By Ben Butkus
Two years after Luminex and EraGen Biosciences ended a licensing and distribution agreement that had coupled Luminex's bead-based detection system with EraGen's multiplex PCR chemistry, the companies will reunite through Luminex's planned $34 million acquisition of Eragen, announced this week.
A key development in Luminex's rekindled interest in privately held EraGen has been the latter's continued development of its real-time and multiplex PCR technology, which will give Luminex its first product offering in this area and bolster the company's molecular diagnostics play, a Luminex official said this week.
Under the terms of the acquisition, Luminex will pay approximately $34 million in cash for all outstanding shares of Madison, Wisc.-based EraGen, which was founded in 1999 and has approximately 70 employees and a 27,000-square-foot facility. Austin, Texas-based Luminex said that after the transaction closes, sometime within the next several weeks, that it expects to retain EraGen's operations in Madison.
Nearly all of EraGen's products are based on its proprietary isoC and isoG technology, probe-free bases that are structurally similar to but do not pair with naturally occurring bases, instead pairing with each other.
Over the first several years of its existence, EraGen developed and marketed a product called MultiCode-PLx, a multiplex, endpoint PCR assay designed for various molecular diagnostic applications. It began working with Luminex as early as 2003; and in 2005 the companies announced a formal partnership under which EraGen would distribute and sell its multiplex assay kits along with Luminex's xMap bead-based readers for certain in vitro diagnostic applications.
However, in 2007, shortly after Luminex acquired Tm Bioscience specifically for its multiplex assay chemistry, it either ended or chose not to renew its agreement with EraGen, primarily because Tm Bioscience's products were more developed for potential use in clinical diagnostics, CEO Irene Hrusovsky said last year (PCR Insider, 5/27/10).
Since that time, however, EraGen has developed and refined additional real-time PCR products, called MultiCode RTx assays, using its isoC and isoG bases. The company currently sells these kits as analyte-specific and research-use-only reagents, although one of its MultiCode RTx assays, for herpes simplex I and II viruses, received 510(k) clearance from the FDA in April 2010, making it the first molecular IVD to detect and type HSV 1 and 2 in symptomatic women.
"One of the differences about EraGen at that time was that it had a fairly significant focus on some multiplexed products that overlapped with products that Luminex either already had on the market or already had in development," Jeremy Bridge-Cook, senior vice president of Luminex's assay group, told PCR Insider this week.
"More recently, particularly over the last couple of years, EraGen has developed a portfolio of products that has a lot less overlap with what Luminex has already; and, in particular, has developed products in the real-time PCR space using its real-time chemistry; as well as some multiplex products that are in areas that we don't currently have products," Bridge-Cook added.
In addition, he said, EraGen has recently achieved revenue growth primarily by selling both its multiplex and real-time PCR assays, making it an even more attractive acquisition target.
"Those things combined led to a position where the company became much more complementary to what we had," Bridge-Cook said.
Although Luminex did not quantify EraGen's aforementioned revenue growth, it said that EraGen generated approximately $8 million in product revenue in 2010; and that it expected the acquisition to contribute between $5 million and $7 million to Luminex's 2011 consolidated revenue.
Luminex's current products are primarily based on its xTag color-coded bead-based arrays and readout instrumentation. The company has only offered PCR-based technology as part of its xTag Fast assays, which use a PCR step that doubles as a labeling step such that the products of the multiplex PCR hybridize to Luminex's beads and can subsequently be read on its instrument, according to Bridge-Cook.
Some of EraGen's technology will complement existing xTag chemistries, and some will bring new capabilities to the platform, Bridge-Cook said.
"In the area of multiplex products, EraGen has a unique set of DNA tags that make use of their iso bases," he said. "So there is some potential there for benefits to the xTag chemistry using the EraGen technology, which we're evaluating."
"But on the real-time chemistry side, that is something that is a unique application of the iso base technology, and is really quite distinct from anything that Luminex had previously," Bridge-Cook added.
Luminex has also developed its own assay content, as well as licensed assay content from partners, for molecular diagnostics, an effort it has ramped up in recent years. In particular, Luminex has made strides in infectious disease testing, most notably with its xTag Respiratory Virus Panel, which received 510(k) approval in the US in 2008; and a gastrointestinal pathogen panel that recently received a CE IVD Mark. The company is also developing an improved RVP assay using its xTag Fast chemistry.
"We have a growing business in infectious disease molecular diagnostic testing," Bridge-Cook said. "And [EraGen's] HSV 1 and 2 assay is very complementary in that many customers for our products are the same as the customers for HSV 1 and 2, and have an interest in the same area of testing.
"Overall, it's an area of interest for us to develop products for disease states where testing is currently underserved," he added. "EraGen's HSV 1 and 2 also fits with our philosophy there of trying to take older technology-based diagnostics and convert them over to new molecular tests."
Bridge-Cook noted that some products in EraGen's molecular diagnostics pipeline "might be of interest for us to take to the IVD stage." According to EraGen's website, it is also developing a multiplex respiratory virus panel for 17 different virus types; as well as primers for adenovirus, JC virus, and varicella zoster virus detection.
"We need to do more analysis with EraGen's marketing team about the potential of those products; and also think about other products that we might be able to make and develop with [EraGen's] real-time chemistry," Bridge-Cook said. "And then we'll figure out what the best combined product strategy is. At the moment, those plans haven't been finalized, and it's too early to say which products we might carry through to IVD."
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