Luminex Wins DTRA Contract

Luminex Corporation(LMNX - Analyst Report), a developer of biological testing technologies, recently announced that the Defense Threat Reduction Agency (“DTRA”) has awarded the company with $11.6 million to develop a portable diagnostic device enabled with quick detection of bio-threat agents. The contract has a term period of more than three and a half years.

The contract with Luminex supports The Chemical and Biological Defense Initiative Fund (“CMB-DIAGB2”) of the U.S. Department of Defense's DTRA. The DTRA was setup in 1998 to cater to the Department of Defense’s core technical, intellectual and operational support expertise to identify and negate threats from weapons of mass destruction and explosives.

The deal with DTRA is in line with Luminex’s business strategy to penetrate the applied markets such as bio-defense and bio-threat testing. Management at Luminex is enthused about its alliance with DTRA to provide cutting-edge solutions to neutralize biothreat agents and enhance civilian safety with its advanced technologies.

This field deployable hand-held tool will identify both protein and nucleic acid targets to detect Systemic Inflammatory Response Syndrome (“SIRS”), a disease caused by blood infection from bio-warfare, combats and more. Bio-warfare agents can cause a variety of diseases which can affect multiple organs and can lead to large scale fatal illnesses to military and civilians as well. However, the symptoms of bloodstream infections are common and hence, a diagnostic test needs to be developed to detect bio-warfare pathogens.

Luminex already possesses an extensive product portfolio and a strong pipeline of novel assays, which are expected to support growth going forward. Earlier in April 2012, the company had announced its decision to expand its Biodefense Group by investing in scientific research to further build on its product line.The DTRA’s award will further boost Luminex’s bio-threat detection technology program.

However, Luminex operates in the highly competitive life sciences industry. The company competes withAffymetrix(AFFX - Analyst Report) andSequenom(SQNM - Snapshot Report), among others. Moreover, sluggish growth in its core markets is a challenge faced by Luminex. We are currently Neutral on the stock, which carries a Zacks #3 Rank (short-term Hold rating).