Luminex CEO Patrick Balthrop this week provided an update on the Austin, Texas-based company's molecular diagnostics portfolio, characterizing Luminex's infectious disease tests as experiencing "continued momentum" in the marketplace and describing talks with the US Food and Drug Administration regarding the company's Neoplex newborn screening assay as "ongoing."
Bathrop discussed Luminex's diagnostics strategy during a first quarter earnings call with investors. The company reported this week that its first-quarter 2013 revenues increased 9 percent, driven by a 15 percent jump in adjusted assay sales and a 23 percent spike in royalty revenues. The jump in royalty revenues was largely due to one-time contributors, including roughly $1 million from a Merck milestone payment and biodefense grant revenue.
Calling the company's Q1 performance "solid," Balthrop noted that while assay sales were up 6 percent year over year, the firm adjusted its comparison to reflect its shift to a direct sales model at the beginning of the year. Balthrop said that in anticipation of the change, the company's distributors placed large orders in the fourth quarter of 2012 that were shipped during Q1.
During the quarter, Luminex achieved US Food and Drug Administration clearance for its xTAG Gastrointestinal Pathogen Panel, or GPP, first for use on its Luminex 200 instrument, and later for use on its Magpix benchtop system (BAN 4/16/2013). Balthrop said that Luminex is "ahead of schedule" in terms of the number of new customers it expected to garner in Q1 due to the GPP clearances, particularly in the US market.
Of these new customers, about half are new adopters of Luminex's platforms, and the other half are existing clients who have already adopted the firm's FDA-cleared Respiratory Viral Panel. While he didn't comment on whether the 50-50 split would hold for the rest of 2013, Balthrop said that the high number of new adopters is an "encouraging trend."
"This is a strong indicator of the high level of interest in the market for this first-mover assay," Balthrop said.
Balthrop also provided an update on NeoPlex 4, which the company expects to submit to the FDA in the second half of the year (BAN 1/15/2013). He said that Luminex continues to engage the FDA about that submission.
NeoPlex 4 is intended to test newborns for analytes that can be indicators of congenital hypothyroidism, congenital adrenal hyperplasia, and cystic fibrosis. Should it achieve clearance, Balthrop said the assay will be entering a "highly concentrated" market of about 150 customers worldwide constituting about 85 percent of the market, a factor that has kept Luminex "cautious" about including NeoPlex-generated revenues in its 2013 guidance.
"We've been working with all those customers for the last couple of years understanding when their contracts are up for renewal, what we have to do to work with them to evaluate our product in contrast to the product that they're using today," Balthrop said. "We've had some success outside the United States with some of those evaluations and we're expecting to generate revenue in 2013. We're expecting our growth there to be more gradual in nature as we compete for the business as those contracts come available and displace the incumbent."
Luminex brought in total revenues of $53.2 million for the three months ended March 31, compared to revenues of $48.7 million in Q1 2012, beating the consensus Wall Street estimate of $52 million in revenues.
Though Luminex's system sales declined 6 percent year over year to $6.6 million from $7 million, CFO Harriss Currie said that the company actually shipped more systems year over year, and said the decline was in part the result of more customers adopting its lower-cost, benchtop Magpix platform instead of its higher-throughput Luminex 200 system. Altogether, Currie said that Luminex sold 205 multiplexing systems during the quarter, increasing cumulative shipments of multiplexing systems to 9,864.
The firm posted a net loss of $2.5 million, versus net income of $3.5 million for Q1 2012.
Luminex reported R&D expenses of $12.7 million, up 26 percent from $10.1 million. Balthrop attributed the spike in R&D costs to development of Luminex's next-generation sample-to-answer platform, an effort the company refers to internally as Project Aries.
The company's SG&A spending increased 53 percent to $25.8 million from $16.9 million.
Luminex finished the quarter with $54.3 million in cash and cash equivalents and $6.6 million in short-term investments. Currie reaffirmed the company's 2013 guidance of between $220 million and $230 million.