Why $487 million US distribution deal is a ‘watershed moment’ for skyrocketing biotech Lumos

• Lumos signs six-year exclusive deal valued at up to US$317 million with PHASE Scientific for distribution of FebriDX in US subject to CLIA waiver
• US$2 million payable immediately, comprising US$1 million exclusivity fee and US$1 million pre-paid purchase order
• Further US$1.5 million pre-paid purchase order will become payable on FebriDx CLIA waiver application to US FDA,  expected within three months

Lumos Diagnostics (ASX:LDX) has skyrocketed more than 150% after inking a landmark six-year distributor deal worth hundreds of millions of dollars to sell its rapid point-of-care diagnostic FebriDx in the US market.

The FebriDx product is a simple test able to differentiate between bacterial and non-bacterial acute respiratory infections.

A lucrative US licencing deal with Hong-Kong based PHASE Scientific could see Lumos net up to to US$317m (~A$487m), and has been described as one of the largest distribution deals of its type to be done by an ASX-listed point-of-care diagnostics company.

It’s all positive for investors, including its largest shareholder Tenmile – a wholly owned subsidiary of billionaire backers Andrew ‘Twiggy’ and Nicola Forrest’s private investment vehicle, Tattarang – which holds 19.9% of the stock.

PHASE backs cutting-edge test

The deal assigns exclusive distribution rights to PHASE for the point-of-care blood test, which helps clinicians differentiate between a bacterial or viral respiratory infection within about 10 minutes.

The agreement includes a US$1 million non-refundable exclusivity payment upon signing, along with an additional US$7.5m in non-refundable prepaid purchase orders, payable in three instalments including:

• US$1m upon signing of agreement
• US$1.5m upon submission of the FebriDx CLIA waiver application to the US Food and Drug Administration (FDA); and
• US$5m on granting of the US FDA CLIA waiver.

Assuming PHASE achieves all payment milestones outlined and meets minimum order quantities, which are expected to “progressively ramp up”, Lumos forecasts total value of the agreement reaching up to US$317m (~A$487m) over its six year duration.

Lumos is currently undertaking a CLIA waiver study in the US to enable FebriDx to be used in a broader range of healthcare settings, including physician offices that do not operate under high-complexity laboratory certification.

As of July 9, the study had enrolled 105 bacterial positive patients of the targeted 120 bacterial positive patient results required for the study.

At the current accrual rate, the study is forecast to be completed during August with an FDA CLIA waiver application submitted about one month after completion.

‘Watershed moment’

Speaking with Stockhead from the US, Lumos managing director Doug Ward described the deal as transformational financially for the company, which listed on the ASX in July 2021.

“I think this is a watershed moment for the business going forward,”  he said.

“It will take hard work to realise everything but at the same time we have put ourselves in a great trajectory here to be very successful.”

As Lumos edges closer to wrapping up the CLIA waiver study, it has been quite the belle of the ball, attracting several suitors for its FebriDX distribution rights.

“We selected PHASE for several reasons including they have a great understanding and experience in the US point-of-care market,” Ward said.

“While Hong Kong-based the majority of their sales are US based, and they know this point of care market very well.”

Ward said launching a brand-new product into the US market takes knowledge and experience of the landscape, but also financial commitment.

“PHASE have made it clear of their intention to invest, and they just did a significant funding round in Hong Kong so have the means and commitment to make this happen,” he said.

“We also wanted to go with a company where we knew we were their primary focus so there were other companies which had more products in their bag, but we didn’t want to be one of 50 or 100.”

Instead, Ward said he wanted to be one of small number of synergistic products for a distributor.

“I think that hunger and focus is there, and PHASE should be very successful,”  he said.

Non-executive chairman Sam Lanyon also praised PHASE and said he was confident the company would be a motivated partner to push the commercialisation of FebriDX in the US.

Tapping into lucrative market opportunity

Ward said in the US, point-of-care testing for respiratory illnesses like influenza and covid-19 represented a market worth more than US$1 billion, with strong demand for fast, accurate diagnostics in primary care and outpatient settings.

“If you have a respiratory element to your sickness here in the US, you’ll be immediately tested for covid or flu and we see FebriDX sitting side by side with those point-of care tests,” Ward said.

“The doctor can determine whether their patient does or doesn’t have covid or flu and then whether their patient has a bacterial infection and needs antibiotics.

“So, we don’t need to teach doctors what we call a new care pathway but rather get them to be aware they can add FebriDX to their testing arsenal to assist with patient treatment.”

Lumos is tackling antimicrobial resistance (AMR) – the ability of microbes to resist the effects of medication – with FebriDX, which according to the World Health Organization is one of the top global public health threats.

Ward said a significant contributor to the AMR crisis was the inappropriate prescribing of antibiotics, particularly for acute respiratory infections in primary care settings.

“Our mission is to impact and improve the practice of medicine and we think FebriDX does that so we’re very excited,” he said.

“It is something which is fresh, novel and should really improve care.”

Positioned to bring FebriDX to frontlines of care

PHASE Scientific founder and CEO Dr Ricky Chiu said the company was proud to partner with Lumos as their exclusive US distributor for FebriDx, and to welcome the test into its INDICAID family, its trusted rapid diagnostics brand known for accessibility and quality.

“With strong product differentiation and a CLIA waiver on the horizon, FebriDX is poised to transform the landscape of rapid respiratory diagnostics and clinical decision-making,” Chiu said.

“Backed by PHASE’s record of having sold over 100 million INDICAID tests and a nationwide network of urgent care centres and clinics, we’re uniquely
positioned to bring this innovation to the frontlines of care — where speed, accuracy, and reliability matter most.”

At Stockhead, we tell it like it is. While Lumos Diagnostics is a Stockhead advertiser, it did not sponsor this article.