Luminex Raises $83 Mil In Public Stock Offering

Multiplex testing technology finds ready acceptance with diagnostics & drug firms

CEO SUMMARY: During the past year, Luminex Corporation moved swiftly to push its LabMAP™ multiplex testing technology into the bioassay marketplace. It found high interest among companies in the pharmaceutical, diagnostics, and bioresearch industries. Luminex executives say that a number of companies are working to have FDA-approved diagnostic test kits available for laboratories by year’s end.

ARMED WITH A WAR CHEST OF $82.8 million from its recent IPO (initial public offering), Luminex Corporation is ready to further push its LabMAP™ multiplex testing technology into the bioassay marketplace.

Luminex, based in Austin, Texas, developed a patented technology that incorporates microscopic plastic beads, small lasers, digital signal processors, and proprietary software to perform up to 100 individual assays on a single drop of fluid.

Multiplexed Test Platform

THE DARK REPORT predicts that Luminex’s LabMAP testing system will significantly change the way clinical laboratories perform diagnostic testing. The clinical laboratory world was first introduced to Luminex in THE DARK REPORT intelligence briefing of December 21, 1998.

When Luminex President and CEO Mark Chandler, Ph.D., appeared at last year’s Executive War College and the private Lab CEO SUMMIT which followed, lab executives and pathologists were quick to recognize the transformational potential of the LabMAP system.

“As of March 31, 2000, we’ve sold 128 LabMAP systems,” stated Randy Marfin, Vice President of Business Development. “About one-third of these systems were purchased by clinical laboratories and diagnostic companies.”

Several of the nation’s largest laboratories and diagnostics companies were first to acquire the LabMap system. Among them are Abbott Laboratories, Bio-Rad Laboratories, Laboratory Corporation of America, Mayo Clinic, National Institutes for Health, and Quest Diagnostics Incorporated.

Within the field of clinical laboratory testing, these companies are developing Luminex technology for two applications. “Diagnostic companies are developing test kits for use on LabMAP,” said Dr. Chandler. “We’ve licensed our technology to a number of companies. Their progress indicates that FDA-approved test kits may be available by the end of this year.”

Clinical laboratories are exploring ways to internalize existing tests onto the LapMap platform under “home brew” guidelines. Their objective is to reduce the cost of using existing methodology on specific assays while improving the quality of results.

Daily Commercial Lab Use

“We believe several of these laboratories have completed their correlation studies,” indicated Marfin. “At least some of these customers will soon be using LabMAP systems for daily test production in their laboratory.”

According to Marfin, early applications will be in genetic testing and serology. “Labs want to use LabMAP for things like Factor 5 Leiden, paternity testing, and autoimmune procedures which require multiple tests on a single specimen.”

The LabMAP system is built around three robust technologies that have existed for quite some time. Luminex figured a way to combine them into a paradigm-shifting bioassay testing platform.

Dyed Microsphere Beads

First, the LabMAP system uses stan- dard plastic microsphere beads that function as sites for covalent ligand attachment. These microspheres have been used in many different types of diagnostic tests for several years. Luminex has a patented method for dying the microspheres. Each bead set has a different color and carries a different bioassay.

Once the beads are introduced into a specimen, which can be as small as 10 microliters, up to 100 discrete assays can be performed simultaneously on that specimen. The beads pass through a pair of laser beams (the second robust technology), resulting in fluorescent emissions that instantly identifies each bead and measures the reaction.

The third robust technology is Luminex’s patented DSP (digital signal processor) software, which accumulates the data and processes it into clinically accurate results.

Typically, the LabMAP system can multiplex a 100-assay lab specimen in as little as three seconds. The retail price for a LabMAP system is $25,000. For an additional $7,000, the instrument can be interfaced to an autoloader, such as the Zymark Twister.

Luminex’s Technology Attracts Investor Interest

When Luminex Corporation brought its IPO (initial public offering) to market last month, there was strong financial support by the investment community.

Luminex raised $82.6 million from the IPO, which was fully subscribed. Shares were issued at $17.00, and the price climbed immediately. At press time, Luminex stock currently trades in the range of $21.00 per share. With 26.7 million shares outstanding, this gives Luminex a market capitalization of $560 million.

Annual revenues at Luminex were only $2.6 million during 1999. Its market capitalization of half a billion dollars demonstrates that the investment community has high expectations for Luminex.

Although diagnostics testing is not the biggest potential market for Luminex technology, it is expected that diagnostic appli- cations will be first to demonstrate commercial viability. FDA-approved test kits may be ready for the market as early as year’s end.

Open Technology Platform

“Luminex’s business strategy is to offer the LabMAP system as an open technology platform,” explained Chandler. “Intel and Microsoft offer their computer chips and operating software as an open technology. They allow any company to buy or license these technologies for specific uses. Similarly, our LabMAP system is designed to be an open technology platform that any company can license and use for bioassay applications.”

Within the clinical laboratory industry, the Luminex LabMAP system is gaining credibility. The instrument is compact, easy to operate, durable, and can be installed in an automated setting. Its modest purchase price means that it is suitable for use outside the core lab, such as in emergency rooms and physician office labs.

It will take additional time before clinical pathologists and laboratorians grasp the full potential of the LabMAP system

What is most intriguing is LabMAP’s capability of multiplexing 100 different tests on a specimen of only 10 microliters, at a relatively low cost. This combination of low cost, ease of use, and multiple analytes will allow diagnostic vendors to develop unimagined combinations of tests that can be performed, in seconds, in a variety of healthcare settings outside the core laboratory.

To that end, Luminex has an agreement with Bio-Rad to develop and distribute test kits. Luminex is also collaborating with Abbott Laboratories to evaluate LabMAP’s effectiveness with Abbott’s “next generation” PSA (prostate specific antigen) tests.

Luminex is even cooperating on a project to develop a point-of-care version of LabMAP. In particular, the goal is to design an instrument capable of functioning in an ambulance or non-laboratory environment. THE DARK REPORT speculates that the military would have a high interest in funding the development of a LabMAP system that would operate dependably in battlefield settings. Once available, such a version could find ready applications in the civilian marketplace.

“These are exciting times for us,” said Marfin. “We have signed 17 deals with pharmaceutical, bioresearch, and diagnostic companies, with many more in the pipeline. Diverse applications are therefore being developed very quickly.

Wide Spectrum Of Assays

“We anticipate that, as our strategic partners bring test kits to the clinical laboratory market, there will be a broad spectrum of assays, particularly involving nucleic acids detection and immunoassays,” he added.

THE DARK REPORT observes that the Luminex LabMAP technology is one of these paradigm-shifting developments which was unanticipated by experts in laboratory medicine. The reason is simple. Its technology is rooted in other scientific disciplines.

For this reason, it will take additional time before clinical pathologists and laboratorians grasp the full potential of the LabMAP system to improve the cost-benefit equation of laboratory medicine.

Hospital CEOs Dissatisfied

Meanwhile, several of the nation’s largest laboratory companies are ready to put LabMAP into daily commercial use. If LabMAP delivers the cost savings predicted by its developers for “home brew” assays, these labs may gain an economic advantage over labs continuing to use traditional methods.

Luminex’s LabMAP provides yet another example that new technology will provide laboratories with the tools needed to improve their financial fortunes while offering enhanced lab services to physicians and patients.

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