One of the punching bags of the ASX, Lumos Diagnostics (ASX: LDX), which develops diagnostics for healthcare professionals to more accurately diagnose and manage medical conditions, has announced the closure of its Sarasota manufacturing facility in Florida as they shift operations across the country to Carlsbad, California.
The decision to close one of its sites comes as the Company is focused on reducing cash burn and future financial commitments.
To successfully negotiate the lease termination, the Company completed a final, one-off payment of US$300k, which relieved the Company of more than US$3.1 million in future lease obligations and additional facility running costs.
Lumos has now transferred and moved essential personal and manufacturing equipment to the Carlsbad site to sell the rest of the assets at the Sarasota facility. The wind-up payment of US$300k is expected to be offset by the proceeds of the sold assets.
“We now have a single operational facility, located in Carlsbad, that can provide everything from product development services through to commercial-scale manufacturing for our clients. Despite its complexity, this has ended up being a remarkably seamless transition that has not resulted in any disruption to our operations, which is critical as we continue to build our pipeline of commercial projects,” said Doug Ward, CEO of Lumos.
In the Company’s August annual report, Lumos saw operating cash outflow eclipsing A$18 million, gaining from a A$10 million cash burn during the June quarter. The Company also spent a further A$4.35 million on investing activities, leaving them with only $8 million in the bank.
“Lumos undertook an extensive operational review and cost reduction program during the year to improve its alignment with current market conditions. This resulted in a significant reduction of Lumos’ operational cash burn and ensured that the Company’s resources are aligned with its focused commercial and business objectives.”
This announcement was released to markets no more than one minute after another announcement that the US Food and Drug Administration has rejected a second time the Company’s appeal for clearance of its FebriDx Point-of-Care testing device for sale in the US. Perhaps they are attempting to hide the double rejection from the top of their announcements list.
Following the rejection, Lumos intends to direct its efforts to markets where its FebriDx device has already been granted clearance. The Company will have the choice to file a new application with the FDA, however, based on the comments and feedback received from the FDA, further investment and research is paramount if a new application is submitted.
“Clearly this is a disappointing outcome for Lumos as we believe there is a significant need and opportunity for FebriDx in the US.”
“However, we are committed to ensuring that investment and expenditure is closely aligned to achieving commercial outcomes for Lumos. At this time, this means focusing our efforts on building our services and manufacturing businesses and selling our own POC diagnostic products in markets where they are cleared.”
Trading Desk Assistant at Emerald Financial
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