UPDATED 4:05 p.m. with comment from Fluidigm.

Fluidigm, a venture-backed biotech company that planned to go public last week, has withdrawn its initial public offering because of “the historical instability in the market,” the company said.

The company, based in South San Francisco, had planned to make the offering, underwritten by Morgan Stanley, on Sept. 18. Shares were expected to be priced from $14 to $16 and the company hoped to raise $70 million to $85 million.

The week that Fluidigm hoped to go public was one of the most tumultuous in market history, with Lehman Brothers’ bankruptcy, the sale of Merrill Lynch and a freezing of the credit markets. Fluidigm decided to postpone its offering and Morgan Stanley moved it to day-to-day status.

On Thursday, the company formally withdrew its I.P.O registration.

The volatile stock market was not the only reason that Fluidigm would have had trouble going public now, said Scott Sweet, senior managing partner at I.P.O. Boutique, a research and advisory firm for individuals and hedge funds. Biotech start-ups have had a particularly difficult time in the public markets since last year, he said.

“A great many have been forced to be postponed due to lack of interest in companies hemorrhaging red ink,” he added. Fluidigm reported a net loss of $25.5 million on $7.3 million in revenue in 2007 and predicts losses for the foreseeable future.

Howard High, a Fluidigm spokesman, said the company has seen strong growth, with revenue in the first half of the year roughly equal to full-year revenue in 2007. Fluidigm’s I.P.O. would have been successful if not for “the unusual market conditions that occurred in the past couple of weeks,” he said. “We booked good investments from strong investors.”

Fluidigm makes a product called an integrated fluidic circuit that is used in biological research. Scientists use it to repeatedly mix, separate or pump minuscule volumes of fluids. The technology has been used to detect mutations in cancer patients’ cells and to monitor the genes of fish, for example.

The news is a setback for the venture capital community, which is growing increasingly concerned after three quarters of very weak exit markets. If Fluidigm had gone public, it would have been only the seventh venture-backed company to go public this year, according to the National Venture Capital Association. In comparison, 86 such start-ups went public in 2007. In November, the N.V.C.A. is convening three task forces with deal makers to develop proposals to address the problem.

Fluidigm investors include Lehman Brothers Healthcare Venture Capital, Versant Ventures, Euclid SR Partners and Alloy Ventures.