NEW YORK (GenomeWeb) — Luminex executives this week provided investors with an update on the progress of Aries, the sample-to-answer molecular testing platform that the company plans to launch in Europe later this year and the US next year.
In addition, executives discussed Luminex's new xTAG multiplex assay technology and provided some insight as to how it is expected — both alone and in combination with a future iteration of the Aries platform — to drive continued molecular diagnostics growth at the company.
Luminex CEO Patrick Balthrop discussed these items, among others, during a conference call held earlier this week following the release of Luminex's first quarter earnings. In Q1, Luminex reported total revenues of $56.6 million, a 6 percent increase over the comparable quarter last year. This increase was driven by an 18 percent spike in assay revenues and 7 percent increase in consumables revenues, but tempered by small declines in royalties, system sales, and other revenues.
A full recap of Luminex's Q1 earnings can be found here.
Luminex's business has over the past few quarters begun to crystallize into two main branches: its well-established infectious disease panels and instruments that are based on its xTAG technology, which address the high-multiplex, high-volume molecular diagnostics market; and Aries, a cartridge-based, fully integrated MDx system that is not yet commercially launched but is expected to target the low- to medium-throughput MDx market.
Luminex unveiled the Aries system in November at the Association for Molecular Pathology annual meeting in Phoenix, Ariz., noting at the time that it hoped to launch the platform and associated assays for Clostridium difficile, herpes simplex virus I and II, influenza A/influenza B/respiratory syncytial virus in Europe in the second half of this year and the US in early 2015. Last week, the company disclosed a fourth planned assay for norovirus, and has said it will add one more test to the Aries launch menu.
During this week's conference call, Balthrop said that a "key strategic priority" for the company this year is preparing for the launch of Aries, and he confirmed that the aforementioned commercialization timeline is on track.
"The system development work — hardware and software — is basically complete on schedule," Balthrop said. "We're moving into the clinical validation phase and will initiate clinical trials shortly thereafter."
"If a company is within six months of launch and 12 months of FDA clearance, a crucial metric is the number of systems built and deployed," Balthrop added. "With this metric in mind, we built and deployed well over 50 systems to date and expect a total of well over 100 by the end of the summer."
Balthrop said that the market for the initial Aries launch menu alone represents more than a $1 billion opportunity that is growing at "strong double-digit rates" annually. "We estimate the placement opportunity for the Aries system to be well over 25,000 in total, and our product design, strong menu, and differentiated features will provide a platform that will drive significant highly profitable revenue and profit growth for many years to come," Balthrop said.
Further detailing that forecast, Balthrop said that the molecular diagnostics market is concentrated in a relatively small number of laboratories, on the order of 1,000 to 1,500 in the US and Western Europe, primarily.
"If you break those down further … the public data shows that about 45 percent or so of the molecular market is in the reference lab space today," Balthrop said. "It's our belief that that will change over time. In those large accounts there will be multiple instruments placed per account as part of that total available market analysis. And as you move from larger accounts down to smaller accounts … the total placement per customer decreases. And based on some third-party data that we purchased and some research we've done … we believe that over the longer term the molecular market will go in the same direction as other market segments in the diagnostics industry have gone."
Although Aries has yet to commercially launch, the company is already looking toward future iterations of the platform. Responding to an analyst's question about Luminex's investment priorities post-Aries launch, Balthrop said that Luminex will focus on increasing the platform's test menu, improving Luminex's multiplexed xTAG technology, and finally, combining the two platforms into a single instrument that will incorporate both real-time PCR and a high level of multiplexing.
This system, currently called Aries v2, is only in the feasibility stage right now, and Balthrop did not provide additional details on it during this week's call. However, at the company's investor day held shortly after the AMP meeting in November, Jeremy Bridge-Cook, Luminex's senior vice president of R&D, provided additional details on Aries v2.
"The idea of Aries v2 is to combine the current capabilities of the Aries cassette and add in the ability to do multiplex assays in addition to the standard real-time PCR assays," Bridge-Cook said during the investor event.
"This will enable Aries v2 to address both the low-plex and the high-plex portions of the sample-to-answer market," he added. "Importantly we've approached this problem in such a way that we will maintain our focus on industry-leading cost of goods, giving us gross margin advantages versus our competitors."
Bridge-Cook said that the company has already demonstrated proof of principal for its Aries v2 cassette design, and stressed that the new system will be "backwards compatible" with cassettes from the first Aries system.
"In other words Aries v2 will be able to run both original Aries cassettes and the new Aries v2 cassettes," he said. "This will enable us to avoid any redevelopment of our Aries assays and cassettes when we launch v2. Our development plan makes use of much of the current cassette and instrument design, reducing risk and time to market. By combining real-time PCR with multiplex we will have a sample-to-answer platform with a very broad range of assay capabilities."