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Hitting a molecular diagnostics high
August 2011
by David Hutton  |  Email the author
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AUSTIN, Texas—Testing equipment manufacturer Luminex Corp. recently completed its $34 million acquisition of privately held EraGen Biosciences Inc.  
 
According to Russell W. Bradley, vice president of business development and strategic planning for Luminex, EraGen proved to be an attractive acquisition because it offers a   highly complementary, high-growth, high-margin molecular diagnostic assay business.   
 
"When we combine the products and platforms from EraGen and Luminex, we have practically no product overlap, yet we serve largely the same customers in molecular diagnostic labs," he says. "This will allow us to bring more scale and depth to the market."  
 
Bradley also notes that through the acquisition, Luminex secures a "low- to mid-plex" assay chemistry that opens up tens of thousands of installed instruments worldwide. 
 
"This will provide Luminex with an immediately incremental product portfolio and a growth platform in other important markets Luminex already participates in, such as biothreat, life science research and the applied testing markets," he notes. "We also gain the benefit of an expanded direct sales force in North America for the EraGen and Luminex products and the opportunity to grow revenue outside the U.S. using our established infrastructure."  
 
The acquisition provides Luminex with access to a highly complementary portfolio of molecular diagnostic assays based on an innovative and proprietary technology platform called MultiCode. Bradley notes that Multicode PLx is for highly multiplexed qualitative applications, or in other words, for detecting more than five specific nucleic acid targets simultaneously.   
 
"The Multicode PLx technology is a complementary alternative to Luminex's xTAG technology and is fully compatible with Luminex's complete instrument line, including the MAGPIX System," he explains. "MultiCode PLx will provide Luminex with expanded capabilities to consider for future assay product development."  
 
The second EraGen technology is Multicode RTx.   
 
"It is this technology that Luminex is particularly excited about," Bradley notes. "The MultiCode technology is a variant of real-time PCR. Real-time PCR is used globally as a standard quantitative assay chemistry across multiple markets and applications. The foundation of the MultiCode technology is a proprietary synthetic base pair, isoG and isoC. It is the ability to incorporate this novel base pair—along with naturally occurring bases—that provides the unique advantages of MultiCode-RTx and MultiCode-PLx."  
 
Essentially, MultiCode chemistry creates an additional synthetic base pair that are highly specific for each other and can be incorporated into oligonucleotide polymers but do not occur in nature.  
 
Bradley notes that Luminex has established leadership positions 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 assay development 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 disease segment."
 
It is this segment where the majority of EraGen's current products reside, says Bradley.   Dr. Irene Hrusovsky, president and CEO of EraGen Biosciences, says Luminex will benefit from EraGen's innovative technologies and expertise to penetrate new segments.  
 
"I am confident that the company will realize significant business and technology synergies as Luminex brings the global reach and scale required to effectively leverage the enormous potential of EraGen's franchise in molecular diagnostics," she says.  
 
Based in Madison, Wis., EraGen was founded in 1999. The company develops molecular diagnostic testing technologies for infectious disease and genetic applications. It employs about 70 people. In 2010, EraGen posted $8 million in revenues. The acquisition is expected to add between $5 million and $7 million in revenues to Luminex in 2011.  
 
As far as realizing the full value of the EraGen acquisition, Bradley says Luminex is well on its way. Over time, Luminex will integrate EraGen branding with the Luminex portfolio.  
 
"Transition planning was initiated during the due diligence process earlier this year," he says. "Although the transaction closed on June 27, Luminex has already installed a cross-company transition team that is implementing a structured process to unlock the full potential of the combined companies."
 
The two companies' commercial teams have already begun coordination in the U.S. and, before the end of this year, the marketing teams will have completed a review of both companies' product pipelines to create product development alignment and synergy.  
 
"Early next year, we will turn our attention to the opportunities for EraGen's products beyond the U.S. market," Bradley says. "Currently, all EraGen's revenue is derived from the domestic market so we believe that we can accelerate revenue growth by leveraging our current infrastructure and networks in Europe, Asia and elsewhere."

 
Code: E081114

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