Decent quarter actually, things are looking up... Not to mention the fact we haven't even entered the US market yet which we know is the gold mine as there universal health care is basically non existent which still baffles me as to how they don't have free medical care (generally). But so it goes with big business there.
Investors looking for insane gains often look no further than the biotech space, a sector where bit risks can mean big rewards. Stocks in this segment can soar (or crash) massively based on one test result or regulatory decision.Allow us to introduce Lumos Diagnostics (ASX:LDX) as a prime example.
For the latest health news, sign up here for free * daily newslettersThe LDX share price has bounced back from a near-death experience, surging 700 per cent (at the time of writing) this month.
Investors piled back into the ticker after the company announced an approval from the US Food and Drug Administration (FDA) to market its FebriDx rapid, point-of-care test in the United States.
The clearance allows FebriDx to be marketed in the US for use by healthcare professionals as an aid in the diagnosis of bacterial acute respiratory infection.Prior to the announcement, the company was in the brink of disaster after its submission was rejected by the FDA in July 2022, and once again at the appeal stage in October 2022.
The FDA decision led to the closure of Lumos’ Sarasota manufacturing facility, as the company tried to minimise cash burn.Lumos’ CEO Doug Ward, who was appointed as CEO just before the initial FDA decision, told * that after this month’s turnaround, the big positive was seeing how very patient investors had been rewarded.“They’ve said, ‘Hey, we believe in this company, which has a great IP, a great leader in technology, and believe that FebriDx is a great idea’,” Ward said.“This FDA approval is the first step in our turnaround, and now we need to put our money where our mouth is and follow through to deliver to our shareholders.”
FebridX makes telling differenceFebridX is a diagnostic test kit designed to aid in the differentiation of bacterial and viral acute respiratory infections (ARIs), and help guide decisions regarding the prescription of antibiotics.It’s intended to be used in conjunction with clinical signs and symptoms, including other clinical and laboratory findings.Here's what the fuss is all about – the FebridX test kit. Picture: BioWorldApart from the US, the kit is already registered in the UK, Europe, Canada, UAE, Brazil, Turkey, Pakistan, Singapore, Malaysia and Australia.“FebridX is basically used as an aid to help physicians to differentiate a bacterial respiratory infection from a non-bacterial one,” explained Ward.
The term “non-bacterial” here could be replaced with “viral” elsewhere but in the US, non-bacterial is used because technically there can be a non-bacterial infection which creates that host immune response other than just viral.“FebridX helps the physician decide whether they should prescribe antibiotics to treat the infection or not,” he added.
Previous research indicated that the inappropriate and unnecessary prescribing of antibiotics is a significant contributing factor to the growing global emergence of antimicrobial resistant (AMR) strains of bacterial pathogens.
In 2021, US healthcare professionals in outpatient settings issued 211 million prescriptions for antibiotics — equivalent to 636 prescriptions per 1000 persons.Despite acute respiratory infections being predominantly viral in origin, they are the most common diagnosis for which antibiotics are prescribed and up to 40 per cent of these prescriptions are considered unnecessary.“If you have viral or other types of infections, you don’t want to be given antibiotics.
Inappropriate and over-treatment of antibiotics means that you get resistance to the antibiotics,” Ward said.“With the FebridX test, within an hour, it will tell you whether you have a bacterial infection and whether an antibiotics should be prescribed.”
More than just FebridX Back to our biotech case study. And the question is what an ASX stock does after that vital success.Following the FDA approval, Lumos completed a $4.75 million cap raise to institutional investors, and has launched another $4.75 million share purchase plan (SPP) for eligible shareholders.
The company said funds raised would be used to buy back outstanding convertible notes, and to provide general working capital.Ward said that the company would remain cautious about how it spends the money, despite the FDA approval.Visit *, where ASX small caps are big deals“ Before I joined, we had built huge amounts of inventory of other products that didn’t eventually make it and we had significant write offs as a result,” said Ward.These write-offs have hurt the bottom line and in turn, the company’s share price.“ Now cash is very, very precious to us. So we chose not to pre-manufacture anything prior to the announcement.”
The company is now in the process of ordering all the components, and investing its money into the supply chain.“After that, we’ll start to gear up manufacturing and selling later on in the year.”Ward expects that the next set of news flow for the company would be around commercial deals for FebridX.“It’s an economic story, and it’s one that takes time.”
Apart from FebridX, the lion share of Lumos’ business is actually in developing and manufacturing tests for other diagnostic companies. During the March quarter, Lumos generated $1.9 million from the provision of diagnostic test development services and contract manufacturing for its clients.“I think we’re also going to see some nice announcements around additional services and partnerships. I think they’re going to be pretty substantial in the future,” said Ward.
