Luminex Gets EraGen for $34M - Analyst Blog
23 June 2011 - 4:10AM
Zacks
Luminex Corporation (LMNX), a developer of
biological testing technologies, has forged a definitive agreement
to buy Madison, Wisconsin-based privately-held diagnostic testing
company EraGen Biosciences, Inc. for $34 million in cash.
The transaction, which is subject to the clearance of EraGen
shareholders and other customary conditions, is expected to
complete within the next few weeks.
EraGen, with annual sales of $8 million, makes molecular reagent
products for infectious diseases and genetic-based conditions. The
company’s products are based on its proprietary MultiCode
technology platform.
EraGen received, in May 2010, the approval of the U.S. Food and
Drug Administration (“FDA”) for its MultiCode-RTx HSV 1&2 Kit.
It is the first FDA-approved molecular test for the herpes simplex
virus (“HSV”).
The acquisition will provide Luminex a highly complementary
portfolio of molecular diagnostic tests based on the MultiCode
platform. Besides expanding its product offering to the existing
customers, the acquisition will enable the company to tap new
markets leveraging EraGen’s innovative
technologies.
Luminex anticipates the acquisition to add between $5 million
and $7 million to its consolidated revenues for 2011. Moreover, the
company expects
the transaction to dilute its earnings (on a reported basis) in
2011 and accretive in 2012. On an adjusted basis (excluding
acquisition-related charges), the acquisition is expected to be
neutral to earnings in 2011.
Texas-based Luminex develops and markets proprietary biological
testing technologies, which have applications across the life
sciences industry. Its proprietary open-architecture xMAP
technology enables fast, cost-effective and accurate conduct and
analysis of biological tests. The company continues to expand its
xMAP technology-based installed instrument base.
Luminex possesses an extensive product portfolio and a healthy
pipeline of novel assays, which if successfully developed and
launched, would facilitate further growth. The company expects to
launch the RVP Fast assay in the U.S. and the NeoPlex 4 newborn
screening assay in Europe in fiscal 2011. Luminex is expected to
provide an update on its pipeline at its forthcoming investor event
slated to take place in Atlanta on July 25.
Luminex operates in the highly competitive life sciences
industry, characterized by rapid and continuous technological
innovation. The company competes with Affymetrix
(AFFX) and Sequenom (SQNM), among others.
Moreover, Luminex is challenged by sluggish growth in its core
markets, faces regulatory uncertainties, and heavily depends on
partners to market its instruments and assays, a strategy that has
its risks. Our Neutral recommendation on the stock is in agreement
with a short-term Zacks #3 Rank (Hold).
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