I recall the study you are talking about. It was identified that some practitioners found it difficult to get the blood in the collection tube. This could be to not producing enough blood for the sample, or the doctor also being incompetent lol. The recommendation was for a slightly larger collection tube.
The test itself is to aid in the identification of viral v bacterial infection. I know when I go to the doctor or take my daughter, the doctors first response is "its just a virus". Not the case all the time and it is this lack of care which is why i value the product so much. I would love to see this over the counter at the chemist like a normal rat test so i can pay $25 to do the test myself instead of at the GP. Saves me $100 and I can determine if i need antibiotics (via GP referral) or just normal cold pills.
On the back of that however, the doctors are to use is to support their theory of diagnosis, not rely on it. I think that's something that needs to be considered.
The price would likely still be sitting around .01c if not for the FDA approval, but it has been received, so there should be more value placed on that if it was at one point, priced to .17c. Outside of that though, the company has and develops other tests.
This is something Hologic place value on which is why they have signed the agreements they have. They can add these other tests and any future LDX tests to the new FFN testing kit for use throughout Hologic's channel. Hologic are likely to pay ongoing annuities for the test itself as LDX will have ongoing manufacturing of the device itself / or Hologic have paid to manufacture themselves and will provide ongoing annuities due to the location of manufacturing as LDX IR already indicated to me:
In terms of margins on sales, I believe that Lumos will not be paid any kind of royalty but will make money from a manufacturing margin for supplying the finished product that is sold. Worth noting, when a device is approved, it includes the place of manufacture so there is a real switching barrier which is why these medical device manufacturing contracts are so valuable - effectively annuity income. I would guess (and this is a guess) that would be around 15-20% of the wholesale price which is typically 60% of the retail price. So if you worked off 7.5%-10% of sales, you should be in the ballpark. But this is a guess (educated guess but still a guess). Another way to look at the Hologic deal: Let say the FFN test is built and works. Hologic have the prototype and are required to obtain the approvals. If approved and ok to produce, it needs to be manufactured. Instead of LDX obtaining ongoing sales margins on the number of tests sold it would be based on the number of tests produced/manufactured, same way AT1 generate revenue for the Pascal cassette the Febridx test is built using.
Lets say the deal currently allows access to the IP so that Hologic can create Hologic branded devices and tests. The IP is valued at $10M. The IP is exclusive to the field of FFN so they are legally not allowed to use the tech for other testing. However, they can add further test items to the device for ongoing annuities outside of FFN as well for ongoing annuities and revenues.
Regarding your investment, you could take some solace in the fact you would still be in profit if you did by in at .01c. You can take solace in the fact the products are in market and revenue producing albeit pending CLIA waiver. You can take further solace that the Hologic deal has come to fruition. You can take further solace that there are other deals taking place so your timing of your investment sounds very good!
LDX Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
