Lumera, GigOptix to Merge

Photonic communications company Lumera Corp. announced it will merge with privately held integrated circuit maker GigOptix LLC and discontinue its Plexera Bioscience LLC life science tools subsidiary.

The combined public company, which will have approximately 85 employees, will be called GigOptix Inc. and will be led by GigOptix Chairman and CEO Avi Katz, effectively ending Lumera's eight-month search for a CEO. Michael Forman, GigOptix CFO since September, will be CFO of the new company. Lumera CFO Peter Biere will become general manager of the Lumera division at GigOptix and Raluca Dinu, Lumera vice president of electro-optics, will become vice president of Lumera product development.

Since Lumera's inception in 2000, it has been focused primarily on the research and development of polymer materials and products based on those materials for electro-optic and life sciences applications. Approximately 95 percent of the company's revenue over the past three years has stemmed from development contracts with the US government and government contractors. Lumera posted a net loss for 2007 of $16 million, up from $13 million in 2006.

Plexera Bioscience was established in the summer of 2007 and was unsuccessful in finding a financial partner, investor or other funding sources to make it profitable, Lumera said. The entire Plexera work force of 23 in Bothell is being laid off and the launch of a commercial version of its antibody discovery system, previously scheduled for May, will not happen. No decision has been made regarding selling Plexera's intellectual property and other assets, Lumera said.

Lumera said exiting Plexera will allow the new company to focus its resources solely on electro-optics, with its new products combining Lumera's modulators with GigOptix's drivers, receivers and electronic engines. Electro-optic devices such as modulators translate electric signals into optical signals used in communication systems to transfer data, either over fiber-optic networks or between chip-based circuits, acting like high-speed switches.

"We're proud of the accomplishments and progress we've made in both our electro-optic and bioscience businesses. However, we do not have enough cash resources to see both businesses reach their full commercial potential. After carefully considering our strategic options, it became clear that the greatest shareholder value would be derived by focusing on our electro-optic business," said C. James Judson, chairman of Lumera, in a statement.

"Many of GigOptix's customers -- leaders in telecom, datacom, and consumer electronics -- are also potential customers for Lumera's modulators, some of whom are currently in the evaluation stage. The combined company expects to align product development for 40-G and 100-G components to provide a higher value and broader solution set to its customers, which we believe will drive more rapid revenue growth and market reach," Judson said.

"This merger brings many benefits beyond the innovative technology of both companies," said Katz in the same statement. "GigOptix's revenue for the first calendar quarter of 2008 is projected to be approximately $2 million and we expect to continue growing quarter over quarter by 10 percent to deliver $2.2 million in the second calendar quarter of 2008. On a combined basis, the two companies expect to generate approximately $6 million in revenue for the first half of 2008, which we believe provides a great base for our future growth."

Based in Palo Alto, Calif., GigOptix is a startup funded by real estate investment and management firm DBSI Group and formed with the acquisition of iTerra Communications in July 2007. In January 2008, GigOptix acquired fabless semiconductor manufacturer Helix Semiconductors of Zurich, Switzerland.

Under terms of GigOptix's merger agreement with Lumera, DBSI will become the new company's largest shareholder. Lumera will issue approximately 20 million shares and options to members and employees of GigOptix, resulting in an approximately 40 million shares outstanding for the combined company. In addition, Lumera will issue a number of options and warrants to GigOptix generally matching options and warrants outstanding at Lumera.

The transaction is also subject to Lumera shareholder and other regulatory approval and is expected to close near the beginning of the third quarter of 2008.

For more information, visti: www.lumera.com or www.gigoptix.com