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Luminex Expects 2013 FDA Clearance for Gastro Pathogen Panel as Q3 Revenues Rise 10 Percent

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Luminex hopes to see two new screening assays cleared by the US Food and Drug Administration next year that together address a market opportunity of about $200 million. In addition, the firm is continuing to develop a new molecular diagnostics instrument gained through its recent acquisition of GenturaDx that it hopes to debut in 2014.

CEO Patrick Balthrop this week provided an update on the Austin, Tex.-based firm during its third quarter earnings call. The company saw revenues rise 10 percent in Q3 driven by increases in consumables and assay-derived revenues. But Balthrop said that the firm believes its two new panels — one intended for gastrointestinal pathogen detection, the other for neonatal screening — will "contribute meaningfully to the company's long-term growth."

The xTAG Gastrointestinal Pathogen Panel, or xTAG GPP, is a qualitative molecular multiplex diarrhea test intended for the simultaneous detection and identification of multiple gastrointestinal pathogens including bacteria, viruses, and parasites. The assay uses the Luminex's xTAG technology and the xMAP platform to detect multiple targets in a single sample. In the xTAG assay, PCR products are subjected to an allele-specific primer extension step. The 5-prime end of the primers is then attached to an xTAG universal tag sequence that is hybridized to the complementary anti-tag sequence coupled to a particular xMAP bead array. The hybridized beads are subsequently read on the firm's 100/200 and MagPix instruments, and the results are analyzed by data-analysis software.

Luminex claims that xTAG GPP can detect hospital-acquired infections, and 15 total gastrointestinal pathogens in a single, five-hour test. These include Salmonella, Shigella, Campylobacter, Clostridium difficile, Enterotoxigenic E. coli, E. coli O157, Shiga-like toxin producing E. coli, Vibrio cholera, Yersinia enterocolitica, Adenovirus 40/41, Rotavirus A, Norovirus GI/GII, Giardia, Entamoeba histolytica, and Cryptosporidium.

Luminex achieved a CE-IVD mark for the panel last year, and it has already been submitted to the FDA. Balthrop described ongoing discussions with the agency as "positive" and said that the company expects demand for the test to accelerate once it is cleared by the FDA and more data from early access customers becomes available.

"We continue to experience increasing interest across a broad spectrum of laboratories for our gastrointestinal pathogen panel," Balthrop said on the call. "This momentum is likely to accelerate as performance data and healthcare economic data from early access centers gets published," he said. "We have seen the early data from a few centers and are encouraged by the reduction in hands-on time compared to legacy pathologies," Balthrop noted. "Clearly these results are appealing to institutions constantly looking for ways to improve patient outcome while freeing up resources to manage more complex cases."

Balthrop did not name competitive offerings for the GPP, but one similar test is in development, BioFire Diagnostics' real-time PCR-based FilmArray GI. The Salt Lake City-based firm, formerly known as Idaho Technologies, claims that its current version of the panel simultaneously detects 25 different diarrheagenic pathogens including bacteria, viruses, and protozoa. In August, the company said in a statement that it planned to have FilmArray GI available as an FDA-cleared IVD in 2014.

Luminex similarly has submitted its xMAP NeoPlex 4 assay to the FDA for review, Balthrop said. NeoPlex 4 can be used to test newborns for four analytes — T4, hTSH, 17-OHP and IRT — which can be indicators of congenital hypothyroidism, congenital adrenal hyperplasia, and cystic fibrosis. This test is based on xMAP technology, according to the company's website, but also uses the NeoPlex System, a fully automated, walk-away sample-processing instrument that incorporates the BSD 300 Semi-Automated Punch System and CardScan reader. Balthrop said that the combined market opportunities for xTAG GPP and NeoPlex 4 is about $200 million annually. He did not elaborate.

Additionally, Balthrop said that efforts to see GenturaDx's system through to commercialization are "proceeding well." Luminex in July acquired Hayward, Calif.-based GenturaDx — which is developing a real-time PCR system called the IDbox System that employs single-use cassettes for molecular diagnostic applications — for $50 million plus additional milestones. Balthrop said that the platform addresses medium-sized and smaller laboratories, a market segment the company does not yet address, and that the combination of the IDbox platform with Luminex's MultiCode RT-PCR and PCR chemistry, will "attract new customers where low-plex testing and ease of use are top priorities."

According to Balthrop, the system represents an "incremental opportunity" of about $5 billion per year, "growing at a healthy rate in the mid-teens." Luminex hopes to have the system on the market in two years.

Q3

Though Luminex reported a 10 percent rise in its third-quarter revenues, the firm fell short of the consensus Wall Street estimate on the top and bottom line. The company brought in total revenues of $50 million for the three months ended Sept. 30, up from $45.6 million for the third quarter of 2011. Analysts, on average, had expected revenues of $51.3 million.

Luminex reported systems sales $8.6 million, down 1 percent year over year from $8.6 million. Its consumables sales were up 8 percent to $12.9 million from $12 million, and its royalty revenue rose 3 percent to $7.7 million from $7.5 million. The firm's assay revenue jumped 22 percent to $16.4 million from $13.4 million.

Luminex said that it shipped 271 multiplexing analyzers during the quarter, which included 127 MagPix systems, exceeding internal expectations of between 200 and 250 systems in the quarter, Balthrop said.

Luminex posted net income for the quarter of $1.7 million, compared to a profit of $1.9 million for Q3 2011. The firm's R&D spending for the quarter jumped 34 percent to $10.7 million from $8 million, and its SG&A expenses climbed 21 percent to $19.9 million from $16.5 million.

Luminex finished the quarter with $28.5 million in cash and cash equivalents. It also lowered its annual revenue guidance to a range of between $200 million and $204 million from a previous range of $205 million to $215 million.

"While we anticipate continued revenue growth in the fourth quarter, we believe it prudent to adjust our annual revenue guidance to account for an increasingly unpredictable budgetary environment among our lab customers, particularly in Europe," Chief Financial Officer Harriss Currie said in a statement. "This environment has primarily impacted our expectations for systems and assay revenue."

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