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Luminex Awaits FDA Decision on RVP as Flu Season Looms; Q3 Revenues Rise 55 Percent

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
 
As flu season rapidly approaches in the US and Europe, Luminex is still awaiting US Food and Drug Administration clearance of its multiplex respiratory virus panel that it had hoped to have on the market this year.
 
The delay had analysts on the company’s third-quarter conference call last week asking questions about the assay and the firm’s contingency plans should it not be cleared soon, but company officials remained confident.
 
Meanwhile, Luminex reported a 55 percent increase in third-quarter revenues, driven by continued growth in sales of its flagship xMAP technology and contributions from its relatively new Assay Group.
 
Luminex has been awaiting FDA clearance of its respiratory virus panel, which the firm had expected to launch already this year.
 
“We continue to be engaged favorably and constructively with the agency,” Patrick Balthrop, president and CEO of Luminex, said during the firm’s conference call last week. “Clearly, we’re disappointed that we do not yet have the product cleared but we expect to receive that clearance soon, and once we do our primary distributor in the US, Fisher, is prepared to execute.”
 
Thermo Fisher Scientific unit Fisher Healthcare signed an agreement last January to distribute tests developed by Luminex Molecular Diagnostics, the former Tm Bioscience, which Luminex acquired for $44 million in March (see BioCommerce Week 12/20/2006).
 
“The interaction with the FDA has remained very constructive … and positive, and as a de novo submission and the first product of its kind, they’re making sure they’re dotting all the i’s and crossing all the t’s,” Balthrop said in response to a question from an analyst during the call.
 
With flu season rapidly approaching, “it is important that we receive clearance soon,” he said. Although it is difficult to predict exactly when the flu season will start each year, he said, it is important for Luminex’s customers to get the test validated before flu samples start arriving in their labs.
 
“We’ve developed a number of scenarios and contingency plans inside Luminex and with Fisher … to prioritize the anticipated customers to maximize the number of training and validation events we have to do, which is all designed to maximize market penetration and revenue for the company,” said Balthrop.
 
He quickly followed that statement with an assurance that Luminex has not done any pre-marketing of the test in advance of FDA clearance, which would run afoul of federal regulations.
 
Though the RVP is already CE-marked, Balthrop said Luminex is facing a similar issue in Europe as in the US because samples have yet to arrive at the labs. He said the firm expects a “nice European franchise,” but “no customers have begun stockpiling” the panel yet.
 
xMAP Sales Continue to Grow
 
Total revenues for the three months ended Sept. 30 rose to $19.4 million from $12.5 million in the third quarter of 2006.
 
Starting in the second quarter of this year, Luminex began reporting results under two business segments: the Technology Group and the Assay Group.
 
Third-quarter revenues for the Technology Group, which includes system sales to partners, raw bead sales, royalties, and service and support of the core xMAP technology, rose 34 percent to $16.8 million from $12.5 million in the year-ago period.
 
Luminex said it shipped more than 200 xMAP systems in the quarter, bringing its installed base to more than 4,700 — a 20 percent increase from the comparable period last year. Balthrop noted that the third quarter was the fourth consecutive quarter with over 200 shipments of the xMAP system.
 
The company’s Assay Group, which includes the Luminex Bioscience Group and Luminex Molecular Diagnostics, reported $3.3 million in revenues compared to zero revenues in the third quarter of 2006.
 
LMD sells a cystic fibrosis molecular diagnostic panel that has been cleared by both the US Food and Drug Administration and European regulatory authorities. “LMD’s cystic fibrosis franchise remains strong and has upside potential in the future with added distribution strength and due to our FDA-cleared status,” said Balthrop during the call.
 
Balthrop also reiterated statements he has made over the past several months that Luminex’s partnership model, which has been a primary outlet for revenue, has not been hampered by the firm’s acquisition of Tm Bioscience.
 

“We’re disappointed that we do not yet have the product cleared but we expect to receive that clearance soon, and once we do our primary distributor in the US, Fisher, is prepared to execute.”

“Our partnership business remains very strong,” he said. “We definitely see our partners expanding their menus [and] the number of tests that are available on the Luminex platform.”
 
He added that many of Luminex’s partners “have expressed significant interest in changing the nature of our relationship with them that would give them access to our cGMP-qualified manufacturing facility and the opportunity to expand their own offerings in the molecular diagnostics category, if they’re not already in the molecular diagnostics business.”
 
For the quarter, Luminex generated $5.5 million in system sales, $5.7 million in consumables revenue, $2.7 million in royalties, $3 million from reagents and assays, $1.2 million in service revenues, and $1.3 million from other sources of revenue, such as spare parts and training.
 
Luminex’s net loss for the third quarter was $3.3 million, or $.09 per share, compared to net income of $111,000, or $0.0 per share, for the same period last year. The current quarter included $3.7 million of non-cash charges, including acquisition-related charges of $1.3 million.
 
The firm’s R&D spending nearly doubled to $4.5 million from $2.3 million in the prior-year period, while its selling, general, and administrative costs likewise jumped to $10.4 million from $5.9 million.
 
As of Sept. 30, Luminex held $9.7 million in cash and cash equivalents. 
 
Assay Pipeline
 
Balthrop said that, in general, the firm’s priorities for assay development are in the inherited disease and infectious disease fields. But, he said Luminex sees additional opportunities in oncology and pharmacogenomics.
 
At the firm’s annual investors’ meeting in New York in March, Luminex officials said they hope the FDA will next year clear the firm’s pharmacogenetic-based dosing test for monitoring the anticoagulant warfarin. Company officials did not provide an update on that product during the most recent conference call.
 
The Luminex Bioscience Group, which sells assays to the research market and to partners developing both research and molecular diagnostic tests, launched the FlexmiR MicroRNA panel earlier this year. Balthrop said that customer feedback has been “favorable” thus far.
 
“What we hope to achieve with that product that we have available now is what I would call market seeding to familiarize the market with a bead-based microRNA approach,” he said.
 
Luminex intends to launch a custom microRNA product, called FlexmiR Select, next month.
 
The Bioscience Group’s pipeline also includes assays for newborn screening and food safety. “Like the other markets that we’re focusing on, food safety itself is a multiplexing problem waiting to be solved because detecting the various organisms that might be relevant in the market can change over time,” said Balthrop.
 
“We have a lot more ground to cover before we actually have a product available, but we are working with large players in the food area to co-develop a product,” he said.
 
If Luminex succeeds in developing and marketing a food safety panel it will compete with a variety of very large tool vendors, such as Thermo Fisher Scientific, PerkinElmer, Applied Biosystems, Waters, and Agilent — all of which have mass spectrometry-based products for that application.
 
Balthrop also said that Luminex is on track with the development and commercialization scheme for its next-generation multiplexing platform, called FlexMAP 3D. The new platform, which was previewed in July at the American Association for Clinical Chemistry meeting in San Diego, offers a five-fold increase in multiplexing capabilities over Luminex’s current xMAP systems (see BioCommerce Week 7/18/2007).
 

Luminex intends to launch the new instrument next summer.

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