004.10.43
    
    Form of Warrant issued by the Company in favor of each investor,
incorporated by reference to the indicated exhibit of the Companys
Form 8-K filed on January 2, 2004.21.1*
    
    Subsidiaries of the Company.23.1
    
    Consent of Ernst & Young LLP, Independent Auditors.23.2*
    
    Consent of Ernst & Young AG, Independent Auditors.24.1
    
    Power of Attorney. Reference is made to the signature page.31.1
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.2
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.3
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.4
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.5*
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.6*
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.32.1++
    
    Certification required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).32.2++*
    
    Certification required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).++
    
    This certification accompanies the Annual Report on Form 10-K to
which it relates, pursuant to Section 906 of the Sarbanes Oxley Act
of 2002, and is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference into any filing
of Lynx Therapeutics, Inc. under the Securities Act or the Exchange
Act (whether made before or after the date of the Annual Report on
Form 10-K), irrespective of any general incorporation language
contained in such filing.
   *
    
    Being filed herewith; all other exhibits previously filed.**
    
    Management contract or compensatory plan or arrangement.(+)
    
    Portions of this agreement have been deleted pursuant to our request for
confidential treatment. -8-




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(b)
    
    Reports on Form 8-K A current report on Form 8-K was filed on November 13, 2003 in connection
with the issuance of a press release dated November 13, 2003 announcing our
financial results for the third quarter of 2003. The press release was
furnished under Item 9. -9-




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) Securities Exchange
Act of 1934, the Registrant has duly caused this report on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized,
on June 30,
2004. LYNX THERAPEUTICS, INC.By:
    
    /s/
    
    Kevin P. CorcoranKevin P. CorcoranPresident and Chief Executive
Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated. Signatures
    
    Title
    
    Date/s/ Kevin P. Corcoran
    
    President, Chief Executive Officer and Director(Principal Executive Officer)
    
    June 30, 2004Kevin P. Corcoran*Chairman of the Board
    
    June 30, 2004Craig C. Taylor/s/ Kathy A. San Roman
    
    Vice President Human Resources &Administration and Acting Chief Financial OfficerKathy A. San Roman
    
    (Principal Financial and Accounting Officer)
    
    June 30, 2004*Director
    
    June 30, 2004Sydney Brenner*Director
    
    June 30, 2004Leroy Hood*Director
    
    June 30, 2004James C. Kitch*Director
    
    June 30, 2004Marc D. Kozin*Director
    
    June 30, 2004James V. Mitchell*Director
    
    June 30, 2004David C. UPrichard*Director
    
    June 30, 2004Richard P. Woychik
 * By:
    
    /s/ Kevin P. CorcoranKEVIN P. CORCORANATTORNEY-IN-FACT




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SCHEDULE A AXARON Bioscience AG
Heidelberg Annual Financial Statements
December 31, 2003




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(ERNST & YOUNG LOGO) Courtesy Translation This is a translation of the German report on which the audit opinion was
rendered and which is the sole authoritative version: AUDIT OPINION We have issued the following qualified opinion on the financial statements and
the management report: We have audited the annual financial statements, together
with the bookkeeping system, and the management report of
AXARON Bioscience AG, Heidelberg, for the fiscal year from
January 1 to December 31, 2003. The maintenance of the books
and records and the preparation of the annual financial
statements and management report in accordance with German
commercial law are the responsibility of the Companys
management. Our responsibility is to express an opinion on
the annual financial statements, together with the
bookkeeping system, and the management report based on our
audit. We conducted our audit of the annual financial statements in
accordance with Sec. 317 HGB [Handelsgesetzbuch: German
Commercial Code] and the generally accepted German standards
for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer [in Deutschland] (IDW). Those
standards require that we plan and perform the audit such
that misstatements materially affecting the presentation of
the net assets, financial position and results of operations
in the annual financial statements in accordance with German
principles of proper accounting and in the management report
are detected with reasonable assurance. Knowledge of the
business activities and the economic and legal environment of
the Company and evaluations of possible misstatements are
taken into account in the determination of audit procedures.
The effectiveness of the accounting-related internal control
system and the evidence supporting the disclosures in the
books and records, the annual financial statements and the
management report are examined primarily on a test basis
within the framework of the audit. The audit includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall presentation of the annual financial statements and
management report. We believe that our audit provides a
reasonable basis for our opinion. With the exception of the following qualification, our audit
has not led to any reservations. As of December 31, 2003, the Company has cash and cash
equivalents amounting to EUR 3.0 million which, based on the
Companys planning, will not be sufficient to maintain and
expand its ordinary business activities in the fiscal year
2004. The business activities do not generate sufficient
cash flows yet and currently no further funds are available.
Therefore, the financial ability of the Company to continue
as a going concern is dependent on successful cooperation
with a strategic partner or on funds obtained from a
financing round. Restructuring measures may also become
necessary. The management board of the Company has prepared these
financial statements on the assumption of a going concern in
spite of the uncertain liquidity situation approximately from
May 2004 onwards. The management board expects financing of
the planned business activities to be possible based on
discussions and negotiations with strategic partners and
financial investors as well as with one of the major
shareholders. At a




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minimum, it expects the Company to be able to continue as a
going concern to a reduced extent. We cannot assess whether
this assumption will materialize. For the above reasons it
cannot be ruled out that the annual financial statements
might have required adjustment. In our opinion, with this qualification, the annual financial
statements give a true and fair view of the net assets,
financial position and results of operations of the Company
in accordance with German principles of proper accounting.
On the whole, the management report provides a suitable
understanding of the Companys position and suitably presents
the risks to future development. (SEAL)




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AXARON Bioscience AG, Heidelberg
    
    Courtesy TranslationBalance Sheet as of December 31, 2003
 
    
    
    
    December 31, 2002 k ASSETSA.
    
    FIXED ASSETSI.
    
    Intangible assetsConcessions, industrial and similar rights and values as well as licenses in such rights and values
    
    
    3,399,568.00
    
    
    
    
    
    
    
    4,302II.
    
    Tangible assets1.
    
    Technical equipment and machinery
    
    
    548,572.00
    
    
    
    
    
    
    
    8552.
    
    Other equipment, furniture and fixtures
    
    
    155,385.00
    
    
    
    
    
    
    
    267703,957.00
    
    
    
    
    
    
    
    1,1224,103,525.00
    
    
    
    5,424B.
    
    CURRENT ASSETSI.
    
    Receivables and other assets1.
    
    Trade receivables
    
    
    0.00
    
    
    
    
    
    
    
    292.
    
    Receivables from companies in which equity investments are held
    
    
    3,016,735.92
    
    
    
    
    
    
    
    6,5333.
    
    Other assets
    
    
    114,267.25
    
    
    
    
    
    
    
    683,131,003.17
    
    
    
    
    
    
    
    6,630II.
    
    SecuritiesTreasury shares
    
    
    485,490.00
    
    
    
    
    
    
    
    457III.
    
    Cash and cash equivalents
    
    
    14,102.19
    
    
    
    
    
    
    
    263,630,595.36
    
    
    
    7,113C.
    
    PREPAID EXPENSES
    
    
    
    
    
    
    21,670.44
    
    
    
    387,755,790.80
    
    
    
    12,575STOCK HOLDERS EQUITY AND LIABILITIESA.
    
    STOCKHOLDERS EQUITYI.
    
    Subscribed capital
    
    
    
    
    
    
    10,020,000.00
    
    
    
    10,020II.
    
    Capital reserve
    
    
    
    
    
    
    6,523,940.18
    
    
    
    6,552III.
    
    Revenue reserves1.
    
    Legal reserve
    
    
    6,000.87
    
    
    
    
    
    
    
    62.
    
    Reserve for treasury shares
    
    
    485,490.00
    
    
    
    
    
    
    
    4573.
    
    Other revenue reserves
    
    
    75,166.17
    
    
    
    
    
    
    
    75566,657.04
    
    
    
    538IV.
    
    Accumulated loss
    
    
    
    
    
    
    -10,344,537.72
    
    
    
    -6,3216,766,059.50
    
    
    
    10,789B.
    
    PROVISIONS1.
    
    Tax provisions
    
    
    0.00
    
    
    
    
    
    
    
    362.
    
    Other provisions
    
    
    510,041.00
    
    
    
    
    
    
    
    916510,041.00
    
    
    
    952C.
    
    LIABILITIES1.
    
    Trade payables
    
    
    292,004.09
    
    
    
    
    
    
    
    3512.
    
    Liabilities due to companies in which equity investments are held
    
    
    37,814.62
    
    
    
    
    
    
    
    243.
    
    Other liabilities
    
    
    149,871.59
    
    
    
    
    
    
    
    459479,690.30
    
    
    
    8347,755,790.80
    
    
    
    12,575




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##### Table of Contents



AXARON BIOSCIENCE AG, HEIDELBERG
    
    Courtesy TranslationIncome Statement for Fiscal Year 2003
 
    
    
    
    2002 k 1.
    
    Sales
    
    
    
    
    
    
    3,661,814.33
    
    
    
    2,6182.
    
    Decrease in inventories of work in process
    
    
    
    
    
    
    0.00
    
    
    
    -633.
    
    Other operating income
    
    
    
    
    
    
    1,082,112.53
    
    
    
    2764,743,926.86
    
    
    
    2,8314.
    
    Cost of materials
    
    
    1,585,404.26
    
    
    
    
    
    
    
    1,7795.
    
    Personnel expenses
    
    
    3,804,340.43
    
    
    
    
    
    
    
    4,3976.
    
    Amortization of intangible assets
and depreciation of tangible fixed assets
    
    
    1,463,664.80
    
    
    
    
    
    
    
    1,5637.
    
    Other operating expenses
    
    
    2,013,859.69
    
    
    
    
    
    
    
    1,6618,867,269.18-4,123,342.32
    
    
    
    -6,5698.
    
    Interest result
    
    
    
    
    
    
    99,711.32
    
    
    
    2489.
    
    Result from ordinary operations
    
    
    
    
    
    
    -4,023,631.00
    
    
    
    -6,32110.
    
    Income taxes
    
    
    
    
    
    
    -186.0111.
    
    Net loss for the year
    
    
    
    
    
    
    -4,023,444.99
    
    
    
    -6,32112.
    
    Withdrawal from the capital reserve
    
    
    
    
    
    
    -28,584.00
    
    
    
    013.
    
    Additions to reserve for treasury shares
    
    
    
    
    
    
    28,584.00
    
    
    
    014.
    
    Loss carryforward
    
    
    
    
    
    
    -6,321,092.73
    
    
    
    015.
    
    Accumulated loss
    
    
    
    
    
    
    -10,344,537.72
    
    
    
    -6,321




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##### Table of Contents



Courtesy Translation AXARON Bioscience AG, Heidelberg
Notes to the Financial Statements for Fiscal Year 2003 General Remarks These financial statements have been prepared in accordance with Secs. 242 et
seq. and Secs. 264 et seq. HGB [Handelsgesetzbuch: German Commercial Code] as
well as in accordance with the relevant provisions of the AktG [Aktiengesetz:
German Stock Corporation Act]. The Company is subject to the requirements for
medium-sized companies. The Company had made use of the exemptions provided by
Sec. 288 Sentence 2 HGB. Classification of the balance sheet and income statement is unchanged. The
income statement has been prepared using the cost-summary method. In order to improve the clarity of the financial statements, we have summarized
individual income statement items and have disclosed and commented on them
separately in the notes to the financial statements. Accounting and valuation methods The following accounting and valuation methods, which have remained unchanged
in comparison to the prior year, have been used to prepare the financial
statements. Intangible assetsare capitalized at acquisition or production cost and, if
they have a limited life, are reduced by systematic amortization. The
straight-line method of amortization is applied. Tangible assetsare capitalized at acquisition or production cost and, if they
have a limited life, are reduced by systematic depreciation. Where permissible
under tax law, the declining-balance method of depreciation is used for movable
assets. The transition to straight-line depreciation takes place in the year
in which the straight-line method leads to a higher depreciation amount for the
first time. Low-value assets not exceeding 410.00 in value are fully
depreciated in the year of acquisition. Depreciation on additions to moveable
assets in the first half of the year is charged at the full rate while
additions in the second half of the year are charged at half the annual
depreciation rate. Receivables and other assetsare stated at their nominal value. Short-term
receivables denominated in foreign currency are valued at the exchange rates
prevailing on the balance sheet date. Securities Securities relate to treasury shares that are recorded at the lower of cost or
market. Other accrualsaccount for all contingent liabilities. They are recorded at
the amounts required according to prudent business judgment. Liabilitiesare recorded at the amount repayable. Short-term liabilities
denominated in foreign currency are valued at the exchange rates prevailing on
the balance sheet date.




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##### Table of Contents



Courtesy Translation Notes to the Balance Sheet Fixed Assets The development of the individual fixed asset items, including amortization and
depreciation for the fiscal year, is presented in the analysis of fixed assets. Receivables and Other Assets All receivables and other assets are due within one year. Securities Treasury shares were acquired in 2002 and 2003 to be transferred to employees
and members of the Companys advisory board. In the fiscal year under review,
42,500 shares were repurchased from former employees (19,500 thereof free of
charge and 23,000 at a price of 1.00 per share) and 13,916 shares sold to
employees at a price of 1.00 per share. The Companys treasury shares
amount to 485,490 as of the balance sheet (4.85% of the subscribed capital). In line with the increase in treasury shares of 28,584.00, the reserve for
treasury shares was raised by the same amount. Subscribed Capital Subscribed capital is unchanged at 10,020,000.00 and is divided into
10,020,000 common shares with a nominal value of 1.00 per share. The
common shares are registered shares with restricted transferability that may be
transferred only with the approval of the supervisory board of the Company. Capital Reserve Upon formation of the Company, a premium on the issue of shares of 2.556,46 was transferred to the capital reserve in accordance with Sec. 272 (2)
No 1 HGB. In fiscal year 2001, the former shareholder BASF Biotechnologie Beteiligungs-
und Verwertungsgesellschaft mbH made a capital contribution of 5,486,570.10 to the capital reserve of AXARON Bioscience AG in accordance with
Sec. 272 (2) No 4 HGB. The transfer at book values on account of the merger of the holding companies
in 2002 without a capital increase resulted in a positive figure for acquired
net assets of 1,520,303.62. This increase in net assets was posted to the
capital reserve pursuant to Sec. 272 (2) No 4. The reserve for treasury shares required by Sec. 272 (4) HGB was withdrawn from
the capital reserve set up in accordance with Sec. 272 (2) No 4 HGB. The
withdrawal came to 28,584.00 in the fiscal year under review. Provisions Other provisions account for personnel obligations and outstanding invoices.




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##### Table of Contents



Courtesy Translation Liabilities The liabilities are due within one year. Other liabilitiesrelate to: Dec. 31, 2003
    
    Dec. 31, 2002
    
    Tax liabilities
    
    
    65,440.65
    
    
    
    347,713.29Liabilities related to social security
    
    
    68,878.16
    
    
    
    102,263.73134,318.81
    
    
    
    449,977.02




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##### Table of Contents



Courtesy Translation Notes to the Income Statement Other operating incomeincludes income from the release of accruals amounting
to k 433. Cost of Materials 2003
    
    2002
    
    Cost of raw materials, consumables and
supplies and of purchased merchandise
    
    
    786,998.59
    
    
    
    893,220.98Cost of purchased services
    
    
    798,405.67
    
    
    
    886,218.671,585,404.26
    
    
    
    1,779,439.65Personnel ExpensesSalaries
    
    
    3,109,166.80
    
    
    
    3,662,928.07Social security, pension and
other benefit costs
    
    
    695,173.63
    
    
    
    733,724.01(thereof for pensions)
    
    
    (135,483.07
    )
    
    
    (94,458.51
    )3,804,340.43
    
    
    
    4,396,652.08Interest ResultOther interest and similar income
    
    
    99,711.32
    
    
    
    251,442.54Interest and similar expenses
    
    
    0.00
    
    
    
    3,132.2999,711.32
    
    
    
    248,310.25




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##### Table of Contents



Courtesy Translation Other Notes Management Board Dr. Alfred Bach, Heidelberg Supervisory Board Dr. Klaus-Jürgen Böhm, Chairman (until October 14, 2003)
          Senior Vice President Zentralbereich Finanzen
          Kapital- und Geldmarkt
          BASF Aktiengesellschaft, Ludwigshafen am Rhein Friedrich J. Christ, Chairman (since October 14, 2003)
          Senior Vice President Zentralbereich Finanzen
          Finanzbetreuung Tochtergesellschaften
          BASF Aktiengesellschaft, Ludwigshafen am Rhein Prof. Dr. Michael Kramer, Vice Chairman
          Chairman, LYNX Therapeutics GmbH,
          Heidelberg Prof. Dr. Hans-Jürgen Quadbeck-Seeger,
          Consultant, Bad Dürkheim Employees An annual average of 76 (prior year: 83) persons were employed in the fiscal
year. Heidelberg, February 26, 2004 The management board




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##### Table of Contents



Analysis of Fixed Assets
    
    Courtesy Translation
 Acquisition and production costs
    
    Accumulated amortization and depreciation
    
    Net book valueDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    December
    
    Dec. 31,
    
    Dec. 31,Jan. 1, 2003
    
    Additions
    
    Disposals
    
    2003
    
    Jan. 1, 2003
    
    Additions
    
    Disposals
    
    31, 2003
    
    2003
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    I. Intangible
AssetsConcessions,
industrial and
similar rights
and values as
well as licenses
in such rights
and values
    
    
    7,596,664.70
    
    
    
    13,759.65
    
    
    
    0.00
    
    
    
    7,610,424.35
    
    
    
    3,295.060.70
    
    
    
    915,795.65
    
    
    
    0.00
    
    
    
    4,210,856.35
    
    
    
    3,399,568.00
    
    
    
    4,301,604.00II. Tangible
Assets1. Technical
equipment and
machinery
    
    
    3,082,394.41
    
    
    
    112,663.88
    
    
    
    63,650.46
    
    
    
    3,131,407.83
    
    
    
    2,227,438.41
    
    
    
    418,305.88
    
    
    
    62,908.46
    
    
    
    2,582,835.83
    
    
    
    548,572.00
    
    
    
    854,956.002. Other
equipment,
furniture and
fixtures
    
    
    948,349.13
    
    
    
    20,869.52
    
    
    
    21,644.60
    
    
    
    947,574.05
    
    
    
    681,010.13
    
    
    
    129,563.27
    
    
    
    18,384.35
    
    
    
    792,189.05
    
    
    
    155,385.00
    
    
    
    267,339.004,030,743.54
    
    
    
    133,533.40
    
    
    
    85,295.06
    
    
    
    4,078,981.88
    
    
    
    2,908,448.54
    
    
    
    547,869.15
    
    
    
    81,292.81
    
    
    
    3,375,024.88
    
    
    
    703,957.00
    
    
    
    1,122,295.0011,627,408.24
    
    
    
    147,293.05
    
    
    
    85,295.06
    
    
    
    11,689,406.23
    
    
    
    6,203,509.24
    
    
    
    1,463,664.80
    
    
    
    81,292.81
    
    
    
    7,585,881.23
    
    
    
    4,103,525.00
    
    
    
    5,423,899.00




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##### Table of Contents



AXARON Bioscience AG, Heidelberg Management Report for 2003 A. Business Development 1. Development of the Industry and the Economy as a Whole The economic situation in Germany was characterized by stagnation in 2003 as in
the two previous years. The consolidation process continued. As before,
companies sought to exploit savings potential. The results of operations of
many companies deteriorated further. The tax law environment was uncertain and
did not provide any planning certainty. The capital markets failed to open up
and obtaining loans was difficult. AXARON Bioscience AG (AXARON) initiated introduction of two technology
platforms  Axaminer and iGentifier  on the market in 2003. The market
environment was shaped by the continuing reluctance of customers to invest as
well as the negative experiences which some of them had in recent years with
investing in biotech companies platform technologies. Conditions for the biotechnology industry remained difficult. The market for
IPOs of such companies collapsed. Exiting their investment is thus no longer
an option for investors. In addition, a higher number of companies than usual
were not able to meet their goals, which meant that providers of venture
capital lost a lot of money and are now placing high requirements on new
investments that are extremely difficult to meet. Consequently, an increasing
number of biotech companies encountered financial difficulties and were forced
to cut costs as well as cancel projects and concentrate more clearly on core
areas. AXARON was no exception. 2. Development of Sales and Order Volume AXARON generated sales of EUR 3.7 million in the reporting year 2003 (2002: EUR
2.6 million). They were generated in Germany and, except for EUR 0.4 million,
exclusively with BASF AG. The Company received research subsidies from the German Federal Ministry for
Education and Research of EUR 0.6 million for the Atlas project (2002: EUR
0.2 million for the ToxChips project). The order backlog as of December 31, 2003 totaled EUR 30 k (2002: EUR 5.4
million). We have promising customer contacts for further cooperation and
service agreements based on the Axaminer and iGentifier technology, but no
further contracts as of December 31, 2003. We are expecting income of EUR 1.1 million for 2004 and research subsidies for
the Atlas project as well as from cooperation with the University Hospital
Heidelberg totaling EUR 146 k.




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##### Table of Contents



Courtesy Translation 3. Capital Expenditure Capital expenditure in 2003 amounted to EUR 147 k (2002: EUR 689 k).
Laboratory equipment accounted for EUR 113 k, EUR 75 k of which was in turn
spent on setting up workplaces for animal operations. The remaining amount was
spent on software, hardware and low-value assets. 4. Personnel and Welfare As a result of focusing and strategically realigning the Company, AXARON laid
off a total of twelve employees in 2003, most of whom as of March 31. On
December 31, 2003, the Company employed 69 workers (2002: 83), seven of whom
are on maternity leave. Personnel expenses fell to EUR 3.8 million as a result (2002: EUR 4.4 million). 5. Significant Events during the Fiscal Year After discontinuing the activities of the microbiology and toxicology business
divisions at the end of 2002, the strategically realigned AXARON Bioscience AG
was positioned in 2003 as a company developing innovative therapies for central
nervous system diseases. In April 2003 iGentifier  a new method of transcription profiling in
unsequenced organisms  was introduced to the life science industry. Customers
may use it via service agreements or obtain a license to use it as an in-house
solution. Following completion of the BASF AG order and launching of marketing
activities in 2003, the first orders from other customers are expected to be
received in 2004 (see comments in Section D, Anticipated Development). In May 2003, AXARON presented Axaminer, a new technology for transcription
profiling, at individual cell level. The primary target group is the
pharmaceutical industry. A cooperation agreement with BASF AG to research
teratogenic effects has already been carried out with the new technology.
AXARON established numerous new interesting customer contacts in 2003 which are
expected to result in actual orders from 2004 onwards. A co-marketing
agreement for this technology has been concluded with Leica Microsystems. In addition, AXARON successfully secured the rights to the patent applications
in the United States and Japan in April 2003 for a drug (AX205) for treating
amyotrophic lateral sclerosis. A utility model is now available in Germany. One area of focus in 2003 was the preparatory work for the clinical trials with
AX200 for stroke indication which are planned to start in mid-2004. The
scientific advisory board was supplemented with a clinical advisory board to
support these activities. Due to the high capital needs for developing AX200
further and the fact that the Company does not want to market a drug without a
larger pharmaceutical company, AXARON began to look for a strategic investor in
2003. However,




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##### Table of Contents



Courtesy Translation as of year end, a strategic investor had not been located
mainly due to the depressed economic situation within the biotechnology
industry. In the second half of the year 2003, BASF AG terminated the three cooperation
agreements concluded in 2002. As a result, AXARON lost sales of EUR 2.1
million. Negotiations for cooperation on other scientific issues are currently
under way. B. Situation of the Company 1. Net Assets and Financial Position About 50% of the Companys finances in 2003 stem from sales from service
contracts. As already in 2002, the call money account at BASF AG was further
reduced to cover further financing needs. Equity at year-end stood at EUR 6.8 million (2002: EUR 10.8 million). The treasury stock held by AXARON Bioscience AG as of December 31, 2003
increased to 485,490 (2002: 456,906) as a result of various employees
transferring their shares back when they left the Company. The management and
supervisory boards will continue to endeavor to issue these shares to the
Companys employees at conditions that are acceptable for both parties. The call money account at BASF AG fell to EUR 3.0 million (2002: EUR 6.5
million). 2. Results of Operations In addition to sales of EUR 3.7 million, AXARON generated other operating
income of EUR 1.1 million in 2003 (2002: EUR 0.3 million), most of which stems
from research subsidies. Income was offset by cost of materials of EUR 1.6 million (2002: EUR 1.8
million), personnel expenses of EUR 3.8 million (2002: EUR 4.4 million),
amortization and depreciation of EUR 1.5 million (2002: EUR 1.6 million) and
other operating expenses of EUR 2.0 million (2002: EUR 1.7 million). This resulted in an operating loss of EUR 4.1 million (2002: loss of EUR 6.6
million). The interest result in 2003 amounted to EUR 100 k (2002: EUR 248 k).
AXARONs net loss for the year 2003 amounted to EUR 4.0 million (2002: net
loss of EUR 6.3 million). Assuming secured financing of the business
activities, the Company expects a net loss for the year 2004 of EUR 9.0
million. C. Significant Risks to Future Development AXARON has budgeted financing needs from operations in the region of EUR 8.0
million for the fiscal year 2004. The main reason for the rise is the planned
start of the clinical phase II trials with the drug AX200. Based on the
finance needs currently forecasted, which includes expenses related to the
clinical phase II trials, the Companys cash and cash equivalents will probably
be used up by May 2004. As already mentioned, owing to the high finance needs
for the trials, they can only be carried out if the Company has sufficient
funds from one or several investors.




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##### Table of Contents



Courtesy Translation Negotiations are currently being held
with potential cooperation partners and investors. Due to the current market
situation, however, we cannot say when these negotiations will be successfully
completed. This issue is the subject
of intense discussions between the management and the Companys principal
shareholders. However, no contractual agreements or comparable commitments
have been made to date to guarantee funding of the Company for 2004 or beyond.
If funding is not ensured, AXARON will not be able to start the clinical trials
for AX200 as planned. Based on the discussions and negotiations with strategic partners and investors
as well as with one of the principal shareholders, it is possible that the
planned business activities will be financed. The Company assumes that it will
continue as a going concern, albeit in the worst-case scenario at a reduced
level. The Company has installed a risk management system to detect any future risks
at an early stage and exploit opportunities that arise for the Company. It
comprises among other things budgetary planning on a monthly basis, monthly
reporting to management and the supervisory board, keeping the budget figures
up to date whenever changes occur, a project management including project cost
accounting and weekly management team meetings. The Companys supervisory
board meets regularly and, in addition to routine reporting, is informed or
consulted on specific issues. D. Anticipated Development The fiscal year 2004 will present a serious challenge. To maintain operations,
we will need additional equity and/or debt capital. The Company will further define its areas of focus. There are plans to spin
off the iGentifier technology platform, if possible, as it no longer generates
strategic added value for AXARON since the realignment. In 2004 AXARON will concentrate its activities on preparing and conducting
clinical trials with the drug AX200 for stroke treatment. The trials are
planned for the period from July 2004 through mid-2006. If the outcome is
positive, the agent could be licensed out to a pharmaceutical company after
these phase-II trials or be developed further in cooperation with a partner
from the pharmaceutical industry. The clinical research program will be
accompanied by preclinical studies. These include experiments to optimize
doses, further research on how it works and use of the drug for other diseases
with high medical demand and consequently high sales potential, such as
Parkinsons. Axaminer, the technology platform for cell-type-specific
transcription profiling, will be another main area of focus for the Company.
Based on the business development in 2003, this service business is expected to
make a contribution to the Companys funding in 2004. The search for cooperation partners will be pursued. In addition, AXARON will
reinforce its efforts to win a venture capital investor to fund the Company.




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##### Table of Contents



Courtesy Translation E. Research and Development After receiving the rights to use the drug AX200 for applications in the field
of the central nervous system in 2002, AXARON conducted further experiments on
its effectiveness in 2003, in particular relating to stroke treatment. The
first steps were also taken to prepare for the clinical phase II trials. A pilot study researched AX200s potential for Parkinsons disease. The
initial preliminary results are positive. The Max-Planck-lnstitut für Experimentelle Medizin in Göttingen is conducting
research on the potential of the drug AX205 for treating amyotrophic lateral
sclerosis. The research work on the DoubleSwitch technology platform for protein-protein
interaction was scaled back in 2003 due to the increase in resources needed by
other, more advanced projects. Activities in the Atlas project, the research and development project for the
Axaminer technology, which is subsidized by the German Federal Ministry for
Education and Research, were completed at year-end 2003 after a period of two
years. A final report and actual costing will follow at the start of 2004. The Axaminer technology platform which was already introduced on the market in
May 2003 was optimized further in the course of the year. In total, AXARON Bioscience AG filed three patent applications in 2003 (2002:
13) and one utility model. Heidelberg, February 2004 AXARON Bioscience AG The Management Board




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##### Table of Contents



Exhibit Index Exhibit No.
    
    Description of Document2.1
    
    Acquisition Agreement, dated as of February 4, 1998, by and between
the Company and Inex Pharmaceuticals Corporation, incorporated by
reference to the indicated exhibit of the Companys Current Report on
Form 8-K filed on March 24, 1998.3.1
    
    Amended and Restated Certificate of Incorporation of the Company,
incorporated by reference to the indicated exhibit of the Companys
Form 10-Q for the period ended June 30, 2000.3.1.1
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Company, incorporated by reference to the
indicated exhibit of the Companys Form 10-K for the period ended
December 31, 2002.3.2
    
    Bylaws of the Company, as amended, incorporated by reference to the
indicated exhibit of the Companys Form 10-Q for the period ended
June 30, 2000.4.1
    
    Form of Common Stock Certificate, incorporated by reference to
Exhibit 4.2 of the Companys Statement Form 10 (File No. 0-22570), as
amended (see the Statement Form 10).10.1
    
    Form of Indemnity Agreement entered into between the Company and its
directors and officers, incorporated by reference to Exhibit 10.7 of
the Companys Statement Form 10.10.2**
    
    The Companys 1992 Stock Option Plan (the Stock Option Plan),
incorporated by reference to Exhibit 10.8 of the Companys Statement
Form 10.10.3**
    
    Form of Incentive Stock Option Grant under the Stock Option Plan,
incorporated by reference to Exhibit 10.9 of the Companys Statement
Form 10.10.4**
    
    Form of Nonstatutory Stock Option Grant under the Stock Option Plan,
incorporated by reference to Exhibit 10.10 of the Companys Statement
Form 10.10.5
    
    Agreement of Assignment and License of Intellectual Property Rights,
dated June 30, 1992, by and between the Company and ABI, incorporated
by reference to Exhibit 10.11 of the Companys Statement Form 10.10.6
    
    Amended and Restated Investor Rights Agreement, dated as of November
1, 1995, incorporated by reference to Exhibit 10.30 of the Companys
Form 10-K for the period ended December 31, 1995.10.7+
    
    Technology Development and Services Agreement, dated as of October 2,
1995, by and among the Company, Hoechst Aktiengesellschaft and its
subsidiary, Hoechst Marion Roussel, Inc., incorporated by reference
to Exhibit 10.28 of the Companys Form 10-K for the period ended
December 31, 1995.10.7.1+
    
    Amended and Restated First Amendment to Technology Development and
Services Agreement, dated May 1, 1998, by and between the Company and
Hoechst Marion Roussel, Inc., incorporated by reference to Exhibit
10.36 of the Companys Form 10-Q for the period ended June 30, 1998.10.7.2+
    
    Second Amendment to Technology Development and Services Agreement,
dated March 1, 1999, by and among the Company, Hoechst Marion
Roussel, Inc. and its affiliate Hoechst Schering AgrEvo GmbH,
incorporated by reference to the indicated exhibit of the Companys
Form 10-K/A filed on August 24, 2001 for the period ended December
31, 2001.




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##### Table of Contents



Exhibit No.
    
    Description of Document10.7.3+
    
    Third Amendment to Technology Development and Services Agreement,
dated December 20, 1999, by and among the Company, Aventis
Pharmaceutical Inc. and its affiliate Aventis CropScience GmbH,
incorporated by reference to the indicated exhibit of the Companys
Form 10-K/A filed on August 24, 2001 for the period ended December
31, 2001.10.7.4+
    
    Fourth Amendment to Technology Development and Services Agreement,
dated March 31, 2002, by and between the Company and Aventis
CropScience GmbH, incorporated by reference to the indicated exhibit
of the Companys Form 10-Q for the period ended March 31, 2002.10.7.5+
    
    Fifth Amendment to Technology Development and Services Agreement,
dated as of September 30, 2002, by and between the Company and Bayer
CropScience GmbH, incorporated by reference to the indicated exhibit
of the Companys Form 10-Q for the period ended September 30, 2002.10.10
    
    Lease, dated as of February 27, 1998, by and between the Company and
SimFirst, L.P., Limited Partnership, incorporated by reference to
Exhibit 10.35 of the Companys Form 10-Q for the period ended March
31, 1998.10.11**
    
    The Companys 1998 Employee Stock Purchase Plan (the Purchase
Plan), incorporated by reference to Exhibit 99.1 of the Companys
Form S-8 (File No. 333-59163).10.12+
    
    Research Collaboration Agreement, dated as of October 29, 1998, by
and between the Company and E.I. Dupont de Nemours and Co.,
incorporated by reference to Exhibit 10.13 of the Companys Form
10-K/A filed on August 24, 2001 for the period ended December 31,
2001.10.12.1+
    
    Letter Amendment, dated March 1, 2002, to Research Collaboration
Agreement by and between the Company and E.I. DuPont De Nemours and
Co., incorporated by reference to the indicated exhibit of the
Companys Form 10-Q for the period ended March 31, 2002.10.13
    
    Master Loan and Security Agreement, dated as of October 26, 1998, by
and between the Company and Transamerica Business Credit Corporation,
incorporated by reference to Exhibit 10.14 of the Companys Form
10-K/A filed on August 24, 2001 for the period ended December 31,
2001.10.14
    
    Promissory Note No. 7, dated as of September 29, 2000, issued by the
Company to Transamerica Business Credit Corporation, incorporated by
reference to Exhibit 10.15 of the Companys Form 10-K/A filed on
August 24, 2001 for the period ended December 31, 2001.10.15+
    
    Collaboration Agreement, dated as of September 30, 1999, by and
between the Company and Hoechst Schering AgrEvo GmbH, incorporated by
reference to Exhibit 10.16.10.16**
    
    Employment Agreement, dated as of October 18, 1999, by and between
the Company and Norman John Wilkie Russell, Ph.D., incorporated by
reference to Exhibit 10.13 of the Companys Form 10-Q for the period
ended September 30, 1999.10.17+
    
    Collaboration Agreement, dated as of October 1, 2000, by and between
the Company and Takara Shuzo Co., Ltd. incorporated by reference to
Exhibit 10.18 of the Companys Form 10-K/A filed on August 24, 2001
for the period ended December 31, 2001.10.17.1+
    
    Amendment No. 1 to Collaboration Agreement, dated December 19, 2002,
by and between the Company and Takara Bio Inc., incorporated by
reference to the indicated exhibit of the Companys Form 10-K for the
period ended December 31, 2002.




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##### Table of Contents



Exhibit No.
    
    Description of Document10.17.2+
    
    Amendment No. 2 to Collaboration Agreement, dated June 30, 2003, by
and between the Company and Takara Bio Inc., incorporated by
reference to the indicated exhibit of the Companys Form 10-Q for the
period ended September 30, 2003.10.18
    
    Securities Purchase Agreement, dated as of May 24, 2001, by and among
the Company and the investors listed therein, incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form
8-K, filed on June 4, 2001.10.19
    
    Registration Rights Agreement, dated as of May 24, 2001, by and among
the Company and the investors listed therein, incorporated by
reference to Exhibit 10.2 of the Companys Current Report on Form
8-K, filed on June 4, 2001.10.20
    
    Form of Warrant issued by the Company in favor of each investor
thereto, incorporated by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K, filed on June 4, 2001.10.21+
    
    Joint Venture Agreement, dated as of June 29, 2001, by and between
the Company and BASF Aktiengesellschaft, incorporated by reference to
Exhibit 10.18 of the Companys Form 10-Q for the period ended June
30, 2001.10.22+
    
    First Amendment to Joint Venture Agreement, by and between the
Company and BASF Aktiengesellschaft, dated as of August 14, 2001,
incorporated by reference to Exhibit 10.22.2 of the Companys Form
10-Q for the period ended September 30, 2001.10.23+
    
    Technology License Agreement, dated as of June 1, 2001, by and
between the Company and BASF-LYNX Bioscience AG, incorporated by
reference to Exhibit 10.19 of the Companys Form 10-Q for the period
ended June 30, 2001.10.24
    
    Common Stock Purchase Agreement, by and between the Company and
Takara Shuzo Co., Ltd., dated as of October 1, 2001, incorporated by
reference to Exhibit 10.24 of the Companys Form 10-Q for the period
ended September 30, 2001.10.25+
    
    Purchase Agreement, dated as of March 5, 2002, by and between Geron
Corporation and Lynx Therapeutics, Inc., incorporated by reference to
the indicated exhibit of the Companys Current Report on Form 8-K
filed on March 18, 2002.10.26+
    
    Common Stock Purchase Agreement, dated as of March 5, 2002, by and
between Geron Corporation and Lynx Therapeutics, Inc., incorporated
by reference to the indicated exhibit of the Companys Current Report
on From 8-K filed on March 18, 2002.10.27
    
    Form of Securities Purchase Agreement by and among the Company and
the investors listed therein, incorporated by reference to the
indicated exhibit of the Companys Current Report on Form 8-K, as
amended, filed on April 30, 2002.10.28
    
    Form of Registration Rights Agreement by and among the Company and
the investors listed therein, incorporated by reference to the
indicated exhibit of the Companys Current Report on Form 8-K, as
amended, filed on April 30, 2002.10.29
    
    Form of Warrant issued by the Company in favor or each investor party
to the Securities Purchase Agreement and Friedman, Billings, Ramsey &
Co., Inc., incorporated by reference to the indicated exhibit of the
Companys Current Report on Form 8-K, as amended, filed on April 30,
2002.




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##### Table of Contents



Exhibit No.
    
    Description of Document10.30**
    
    Employment Agreement, dated as of June 3, 2002, by and between the
Company and Kevin P. Corcoran, incorporated by reference to the
indicated exhibit of the Companys Form 10-Q for the period ended
June 30, 2002.10.31**
    
    Employment Agreement, dated as of June 10, 2002, by and between the
Company and Thomas J. Vasicek, Ph.D., incorporated by reference to
the indicated exhibit of the Companys Form 10-Q for the period ended
June 30, 2002.10.32**
    
    Letter Agreement, dated as of July 9, 2002, by and between the
Company and Norman John Wilkie Russell, Ph.D., incorporated by
reference to the indicated exhibit of the Companys Form 10-Q for the
period ended June 30, 2002.10.33
    
    Common Stock Purchase Agreement, dated as of September 25, 2002, by
and between the Company and Takara Shuzo Co., Ltd., incorporated by
reference to the indicated exhibit of the Companys Form 10-Q for the
period ended September 30, 2002.10.34
    
    Loan and Security Agreement, dated October 23, 2002, by and between
the Company and Comerica Bank-California, incorporated by reference
to the indicated exhibit of the Companys Form 10-Q for the period
ended September 30, 2002.10.35
    
    Common Stock Purchase Agreement, dated as of December 26, 2002, by
and between the Company and Takara Shuzo Co., Ltd., incorporated by
reference to the indicated exhibit of the Companys Form 10-K for the
period ended December 31, 2002.10.39
    
    Securities Purchase Agreement by and among the Company and the
investors listed therein, incorporated by reference to the indicated
exhibit of the Companys Form 8-K filed on September 25, 2003.10.40
    
    Form of Warrant issued by the Company in favor of each investor,
incorporated by reference to the indicated exhibit of the Companys
Form 8-K filed on September 25, 2003.10.41+
    
    Services Agreement, by and between E.I. DuPont de Nemours and Company.10.42
    
    Securities Purchase Agreement by and among the Company and the
investors listed therein, incorporated by reference to the indicated
exhibit of the Companys Form 8-K filed on January 2, 2004.10.43
    
    Form of Warrant issued by the Company in favor of each investor,
incorporated by reference to the indicated exhibit of the Companys
Form 8-K filed on January 2, 2004.21.1*
    
    Subsidiaries of the Company.23.1
    
    Consent of Ernst & Young LLP, Independent Auditors.23.2*
    
    Consent of Ernst & Young AG, Independent Auditors.24.1
    
    Power of Attorney.31.1
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.2
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended .




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##### Table of Contents



Exhibit No.
    
    Description of Document31.3
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.4
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.5*
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.6*
    
    Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.32.1++
    
    Certification required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).32.2++*
    
    Certification required by Rule 13a-14(b) or Rule 15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).++
    
    This certification accompanies the Annual Report on Form 10-K which
it relates, pursuant to Section 906 of the Sarbanes Oxley Act of
2002, and is not deemed filed with the Securities and Exchange
Commission and is not to be incorporated by reference into any filing
of Lynx Therapeutics, Inc. under the Securities Act or the Exchange
Act (whether made before or after the date of the Annual Report on
Form 10-K), irrespective of any general incorporation language
contained in such filing.
   *
    
    Being filed herewith; all other exhibits previously filed.**
    
    Management contract or compensatory plan or arrangement.(+)
    
    Portions of this agreement have been deleted pursuant to our request for confidential treatment.