Dr Boreham’s Crucible: Lumos waits on FDA call that could 15x its US footprint
Lumos Diagnostics is closer than ever to a decision that could redefine its future: an FDA ruling that would open the entire US point-of-care market to Febridx.
Potentially any day now, the US Food and Drug Administration (FDA) will rule on a request which – if granted – will boost Lumos Diagnostics' (ASX:LDX) US addressable market by a factor of 15.
The submission pertains to a CLIA waiver request for the Lumos Febridx, a lateral flow test that distinguishes between a viral or bacterial respiratory infection in minutes.
Not to be confused with the Cruise Lines International Association, CLIA refers to the Clinical Laboratory Improvements Amendment.
This is a set of US Federal standards that ensure the quality and accuracy of all laboratory testing performed in the US.
The idea of a waiver is that simple tests with insignificant risk can be used by any staff in a medical setting, such as nurses and receptionists.
Other examples of CLIA-waived assays are blood glucose, urine pregnancy and bowel cancer poo tests.
In October 2023, the FDA approved the Febridx test, having rejected the company’s application in 2022 under the 510(k) pathway, deeming Febridx not substantially equivalent to the predicate device.
The FDA clearance only relates to ‘moderate to complex’ uses by a trained clinician, which account for about 5% of the market.
Lumos chair Sam Lanyon told shareholders at last month’s AGM that approval would expand the company’s US addressable market to more than US$1 billion (80 million patients) a year.
CLIA-waived tests need to be intuitive to use, with a low risk for errors if the user follows simple instructions.
“You don’t get a lot of CLIA-waived products because it is a high bar,” says Lumos CEO Doug Ward.
The potential is CLIA
CLIA waiver would mark another step change in the fortunes of Lumos, which looked a tad ‘lost’ after the FDA knock-back.
The company already had an approved test called Viradx, for Covid and influenza A and B.
But the US market became flooded by cheaper Chinese and South Korean rivals and a price war ensued.
Suffice to say, Lumos de-emphasised the Viradx program.
On July 16 this year, Lumos announced a US distribution deal with Phase Scientific, worth up to US$317 million over six years (see below).
“This represents one of the largest distribution deals of its kind by an ASX-listed point-of-care diagnostics company, marking a major milestone in Lumos’ history and a significant step forward for the company,” Lanyon says.
Lumos supported its CLIA submission with an extensive 500-plus patient US study, supported by the US disaster response agency, the Biomedical Advanced Research and Development Authority (BARDA).
“Our take is given how well the study performed – exceeding all the endpoints – we stand the good chance of a CLIA waiver,” Ward says.
Shining a light on point-of-care diagnosis
Lumos specializes in rapid point-of-care (POC) tests to help healthcare professionals diagnose and manage medical conditions more accurately.
Febridx targets the over-use of antibiotics which contributes to the huge problem of antimicrobial resistance.
POC tests are commonly used for glucose and cholesterol measurement, pregnancy tests, cardiac issues and faecal-based bowel cancer assays.
Lumos offers customized assay development and manufacturing services for third-party POC tests, as well as proprietary digital reader platforms.
Lumos means ‘light’, by the way.
Lumos is a spin-off from the Melbourne based Planet Innovation, which designs and develops medical devices.
Lanyon also chairs Planet Innovation.
Under Planet Innovation ownership, Lumos acquired Nplex, which held crucial electronic reader technology.
In 2019, Lumos merged with the Florida-based Rapid Pathogen Screening (RPS), developer of the Febridx test to distinguish between viral and bacterial infections.
Lumos debuted at the height of the pandemic in July 2021, having raised $63 million.
Ward became CEO of Lumos in June 2022, taking over from RPS co-founder Dr Rob Sambursky.
Ward was business development manager for the women’s health group Hologic, a key Lumos partner and collaboration partner (see below).
In an ensuing cost-cutting blitz, management closed the Sarasota, Florida premises – previously RPS’s HQ – and moved all commercial activities to California.
This year Lumos incrementally achieved Medicare Febridx reimbursement coverage, at US$41.38 per test.
Now, seven key Medicare Administration Contractors have come to the party and the company is confident of securing private insurance coverage.
About Febridx
The Febridx tests are similar to the Covid lateral flow (rapid antigen) assays we all got to know and loathe, er, love.
But rather than availing of a synapse-searing nasal swab, the test uses blood from a finger-prick.
The claret is placed on a cantilever, which flips the sample on to the paper and releases the buffer.
In other words, it’s highly automated and foolproof.
As with a Covid test, the tell-tale lines will indicate the presence of a virus or bacteria.
No lines mean it’s something else outside the purview of the test, possibly a gastro disorder.
According to the US Centers for Disease Control and Prevention, more than 200 million antibiotic prescriptions are written each year.
About half are for acute respiratory tract infections and about 40% of them are unnecessary.
The company claims a 99% accuracy for the ability of Febridx to rule out bacterial infections, while 90% of the time it will distinguish accurately viral diseases from bacterial ones.
In September, a conference aired the results of a two-year UK study, showing Febridx use over resulted in a “measurable reduction” in antibiotic prescribing.
This resulted in a reduced incidence of doctor revisits and a significant cost savings to the health system.
Ward says while other bacterial-versus-viral tests exist, they rely on laboratory-based instruments. One test is for use by hospitals and requires venous blood to be drawn.
“There’s no other finger prick assay that does what we do,” he says.
Lumos’s cartridges are supplied by the ASX-listed Atomo Diagnostics, which has its own patents around this hardware.
Lumos’s smarts relates to the “combination of the chemistry and what it’s doing.”
Febridx also has been approved in other geographies including Europe and the UK, Canada, Brazil and – of course – Australia.
More than just a Phase
Ward says Phase Scientific was the most appealing of four potential distribution partners who knocked on the company’s door.
Phase is the “single and exclusive” distributor for Febridx in the US.
The Phase deal delivers a “total potential value” of US$317 million to Lumos, over the six-year term of the agreement. This includes a US$5 million sales order triggered on FDA approval.
In essence, the deal involves Phase buying the tests from Lumos at a proprietary transfer price and selling it directly to general practitioners or sub distributors.
“At early stages we are talking about 60%-plus gross margins,” Ward says.
“Once we get good volumes, this should be around 80% over the term of the agreements.”
He says Febridx will be Phase’s flagship product.
“We didn’t want to go with a company with 1,000 products, in which case the talk about it … and maybe they don’t,” he says.
“We want this product to be the most important .”
Women’s health
While Febridx drives Lumos’s near term prospects, it’s not the only product in the company’s armoury.
Lumos and the Massachusetts-based women’s’ health specialist, Hologic are developing a next-generation test for foetal fibronectin (FFN).
FFN is a biomarker that points to a higher risk of pre-term births.
The assay would replace Hologic’s current ageing FFN test, which is the only one on the market.
In January 2024, the parties entered a licencing agreement worth US$10 million, for Hologic to use Lumos’s reader and point-of-care tech.
The compact also involves an FFN development agreement, initially worth US$4.7 million. The program focuses on adapting the test for use on the Lumos reader platform and providing “improved connectivity options”.
This program has been expanded with two additional assignments, worth between US$1.1 million and US$1.7 million.
This BARDA be good
Lumos also is undergoing a study to expand the use of Febridx to children.
This one is funded by the Biomedical Advanced Research and Development Authority (BARDA), the US disaster preparation agency, to the tune of US$6.2 million.
BARDA also supported the adult trial with a US$2.1 million contribution.
Paediatric approval would apply to kids between two and 12 years and would expand the addressable market by about 20%.
Febridx is not allowed to be used as a home test, but for Lumos it’s a case of ‘never say never’.
“Given its ease of use … it makes sense to consider that,” Ward says.
Home testing would open a similar sized market to the CLIA-waived sector – if not bigger.
Finances and performance
Lumos posted September quarter revenue of US$3.4 million, 28% higher than the June quarter and 1.7% lower than the previous September quarter. But customer receipts for the three months were US$5.3 million, up 356% compared to September 30, 2024.
The company had operating cash inflows of US$1.8 million, excluding US$1 million from an options exercise.
Of the revenue, US$1.2 million derived from products (up 300%) and US$2.2 million from services (down 29%).
This resulted from an expansion of the FFN project timeline.
The product revenue reflected a five-fold increase in US Febridx sales and a US$1 million exclusivity fee from Phase.
The company ended the quarter with cash of US$4.5 million, with a loan facility of up to US$3.3 million, provided by two major shareholders.
Spurred by the Phase deal, Lumos shares have climbed more than 400% over the last year.
In mid-April this year they traded as low as two cents and were as high as 26 cents in late-October.
The shares hit an all-time low of one cent in June 2023. They peaked at $1.28 in August 2021 – the good ol’ days of Covid.
Andrew and Nicola Forrest’s Tenmile Ventures last year became a 19.9% Lumos shareholder, having acquired its stake from Planet Innovation.
Dr Boreham’s diagnosis
Despite the reimbursement and the lack of rival assays, Ward says penetrating the US market will be a gradual exercise.
“As with all diagnostic tests, it’s about first creating awareness,” he says.
“At first, not many patients know about the test.
“We will need to do a lot of awareness campaigning for both doctors and patients.”
The company aspires to a 1-2% market penetration within the first two years.
“Over the timeline of the Phase agreement over six years, it would be great if we could get double digit market share”.
Yep – that’s at least 10%.
Lanyon says Lumos is “increasingly recognised as a credible and scalable partner in the diagnostics ecosystem”.
Still, management and shareholders alike are sweating on the FDA decree, which could come any time between now and February next year.
After all, the company-making Phase deal is contingent on approval.
At a glance
ASX code: LDX
Share price: 24.5 cents
Shares on issue: 787,181,292
Market cap: $192 million
Chief executive officer: Doug Ward
Board: Sam Lanyon (chair), Ward, Bronwyn Le Grice, Lawrence Mehren, Catherine Robson
Financials (September quarter 2025): customer receipts US$5.3 million ($A8.2 million; up 356% on prior period), US$1.8 million cash flow positive, cash balance US$4.5 million (plus US$3.3 million untapped loan facility)
Identifiable major holders: Tenmile Ventures 19.9%, Ryder Capital 17%, Planet Innovation 3%
Disclosure: Dr Boreham is not a qualified medical practitioner and does not possess a doctorate of any sort. Neither does Dr Who, but he – or more latterly she – still is recognised as a credible partner in the space-time continuum ecosystem.
Originally published as Dr Boreham’s Crucible: Lumos waits on FDA call that could 15x its US footprint
