Hitting a molecular diagnostics high
Luminex finalizes deal to acquire EraGen Biosciences
AUSTIN, Texas—Testing equipment manufacturer Luminex Corp.recently completed its $34 million acquisition of privately held EraGenBiosciences Inc.
According to Russell W. Bradley, vice president of businessdevelopment and strategic planning for Luminex, EraGen proved to be anattractive acquisition because it offers a
highly complementary, high-growth, high-margin moleculardiagnostic assay business.
"When we combine the products and platforms from EraGen andLuminex, we have practically no product overlap, yet we serve largely the samecustomers in molecular diagnostic labs," he says. "This will allow us to bringmore scale and depth to the market."
Bradley also notes that through the acquisition, Luminexsecures a "low- to mid-plex" assay chemistry that opens up tens of thousands ofinstalled instruments worldwide.
"This will provide Luminex with an immediately incrementalproduct portfolio and a growth platform in other important markets Luminexalready participates in, such as biothreat, life science research and theapplied testing markets," he notes. "We also gain the benefit of an expandeddirect sales force in North America for the EraGen and Luminex products and theopportunity to grow revenue outside the U.S. using our establishedinfrastructure."
The acquisition provides Luminex with access to a highlycomplementary portfolio of molecular diagnostic assays based on an innovativeand proprietary technology platform called MultiCode. Bradley notes thatMulticode PLx is for highly multiplexed qualitative applications, or in otherwords, for detecting more than five specific nucleic acid targetssimultaneously.
"The Multicode PLx technology is a complementary alternativeto Luminex's xTAG technology and is fully compatible with Luminex's completeinstrument line, including the MAGPIX System," he explains. "MultiCode PLx willprovide Luminex with expanded capabilities to consider for future assay productdevelopment."
The second EraGen technology is Multicode RTx.
"It is this technology that Luminex is particularly excitedabout," Bradley notes. "The MultiCode technology is a variant of real-time PCR.Real-time PCR is used globally as a standard quantitative assay chemistryacross multiple markets and applications. The foundation of the MultiCodetechnology is a proprietary synthetic base pair, isoG and isoC. It is theability to incorporate this novel base pair—along with naturally occurringbases—that provides the unique advantages of MultiCode-RTx and MultiCode-PLx."
Essentially, MultiCode chemistry creates an additionalsynthetic base pair that are highly specific for each other and can beincorporated into oligonucleotide polymers but do not occur in nature.
Bradley notes that Luminex has established leadershippositions in both the genetic testing and infectious disease segments of the$4.8 billion molecular diagnostic market.
"This leadership is due to the combination of assaydevelopment innovation, a proprietary and differentiated detection platform,and a focus on critical unmet needs in clinical practice," he says. "By far,the largest opportunity in molecular diagnostics is the infectious diseasesegment."
It is this segment where the majority of EraGen's currentproducts reside, says Bradley.
Dr. Irene Hrusovsky, president and CEO of EraGenBiosciences, says Luminex will benefit from EraGen's innovative technologiesand expertise to penetrate new segments.
"I am confident that the company will realize significantbusiness and technology synergies as Luminex brings the global reach and scalerequired to effectively leverage the enormous potential of EraGen's franchisein molecular diagnostics," she says.
Based in Madison, Wis., EraGen was founded in 1999. Thecompany develops molecular diagnostic testing technologies for infectiousdisease and genetic applications. It employs about 70 people. In 2010, EraGenposted $8 million in revenues. The acquisition is expected to add between $5million and $7 million in revenues to Luminex in 2011.
As far as realizing the full value of the EraGenacquisition, Bradley says Luminex is well on its way. Over time, Luminex willintegrate EraGen branding with the Luminex portfolio.
"Transition planning was initiated during the due diligenceprocess earlier this year," he says. "Although the transaction closed on June27, Luminex has already installed a cross-company transition team that isimplementing a structured process to unlock the full potential of the combinedcompanies."
The two companies' commercial teams have already beguncoordination in the U.S. and, before the end of this year, the marketing teamswill have completed a review of both companies' product pipelines to createproduct development alignment and synergy.
"Early next year, we will turn our attention to theopportunities for EraGen's products beyond the U.S. market," Bradley says."Currently, all EraGen's revenue is derived from the domestic market so webelieve that we can accelerate revenue growth by leveraging our current infrastructureand networks in Europe, Asia and elsewhere."