Edgar Filing: LYNX THERAPEUTICS INC

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-87394

PROSPECTUS

20,732,000 SHARES

LYNX THERAPEUTICS, INC.

COMMON STOCK

The selling stockholders listed beginning on page 10 are offering up to
20,732,000 shares of Lynx Therapeutics, Inc. common stock, which includes
6,132,000 shares of common stock issuable to the selling stockholders upon the
exercise of warrants to purchase common stock. We will not receive any proceeds
from the sale of the shares of common stock by the selling stockholders.

Our common stock trades on the Nasdaq National Market under the symbol
LYNX. On May 10, 2002, the last reported sale price of our common stock was
$1.38 per share.

The selling stockholders may sell the shares of common stock described
in this prospectus in a number of different ways and at varying prices. See
"Plan of Distribution" beginning on page 15 for more information about how the
selling stockholders may sell their shares of common stock. We will not be
paying any underwriting discounts or commissions in this offering.

------------------------
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2.
------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

May 13, 2002.

TABLE OF CONTENTS

Page
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LYNX............................................................................... 1

RISK FACTORS....................................................................... 2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS............................... 9

WHERE YOU CAN FIND MORE INFORMATION ABOUT LYNX AND THIS OFFERING................... 9

USE OF PROCEEDS.................................................................... 10

SELLING STOCKHOLDERS............................................................... 10

PLAN OF DISTRIBUTION............................................................... 15

LEGAL MATTERS...................................................................... 17

EXPERTS............................................................................ 17

LYNX

We believe that Lynx Therapeutics, Inc. is a leader in the development and
application of novel technologies for the discovery of gene expression patterns
and genomic variations important to the pharmaceutical, biotechnology and
agricultural industries. Gene expression patterns refer to the number of genes
and the extent a cell or tissue expresses those genes, and they represent a way
to move beyond DNA sequence data to understand the function of genes, the
proteins that they encode and the role they play in health and disease. Genomic
variations refer to the differences in the genetic sequences in the genomes of
different organisms. Megaclone, our unique and proprietary cloning procedure,
forms the foundation of these technologies. Megaclone transforms a sample
containing millions of DNA molecules into one made up of millions of
micro-beads, which are microscopic beads of latex, each of which carries
approximately 100,000 copies of one of the DNA molecules in the sample. In
contrast to conventional cloning, in which an individual DNA molecule is
selected from a sample and amplified into many copies for analysis or
identification, we can capture on one set of micro-beads clones of nearly all
the DNA sequences that characterize a sample. Once attached to the micro-beads,
these clones can be handled and subjected to experiments and analyses all at the
same time. Megaclone thereby enables many analyses or characterizations to be
conducted that would otherwise be too cumbersome or onerous to conduct using
conventional procedures where each clone must be addressed individually. Based
on Megaclone, we have developed a suite of applications that have the potential
to enhance the pace, scale and quality of genomics and genetics research
programs.

The primary genomics application we have developed that leverages the power
of Megaclone is Massively Parallel Signature Sequencing, or MPSS. MPSS generates
simultaneously, from a million or more Megaclone micro-beads, gene sequence
information that uniquely identifies a sample's DNA molecules without the need
for individual conventional sequencing reactions, and produces a comprehensive
quantitative profile of gene expression in cells or tissues.

We are developing additional applications of these technologies, as well as
new technologies aimed at addressing the needs of the pharmaceutical,
biotechnology and agricultural industries. Lynx is also developing a proteomics
technology, Protein ProFiler, which is expected to provide high-resolution
analysis of complex mixtures of proteins from cells or tissues. Proteomics is
the study of the number of proteins and the extent to which they are expressed
in cells or tissues.

Lynx was incorporated in Delaware in February 1992. Our executive offices
are located at 25861 Industrial Boulevard, Hayward, California 94545, and our
telephone number is (510) 670-9300.

Lynx, MPSS(TM), Megaclone(TM), Protein ProFiler(TM) and the Lynx logo are
some of Lynx Therapeutics, Inc.'s trademarks and service marks. Other
trademarks, trade names and service marks referred to in this prospectus are the
property of their respective owners.

RECENT DEVELOPMENTS

On April 29, 2002, we sold 14,600,000 newly issued shares of our common
stock at a purchase price of $1.55 per share and warrants to purchase up to
5,840,000 shares of our common stock at an exercise price of $1.94 per share for
an aggregate purchase price of approximately $22,630,000. In addition, we issued
a warrant to purchase up to 292,000 shares of our common stock at an exercise
price of $1.55 per share to Friedman, Billings, Ramsey & Co., Inc. as partial
compensation, in addition to customary fees, for services rendered to us in
connection with the private placement transaction.

RISK FACTORS

You should carefully consider the following risk factors, in addition to
other information included or incorporated by reference in this prospectus,
before making an investment decision. Additional risks that we do not yet know
of or that we currently think are immaterial may also impair our business
operations. If any of the events or circumstances described in the following
risks actually occurs, our business may suffer, the trading price of our common
stock could decline and you may lose all or part of your investment.

WE HAVE A HISTORY OF NET LOSSES, AND WE MAY NOT ACHIEVE OR MAINTAIN
PROFITABILITY.

We have incurred net losses each year since our inception in 1992, including
net losses of approximately $6.7 million in 1999, $13.3 million in 2000 and
$16.7 million in 2001. As of December 31, 2001, we had an accumulated deficit of
approximately $83.4 million. Future net losses or profits will depend, in part,
on the rate of growth, if any, in our revenues and on the level of our expenses.
Our research and development expenditures and general and administrative costs
have exceeded our revenues to date, and we expect research and development
expenses to increase due to planned spending for ongoing technology development
and implementation, as well as new applications. As a result, we will need to
generate significant additional revenues to achieve profitability. Even if we do
increase our revenues and achieve profitability, we may not be able to sustain
profitability.

Our ability to generate revenues and achieve profitability depends on many
factors, including:

- our ability to continue existing customer relationships and enter into
additional corporate collaborations and agreements;

- our ability to discover genes and targets for drug discovery;

- our ability to expand the scope of our research into new areas of
pharmaceutical, biotechnology and agricultural research;

- our collaborators' ability to develop diagnostic and therapeutic
products from our drug discovery targets; and

- the successful clinical testing, regulatory approval and
commercialization of such products.

The time required to reach profitability is highly uncertain. We may not
achieve profitability on a sustained basis, if at all.

WE WILL NEED ADDITIONAL FUNDS IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO US.

We have invested significant capital in our scientific and business
development activities. Our future capital requirements will be substantial as
we expand our operations, and will depend on many factors, including:

- the progress and scope of our collaborative and independent research and
development projects;

- payments received under collaborative agreements;

- our ability to establish and maintain collaborative arrangements;

- the progress of the development and commercialization efforts under our
collaborations and corporate agreements;

- the costs associated with obtaining access to samples and related
information; and

- the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims and other intellectual property rights.

We anticipate that our current cash and cash equivalents, short-term
investments and funding to be received from collaborators and customers will
enable us to maintain our currently planned operations for at least the next 12
months. Changes to our current operating plan may require us to consume
available capital resources significantly sooner than we expect. If our capital
resources are insufficient to meet future capital requirements, we will have to

raise additional funds. We do not know if we will be able to raise sufficient
additional capital on acceptable terms, or at all. If we raise additional
capital by issuing equity or convertible debt securities, our existing
stockholders may experience substantial dilution. If we fail to obtain adequate
funds on reasonable terms, we may have to curtail operations significantly or
obtain funds by entering into financing or collaborative agreements on
unattractive terms.

OUR TECHNOLOGIES ARE NEW AND UNPROVEN AND MAY NOT ALLOW US OR OUR COLLABORATORS
TO IDENTIFY GENES OR TARGETS FOR DRUG DISCOVERY.

You must evaluate us in light of the uncertainties and complexities
affecting an early stage genomics and proteomics company. Our technologies are
new and unproven. The application of these technologies is in too early a stage
to determine whether it can be successfully implemented. These technologies
assume that information about gene expression, protein expression and gene
sequences may enable scientists to better understand complex biological
processes. Our technologies also depend on the successful integration of
independent technologies, each of which has its own development risks.
Relatively few therapeutic products based on gene discoveries have been
successfully developed and commercialized. Our technologies may not enable us or
our collaborators to identify genes, proteins or targets for drug discovery. To
date, neither we nor our collaborators have identified any targets for drug
discovery based on our technologies.

WE DEPEND ON OUR COLLABORATIONS AND WILL NEED TO FIND ADDITIONAL COLLABORATORS
IN THE FUTURE TO DEVELOP AND COMMERCIALIZE DIAGNOSTIC OR THERAPEUTIC PRODUCTS.

Our strategy for the development and commercialization of our technologies
and potential products includes entering into collaborations, subscription
arrangements or licensing arrangements with pharmaceutical, biotechnology and
agricultural companies. We do not have the resources to develop or commercialize
diagnostic or therapeutic products on our own. If we cannot negotiate additional
collaborative arrangements or contracts on acceptable terms, or at all, or such
collaborations or relationships are not successful, we may never become
profitable.

We have derived substantially all of our revenues from corporate
collaborations and agreements. Revenues from collaborations and related
agreements depend upon continuation of the collaborations, the achievement of
milestones and royalties derived from future products developed from our
research and technologies. To date, we have received a significant portion of
our revenues from a small number of collaborators and customers. For the year
ended December 31, 2001, revenues from DuPont, BASF, Takara and the Institute of
Molecular and Cell Biology accounted for 37%, 24%, 12% and 12%, respectively, of
our total revenues. For the year ended December 31, 2000, revenues from DuPont,
BASF and Aventis CropScience accounted for 51%, 29% and 11%, respectively, of
our total revenues. For the year ended December 31, 1999, revenues from DuPont,
Aventis CropScience and BASF accounted for 81%, 13% and 5%, respectively, of our
total revenues. If we fail to successfully achieve milestones or our
collaborators fail to develop successful products, we will not earn the revenues
contemplated under such collaborative agreements. If our collaborators or
customers do no renew existing agreements, we lose one of these collaborators or
customers and we do not attract new collaborators or customers or we are unable
to enter into new collaborative agreements on commercially acceptable terms, our
revenues may decrease, and our activities may fail to lead to commercialized
products.

Our dependence on collaborative arrangements with third parties subjects us
to a number of risks. We have limited or no control over the resources that our
collaborators may choose to devote to our joint efforts. Our collaborators may
breach or terminate their agreements with us or fail to perform their
obligations thereunder. Further, our collaborators may elect not to develop
products arising out of our collaborative arrangements or may fail to devote
sufficient resources to the development, manufacture, marketing or sale of such
products. While we do not currently compete directly with any of our
collaborators, some of our collaborators could become our competitors in the
future if they internally develop DNA or protein analysis technologies or if
they acquire other genomics or proteomics companies and move into the genomics
and proteomics industries. We will not earn the revenues contemplated under our
collaborative arrangements, if our collaborators:

- do not develop commercially successful products using our technologies;

- develop competing products;

- preclude us from entering into collaborations with their competitors;

- fail to obtain necessary regulatory approvals; or

- terminate their agreements with us.

WE DEPEND ON A SOLE SUPPLIER TO MANUFACTURE FLOW CELLS USED IN OUR MPSS
TECHNOLOGY.

Flow cells are glass plates that are micromachined, or fabricated to very
precise, small dimensions, to create a grooved chamber for immobilizing
microbeads in a planar microarray, which is a two-dimensional, dense ordered
array of DNA samples. We use flow cells in our Massively Parallel Signature
Sequencing, or MPSS, technology. We currently purchase the flow cells used in
our MPSS technology from a single supplier, although the flow cells are
potentially available from multiple suppliers. While we believe that alternative
suppliers for flow cells exist, identifying and qualifying new suppliers could
be an expensive and time-consuming process. Our reliance on outside vendors
involves several risks, including:

- the inability to obtain an adequate supply of required components due to
manufacturing capacity constraints, a discontinuance of a product by a
third-party manufacturer or other supply constraints;

- reduced control over quality and pricing of components; and

- delays and long lead times in receiving materials from vendors.

WE OPERATE IN AN INTENSELY COMPETITIVE INDUSTRY WITH RAPIDLY EVOLVING
TECHNOLOGIES, AND OUR COMPETITORS MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT
MAKE OURS OBSOLETE.

The biotechnology industry is highly fragmented and is characterized by
rapid technological change. In particular, the area of genomics and proteomics
research is a rapidly evolving field. Competition among entities attempting to
identify genes and proteins associated with specific diseases and to develop
products based on such discoveries is intense. Many of our competitors have
substantially greater research and product development capabilities and
financial, scientific and marketing resources than we do.

We face, and will continue to face, competition from pharmaceutical,
biotechnology and agricultural companies, as well as academic research
institutions, clinical reference laboratories and government agencies. Some of
our competitors, such as Affymetrix, Inc., Celera Genomics Group, Incyte
Genomics, Inc., Gene Logic, Inc., Genome Therapeutics Corporation and Hyseq,
Inc., may be:

- attempting to identify and patent randomly sequenced genes and gene
fragments and proteins;

- pursuing a gene identification, characterization and product development
strategy based on positional cloning, which uses disease inheritance
patterns to isolate the genes that are linked to the transmission of
disease from one generation to the next; and

- using a variety of different gene and protein expression analysis
methodologies, including the use of chip-based systems, to attempt to
identify disease-related genes and proteins.

In addition, numerous pharmaceutical, biotechnology and agricultural
companies are developing genomics and proteomics research programs, either alone
or in partnership with our competitors. Our future success will depend on our
ability to maintain a competitive position with respect to technological
advances. Rapid technological development by others may make our technologies
and future products obsolete.

Any products developed through our technologies will compete in highly
competitive markets. Our competitors may be more effective at using their
technologies to develop commercial products. Further, our competitors may obtain
intellectual property rights that would limit the use of our technologies or the
commercialization of diagnostic or therapeutic products using our technologies.
As a result, our competitors' products or technologies may render our
technologies and products, and those of our collaborators, obsolete or
noncompetitive.

IF WE FAIL TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGIES, THIRD PARTIES MAY
BE ABLE TO USE OUR TECHNOLOGY, WHICH COULD PREVENT US FROM COMPETING IN THE
MARKET.

Our success depends in part on our ability to obtain patents and maintain
adequate protection of the intellectual property related to our technologies and
products. The patent positions of biotechnology companies, including our patent
position, are generally uncertain and involve complex legal and factual
questions. We will be able to protect our proprietary rights from unauthorized
use by third parties only to the extent that our proprietary technologies are
covered by valid and enforceable patents or are effectively maintained as trade
secrets. The laws of some foreign countries do not protect proprietary rights to
the same extent as the laws of the U.S., and many companies have encountered
significant problems in protecting and defending their proprietary rights in
foreign jurisdictions. We have applied and will continue to apply for patents
covering our technologies, processes and products as and when we deem
appropriate. However, third parties may challenge these applications, or these
applications may fail to result in issued patents. Our existing patents and any
future patents we obtain may not be sufficiently broad to prevent others from
practicing our technologies or from developing competing products. Furthermore,
others may independently develop similar or alternative technologies or design
around our patents. In addition, our patents may be challenged or invalidated or
fail to provide us with any competitive advantage.

We also rely on trade secret protection for our confidential and proprietary
information. However, trade secrets are difficult to protect. We protect our
proprietary information and processes, in part, with confidentiality agreements
with employees, collaborators and consultants. However, third parties may breach
these agreements, we may not have adequate remedies for any such breach or our
trade secrets may still otherwise become known by our competitors. In addition,
our competitors may independently develop substantially equivalent proprietary
information.

LITIGATION OR THIRD-PARTY CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT COULD
REQUIRE US TO SPEND SUBSTANTIAL TIME AND MONEY AND ADVERSELY AFFECT OUR ABILITY
TO DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES AND PRODUCTS.

Our commercial success depends in part on our ability to avoid infringing
patents and proprietary rights of third parties and not breaching any licenses
that we have entered into with regard to our technologies. Other parties have
filed, and in the future are likely to file, patent applications covering genes,
gene fragments, proteins, the analysis of gene expression and protein expression
and the manufacture and use of DNA chips or microarrays, which are tiny glass or
silicon wafers on which tens of thousands of DNA molecules can be arrayed on the
surface for subsequent analysis. We intend to continue to apply for patent
protection for methods relating to gene expression and protein expression and
for the individual disease genes and proteins and drug discovery targets we
discover. If patents covering technologies required by our operations are issued
to others, we may have to rely on licenses from third parties, which may not be
available on commercially reasonable terms, or at all.

Third parties may accuse us of employing their proprietary technology
without authorization. In addition, third parties may obtain patents that relate
to our technologies and claim that use of such technologies infringes these
patents. Regardless of their merit, such claims could require us to incur
substantial costs, including the diversion of management and technical
personnel, in defending ourselves against any such claims or enforcing our
patents. In the event that a successful claim of infringement is brought against
us, we may need to pay damages and obtain one or more licenses from third
parties. We may not be able to obtain these licenses at a reasonable cost, or at
all. Defense of any lawsuit or failure to obtain any of these licenses could
adversely affect our ability to develop and commercialize our technologies and
products and thus prevent us from achieving profitability.

WE HAVE LIMITED EXPERIENCE IN SALES AND MARKETING AND THUS MAY BE UNABLE TO
FURTHER COMMERCIALIZE OUR TECHNOLOGIES AND PRODUCTS.

Our ability to achieve profitability depends on attracting collaborators and
customers for our technologies and products. There are a limited number of
pharmaceutical, biotechnology and agricultural companies that are potential
collaborators and customers for our technologies and products. To market our
technologies and products, we must develop a sales and marketing group with the
appropriate technical expertise. We may not successfully build such a sales
force. If our sales and marketing efforts fail to be successful, our
technologies and products may fail to gain market acceptance.

OUR SALES CYCLE IS LENGTHY, AND WE MAY SPEND CONSIDERABLE RESOURCES ON
UNSUCCESSFUL SALES EFFORTS OR MAY NOT BE ABLE TO ENTER INTO AGREEMENTS ON THE
SCHEDULE WE ANTICIPATE.

Our ability to obtain collaborators and customers for our technologies and
products depends in significant part upon the perception that our technologies
and products can help accelerate their drug discovery and genomics and
proteomics efforts. Our sales cycle is typically lengthy because we need to
educate our potential collaborators and customers and sell the benefits of our
products to a variety of constituencies within such companies. In addition, we
may be required to negotiate agreements containing terms unique to each
collaborator or customer. We may expend substantial funds and management effort
with no assurance that we will successfully sell our technologies and products.
Actual and proposed consolidations of pharmaceutical companies have negatively
affected, and may in the future negatively affect, the timing and progress of
our sales efforts.

WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH.

We may experience significant growth in the number of our employees and the
scope of our operations. This growth may place a significant strain on our
management and operations. As our operations expand, we expect that we will need
to manage additional relationships with various collaborators and customers,
suppliers and other third parties. Our ability to manage our operations and
growth effectively requires us to continue to improve our operational, financial
and management controls, reporting systems and procedures. We may not
successfully implement improvements to our management information and control
systems in an efficient or timely manner and may discover deficiencies in
existing systems and controls.

THE LOSS OF KEY PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL COULD IMPAIR THE GROWTH OF OUR BUSINESS.

We are highly dependent on the principal members of our management and
scientific staff. The loss of any of these persons' services might adversely
impact the achievement of our objectives and the continuation of existing
collaborations. In addition, recruiting and retaining qualified scientific
personnel to perform future research and development work will be critical to
our success. There is currently a shortage of skilled executives and employees
with technical expertise, and this shortage is likely to continue. As a result,
competition for skilled personnel is intense and turnover rates are high.
Competition for experienced scientists from numerous companies, academic and
other research institutions may limit our ability to attract and retain such
personnel. We depend on our President and Chief Executive Officer, Norman J.W.
Russell, Ph.D., the loss of whose services could have a material adverse effect
on our business. Although we have an employment agreement with Dr. Russell in
place, currently we do not maintain key person insurance for him or any other
key personnel.

WE USE HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS IN OUR
BUSINESS. ANY CLAIMS RELATING TO IMPROPER HANDLING, STORAGE OR DISPOSAL OF THESE
MATERIALS COULD BE TIME CONSUMING AND COSTLY.

Our research and development processes involve the controlled use of
hazardous materials, including chemicals and radioactive and biological
materials. Our operations produce hazardous waste products. We cannot eliminate
the risk of accidental contamination or discharge and any resultant injury from
these materials. Federal, state and local laws and regulations govern the use,
manufacture, storage, handling and disposal of hazardous materials. We may be
sued for any injury or contamination that results from our use or the use by
third parties of these materials, and our liability may exceed our insurance
coverage and our total assets. Compliance with environmental laws and
regulations may be expensive, and current or future environmental regulations
may impair our research, development and production efforts.

ETHICAL, LEGAL AND SOCIAL ISSUES MAY LIMIT THE PUBLIC ACCEPTANCE OF, AND DEMAND
FOR, OUR TECHNOLOGIES AND PRODUCTS.

Our collaborators and customers may seek to develop diagnostic products
based on genes or proteins we discover. The prospect of broadly available
gene-based diagnostic tests raises ethical, legal and social issues regarding
the appropriate use of gene-based diagnostic testing and the resulting
confidential information. It is possible that discrimination by third-party
payors, based on the results of such testing, could lead to the increase of
premiums by such payors to prohibitive levels, outright cancellation of
insurance or unwillingness to provide coverage to individuals showing
unfavorable gene expression profiles. Similarly, employers could discriminate
against employees with gene expression profiles indicative of the potential for
high disease-related costs and lost employment time. Finally, government
authorities could, for social or other purposes, limit or prohibit the use of

such tests under certain circumstances. These ethical, legal and social concerns
about genetic testing and target identification may delay or prevent market
acceptance of our technologies and products.

Although our technology does not depend on genetic engineering, genetic
engineering plays a prominent role in our approach to product development. The
subject of genetically modified food has received negative publicity, which has
aroused public debate. Adverse publicity has resulted in greater regulation
internationally and trade restrictions on imports of genetically altered
agricultural products. Claims that genetically engineered products are unsafe
for consumption or pose a danger to the environment may influence public
attitudes and prevent genetically engineered products from gaining public
acceptance. The commercial success of our future products may depend, in part,
on public acceptance of the use of genetically engineered products, including
drugs and plant and animal products.

IF WE DEVELOP PRODUCTS WITH OUR COLLABORATORS, AND IF PRODUCT LIABILITY LAWSUITS
ARE SUCCESSFULLY BROUGHT AGAINST US, WE COULD FACE SUBSTANTIAL LIABILITIES THAT
EXCEED OUR RESOURCES.

We may be held liable, if any product we develop with our collaborators
causes injury or is otherwise found unsuitable during product testing,
manufacturing, marketing or sale. Although we have general liability and product
liability insurance, this insurance may become prohibitively expensive or may
not fully cover our potential liabilities. Inability to obtain sufficient
insurance coverage at an acceptable cost or to otherwise protect us against
potential product liability claims could prevent or inhibit our ability to
commercialize products developed with our collaborators.

HEALTHCARE REFORM AND RESTRICTIONS ON REIMBURSEMENTS MAY LIMIT OUR RETURNS ON
DIAGNOSTIC OR THERAPEUTIC PRODUCTS THAT WE MAY DEVELOP WITH OUR COLLABORATORS.

If we successfully validate targets for drug discovery, products that
we develop with our collaborators based on those targets may include diagnostic
or therapeutic products. The ability of our collaborators to commercialize such
products may depend, in part, on the extent to which reimbursement for the cost
of these products will be available from government health administration
authorities, private health insurers and other organizations. In the U.S.,
third-party payors are increasingly challenging the price of medical products
and services. The trend towards managed healthcare in the U.S., legislative
healthcare reforms and the growth of organizations such as health maintenance
organizations that may control or significantly influence the purchase of
healthcare products and services, may result in lower prices for any products
our collaborators may develop. Significant uncertainty exists as to the
reimbursement status of newly approved healthcare products. If adequate
third-party coverage is not available in the future, our collaborators may fail
to maintain price levels sufficient to realize an appropriate return on their
investment in research and product development.

OUR FACILITIES ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES; AN EARTHQUAKE OR
OTHER CATASTROPHIC DISASTER COULD CAUSE DAMAGE TO OUR FACILITIES AND EQUIPMENT,
WHICH COULD REQUIRE US TO CEASE OPERATIONS.

Our facilities are located near known earthquake fault zones and are
vulnerable to damage from earthquakes. We are also vulnerable to damage from
other types of disasters, including fire, floods, power loss, communications
failures and similar events. If any disaster were to occur, our ability to
operate our business at our facilities would be seriously, or potentially
completely, impaired. In addition, the unique nature of our research activities
could cause significant delays in our programs and make it difficult for us to
recover from a disaster. The insurance we maintain may not be adequate to cover
our losses resulting from disasters or other business interruptions.
Accordingly, an earthquake or other disaster could materially and adversely harm
our ability to conduct business.

OUR STOCK PRICE MAY BE EXTREMELY VOLATILE.

We believe that the market price of our common stock will remain highly
volatile and may fluctuate significantly due to a number of factors. The market
prices for securities of many publicly-held, early-stage biotechnology companies
have in the past been, and can in the future be expected to be, especially
volatile. For example, during the two-year period from March 31, 2000 to March
31, 2002, the closing sales price of our common stock as quoted on the Nasdaq
National Market fluctuated from a low of $2.02 to a high of $48.75 per share. In

addition, the securities markets have from time to time experienced significant
price and volume fluctuations that may be unrelated to the operating performance
of particular companies. The following factors and events may have a significant
and adverse impact on the market price of our common stock:

- fluctuations in our operating results;

- announcements of technological innovations or new commercial products by
us or our competitors;

- release of reports by securities analysts;

- developments or disputes concerning patent or proprietary rights;

- developments in our relationships with current or future collaborators
or customers; and

- general market conditions.

Many of these factors are beyond our control. These factors may cause a
decrease in the market price of our common stock, regardless of our operating
performance.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE IT MORE DIFFICULT TO ACQUIRE US OR TO EFFECT A CHANGE IN OUR MANAGEMENT,
EVEN THOUGH AN ACQUISITION OR MANAGEMENT CHANGE MAY BE BENEFICIAL TO OUR
STOCKHOLDERS.

Under our certificate of incorporation, our board of directors has the
authority, without further action by the holders of our common stock, to issue
2,000,000 additional shares of preferred stock from time to time in series and
with preferences and rights as it may designate. These preferences and rights
may be superior to those of the holders of our common stock. For example, the
holders of preferred stock may be given a preference in payment upon our
liquidation or for the payment or accumulation of dividends before any
distributions are made to the holders of common stock.

Any authorization or issuance of preferred stock, while providing desirable
flexibility in connection with financings, possible acquisitions and other
corporate purposes, could also have the effect of making it more difficult for a
third party to acquire a majority of our outstanding voting stock or making it
more difficult to remove directors and effect a change in management. The
preferred stock may have other rights, including economic rights senior to those
of our common stock, and, as a result, an issuance of additional preferred stock
could lower the market value of our common stock. Provisions of Delaware law may
also discourage, delay or prevent someone from acquiring or merging with us.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus and the documents incorporated by
reference are forward-looking statements. These statements are based on our
current expectations, assumptions, estimates and projections about our business
and our industry, and involve known and unknown risks, uncertainties and other
factors that may cause our or our industry's results, levels of activity,
performance or achievement to be materially different from any future results,
levels of activity, performance or achievements expressed or implied in or
contemplated by the forward-looking statements. Words such as "believe,"
"anticipate," "expect," "intend," "plan," "will," "may," "should," "estimate,"
"predict," "potential," "continue," or the negative of such terms or other
similar expressions, identify forward-looking statements. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. Our actual
results could differ materially from those anticipated in such forward-looking
statements as a result of several factors more fully described under the caption
"Risk Factors" and in the documents incorporated by reference. The
forward-looking statements made in this prospectus relate only to events as of
the date on which the statements are made.

WHERE YOU CAN FIND MORE INFORMATION ABOUT LYNX AND THIS OFFERING

You should rely only on the information provided or incorporated by
reference in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of the document.

We have filed with the SEC a resale registration statement on Form S-3 to
register the common stock offered by this prospectus. However, this prospectus
does not contain all of the information contained in the registration statement
and the exhibits and schedules to the registration statement. We strongly
encourage you to carefully read the registration statement and the exhibits and
schedules to the registration statement.

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Rooms in Washington, DC. You can request copies of these
documents by contacting the SEC and paying a fee for the copying cost. Please
call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Rooms. Our SEC filings are also available to the public from the SEC's website
at www.sec.gov.

The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring to those documents. The information incorporated
by reference is considered to be part of this prospectus. Information in this
prospectus supersedes information incorporated by reference that we filed with
the SEC prior to the date of this prospectus, while information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below, any filings we will make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 after the date we filed the registration statement of which this
prospectus is a part and before the effective date of the registration statement
and any future filings we will make with the SEC under those sections.

The following documents filed with the SEC are incorporated by reference in
this prospectus:

1. Our Annual Report on Form 10-K for the year ended December 31, 2001;

2. Our Current Reports on Form 8-K filed on March 15, 2002, as amended;
April 19, 2002; and April 30, 2002; and

3. The description of our common stock set forth in our registration
statement on Form 10 (No. 0-22570), as amended, filed with the SEC
pursuant to the Exchange Act on October 5, 1993.

We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, including exhibits to
these documents. You should direct any requests for documents to Lynx
Therapeutics, Inc., Attention: Investor Relations, 25861 Industrial Boulevard,
Hayward, California 94545, telephone: (510) 670-9300; email:
investor_information@lynxgen.com.

USE OF PROCEEDS

The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the accounts of the selling stockholders. We will not
receive any proceeds from the sale of these shares of common stock.

SELLING STOCKHOLDERS

We issued 14,600,000 shares of our common stock, and warrants to purchase up
to 5,840,000 shares of our common stock, in a private placement transaction. In
addition, we issued a warrant to purchase up to 292,000 shares of our common
stock to Friedman, Billings, Ramsey & Co., Inc. as partial compensation, in
addition to customary fees, for services rendered to us in connection with the
private placement transaction. We are registering the 20,732,000 shares covered
by this prospectus on behalf of the selling stockholders named in the table
below. We agreed to register all of the above referenced shares of common stock
for resale in connection with the terms and conditions of the private placement
transaction. We have registered the shares to permit each of the selling
stockholders and its pledgees, donees, transferees or other
successors-in-interest that receive their shares from each selling stockholder
as a gift, partnership distribution or other non-sale related transfer after the
date of this prospectus to resell the shares.

The following table sets forth the name of each selling stockholder, the
number of shares owned by it, the number of shares that may be offered under
this prospectus and the number of shares of our common stock owned by the
selling stockholder after this offering is completed. Except as otherwise
disclosed below, none of the selling stockholders has, or within the past three
years has had, any position, office or other material relationship with us. The
number of shares in the column "Number of Shares Being Offered" represents all
of the shares that a selling stockholder may offer under this prospectus, and
assumes the exercise of all the warrants for common stock. The selling
stockholders may sell some, all or none of their shares. We do not know how long
the selling stockholders will hold the shares before selling them, and we
currently have no agreements, arrangements or understandings with the selling
stockholders regarding the sale of any of the shares. The shares offered by this
prospectus may be offered from time to time by the selling stockholders.

Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the SEC under the Securities Exchange Act of 1934. Unless
otherwise noted, none of the share amounts set forth below represents more than
1% of our outstanding stock as of April 29, 2002, adjusted as required by rules
promulgated by the SEC. The percentages of shares beneficially owned prior to
the offering are based on 28,405,453 shares of our common stock outstanding as
of April 29, 2002, (which includes the sale of the 14,600,000 shares to the
selling stockholders in the private placement), plus the shares of common stock
issuable upon exercise of the warrants for common stock held by the respective
selling stockholder.

SHARES BENEFICIALLY NUMBER OF SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING SHARES OWNED AFTER OFFERING(1)
------------------------ BEING -----------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- ---------- -------- --------- ---------- ---------

Horizon Waves & Co. 3,500,000(2) 11.9% 3,500,000 0 0

Perceptive Life Sciences Master Fund Ltd. 2,660,000(3) 9.1% 2,660,000 0 0

Seneca Capital International, Ltd. 1,960,000(4) 6.8% 1,960,000 0 0

10.

H&Q Healthcare Investors 1,577,400(5) 5.5% 1,352,400 225,000 *

Bear Stearns Securities Corp. 1,260,000(6) 4.4% 1,260,000 0 0

V4 Partners, L.P. 1,120,000(7) 3.9% 1,120,000 0 0

H&Q Life Science Investors 1,051,600(8) 3.7% 901,600 150,000 *

FBR Private Equity Fund, L.P. 875,000(9) 3.1% 875,000 0 0

Seneca Capital L.P. 840,000(10) 2.9% 840,000 0 0

Millennium Global Offshore, LTD 816,200(11) 2.8% 816,200 0 0

PW Eucalyptus Fund, L.L.C. 567,000(12) 2.0% 567,000 0 0

Craig C. Taylor 531,439(13) 1.9% 88,200 443,239 1.6%

Winchester Global Trust Co. Ltd as
trustee for Caduceus Capital Trust, Ltd. 518,000(14) 1.8% 518,000 0 0

The Shaar Fund, Ltd. 455,000(15) 1.6% 455,000 0 0

FNY Millennium Partners, LP 408,800(16) 1.4% 408,800 0

William K. Bowes, Jr. 362,963(17) 1.3% 177,800 185,163 *

Piedmont Partners 315,000(18) 1.1% 315,000 0 0

Stratford Partners, L.P. 315,000(19) 1.1% 315,000 0 0

Friedman, Billings, Ramsey & Co., Inc. 292,000(20) 1.0% 292,000 0 0

Caduceus Capital II, LP 245,000(21) * 245,000 0 0

11.

M&M Arbitrage Offshore, Ltd. 239,400(22) * 239,400 0 0

Alan W. Steinberg Limited Partnership 210,000(23) * 210,000 0 0

J. Steven Emerson, IRA II
c/o Bear Stearns Securities Corp. Inc.,
Custodian 210,000(24) * 210,000 0 0

M&M Arbitrage Fund II, LLC 208,600(25) * 208,600 0 0

M&M Arbitrage, LLC 182,000(26) * 182,000 0 0

Osiris Investment Partners, LP 182,000(27) * 182,000 0 0

Radyr Investments Limited 182,000(28) * 182,000 0 0

Apex Limited Partners, L.P. 140,000(29) * 140,000 0 0

Seymour Rubinfeld 140,000(30) * 140,000 0 0

Bulldog Investment Partners, LP 88,333(31) * 88,333 0 0

PW Eucalyptus Fund, Ltd. 70,000(32) * 70,000 0 0

Bear Stearns Securities Corp. 56,000(33) * 56,000 0 0

John McClure 45,150(34) * 45,150 0 0

Canaccord Capital Corp. 35,000(35) * 35,000 0 0

Jeffrey Schnipper 35,000(36) * 35,000 0 0

Bulldog Investment Partners II, LP 23,667(37) * 23,667 0 0

Alexander Bistricer 17,850(38) * 17,850 0 0

12.

TOTAL NUMBER OF SHARES BEING OFFERED 20,732,000

------------------
* Represents less than 1%.

(1) Assumes the sale of all shares offered hereby.

(2) Includes 1,000,000 shares of common stock issuable upon exercise of a
warrant that was purchased in the private placement.

(3) Includes 760,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(4) Includes 560,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(5) Includes 966,000 shares of common stock and 386,400 shares of common stock
issuable upon exercise of a warrant that was purchased in the private
placement.

(6) Includes 360,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(7) Includes 320,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(8) Includes 644,000 shares of common stock and 257,600 shares of common stock
issuable upon exercise of a warrant that was purchased in the private
placement.

(9) Includes 250,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement. FBR Private Equity Fund, L.P.
("PEF") is an equity fund limited partnership. Friedman, Billings, Ramsey
Investment Management, Inc., a wholly owned subsidiary of Friedman,
Billings, Ramsey Group, Inc. ("FBRG"), serves as PEF's General Partner and
in such capacity directs its investment activities. Friedman, Billings,
Ramsey & Co., Inc., the sole manager for the private placement, is a wholly
owned subsidiary of FBRG.

(10) Includes 240,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(11) Includes 233,200 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(12) Includes 162,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(13) Includes 116,243 shares of common stock, 10,000 shares of common stock
issuable upon exercise of stock options and 41,092 shares of common stock
issuable upon exercise of warrants held by Mr. Taylor. Also includes
364,104 shares of common stock held by Asset Management Associates 1989
L.P. Mr. Taylor, the Chairman of the Board of Lynx, is a general partner of
AMC Partners 89, which is the general partner of Asset Management
Associates 1989 L.P. Mr. Taylor shares the power to vote and control the
disposition of shares held by Asset Management Associates 1989 L.P. and,
therefore, may be deemed to be the beneficial owner of such shares. Mr.
Taylor disclaims beneficial ownership of such shares, except to the extent
of his pro-rata interest therein. Mr. Taylor was elected Chairman of the
Board of Directors of Lynx in December 2000 and has served as a director of
Lynx since March 1994.

(14) Includes 148,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(15) Includes 130,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

13.

(16) Includes 116,800 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(17) Includes 162,401 shares of common stock held by Mr. Bowes, 17,606 shares of
common stock held by the William K. Bowes Charitable Remainder Trust, of
which Mr. Bowes is Trustee, 10,000 shares of common stock issuable upon
exercise of stock options held by Mr. Bowes and 50,800 shares of common
stock issuable upon exercise of a warrant that was purchased in the private
placement. Also includes 122,156 shares of common stock held by entities
affiliated with U.S. Venture Partners IV, L.P., or U.S.V.P. IV. Mr. Bowes,
a director of Lynx, is a general partner of Presidio Management Group IV,
the general partner of U.S.V.P. IV. Mr. Bowes shares the power to vote and
control the disposition of shares held by U.S.V.P. IV and, therefore, may
be deemed to be the beneficial owner of such shares. Mr. Bowes disclaims
beneficial ownership of such shares, except to the extent of his pro-rata
interest therein. Mr. Bowes has served as a director of Lynx since March
1994.

(18) Includes 90,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(19) Includes 90,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(20) Includes 292,000 shares of common stock issuable upon exercise of a warrant
that was issued as partial consideration, in addition to customary fees,
for services rendered by Friedman, Billings, Ramsey & Co., Inc. as
placement agent for the Company in connection with the private placement.

(21) Includes 70,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(22) Includes 68,400 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(23) Includes 60,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(24) Includes 60,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(25) Includes 59,600 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(26) Includes 52,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(27) Includes 52,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(28) Includes 52,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(29) Includes 40,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(30) Includes 40,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(31) Includes 25,238 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(32) Includes 20,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(33) Includes 16,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

14.

(34) Includes 12,900 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(35) Includes 10,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(36) Includes 10,000 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(37) Includes 6,762 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

(38) Includes 5,100 shares of common stock issuable upon exercise of a warrant
that was purchased in the private placement.

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, assignees and
successors-in-interest (including distributees) may, from time to time, sell any
or all of their shares of common stock. The selling stockholders will act
independently of us in making decisions regarding the timing, manner and size of
each sale. The sales may be made on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The selling stockholders may use any one
or more of the following methods when selling shares:

- ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers;

- block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction;

- purchases by a broker-dealer as principal and resale by the broker-
dealer for its account;

- an exchange distribution in accordance with the rules of the applicable
exchange;

- privately negotiated transactions;

- short sales;

- broker-dealers may agree with the selling stockholders to sell a
specified number of shares at a stipulated price per share;

- option agreements;

- a combination of any such methods of sale; and

- any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, the amendment or supplement
will disclose:

- the name of the selling stockholder and of the participating
broker-dealer(s);

- the number of shares involved;

- the price at which the shares were sold;

- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;

- that a broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and

15.

- other facts material to the transaction.

From time to time, a selling stockholder may transfer, pledge, donate or
assign its shares of common stock to lenders or others, and each of such persons
will be deemed to be a "selling stockholder" for purposes of this prospectus.
The number of shares of common stock beneficially owned by the selling
stockholder will decrease as and when it takes such actions. The plan of
distribution for the selling stockholder's shares of common stock sold under
this prospectus will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be selling stockholders hereunder.

The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in securities of Lynx or derivatives of
Lynx securities and may sell or deliver shares in connection with these trades.
The selling stockholders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling stockholder defaults on a
margin loan, the broker may, from time to time, offer and sell the pledged
shares. Lynx is not aware of any agreements, understandings or arrangements with
any selling stockholders and underwriters or broker-dealers regarding the sale
of their shares other than ordinary course brokerage arrangements.

Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Because a selling stockholder may be deemed
to be an "underwriter" within the meaning of the Securities Act, the selling
stockholder will be subject to the prospectus delivery requirements of the
Securities Act.

The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in some
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of the distribution. In addition, the
selling stockholders will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed the
selling stockholders of the need to deliver copies of this prospectus to
purchasers at or prior to the time of any sale of the shares.

Lynx is required to pay all fees and expenses incident to the registration
of the shares. The selling stockholders will pay all commissions and discounts,
if any, attributable to the sales of the shares. The selling stockholders may
agree to indemnify any broker-dealer or agent that participates in transactions
involving sales of the shares against specific liabilities, including
liabilities arising under the Securities Act. Lynx has agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.

We have agreed to use best efforts to maintain the effectiveness of this
registration statement under the Securities Act as long as delivery of a
prospectus is required under the Securities Act in connection with the
disposition of the shares being registered hereunder.

16.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon by Cooley Godward LLP, Palo Alto, California. James C. Kitch, a partner at
Cooley Godward LLP, has served as a director of Lynx since 1993, and owns 17,985
shares of our common stock, a warrant to purchase 6,356 shares of our common
stock and options to purchase 20,000 shares of our common stock. In addition,
two other partners at Cooley Godward LLP hold an aggregate of 4,708 shares of
our common stock and warrants to purchase 1,905 shares of our common stock.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 2001, as set forth in their report (which contains an
explanatory paragraph describing conditions that raise substantial doubt about
our ability to continue as a going concern, as described in Note 1 to the
consolidated financial statements), which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial statements
are incorporated by reference in reliance upon Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.

17.

WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD
RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. YOU SHOULD NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS
DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE ON THE
COVER.

20,732,000 SHARES

LYNX THERAPEUTICS, INC.

COMMON STOCK

----------------

PROSPECTUS

----------------

May 13, 2002