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Independent Reviews for Venture Investors

LXG.V - Beta testing.

LexaGene Holdings Inc. (LXG.V) is working to develop a fully automated pathogen detection instrument that is self-served. The objective is to enable an end-users to target any pathogen of interest for customized detection and return results in about an hour.

The end-users simply need to collect a sample, load it onto the instrument with a cartridge, and press ‘go’. The instrument is expected to offer excellent sensitivity, specificity, and a breadth of pathogen detection. End-users will be able to input multiple samples at a time, on an self-served basis. Panels on the instrument allows for each sample to be screened for up to 28 targets while performing 15 positive and 2 negative controls.

We initiated coverage in December 2018. Here's a review of its activities since.

Jan. 3 - Featured on ABC Affiliate WCVB-TV Boston. On a segment of ‘Cutting Edge’ on December 21, 2018. Following the initial airing, the segment is scheduled to air several more times in the coming weeks on other ABC-affiliated channels.

Jan. 22 - Announces Formation of Scientific Advisory Board (SAB). The SAB is comprised of key opinion leaders in the Company’s targeted markets, namely food safety, veterinary diagnostics, and open-access markets such as biodefense

The initial SAB members include Dr. Kimothy Smith DVM PhD and Mr. Shawn Stevens JD. Other SAB members will be added over the coming months to complete a five-member advisory board.

Feb. 5 - Starts Clinical Study Using its Technology. The clinical study will collect data using its LX genetic analyzer technology. It will include testing urine samples collected from dogs suspected of having a urinary tract infection (UTI).

Feb. 7 - Successfully Detects Dual Infected Samples. LX technology has successfully detected the presence of two different pathogens from a single clinical urine sample in some of the first samples tested in the Company’s recently initiated clinical study.

Feb. 12 - Successfully Detects Antibiotic Resistance Factors. Can detect antibiotic resistance factors from pathogens causing urinary tract infections (UTIs) in dogs. Animals with these types of infections are more susceptible to serious health consequences if wrong antibiotic is used.

Feb. 25 - Completes Pilot Clinical Study and Reports Results. LX analyzer technology has robustly – in a sensitive and specific manner – detected each of the six most common pathogens in canine urinary tract infections (UTI) and is 97.5% concordant with reference laboratory results.

A total of 107 urine samples processed in a blinded fashion (samples provided by Ethos Veterinary Health) Each of six major pathogens was successfully detected (E. coli (43), Staphylococcus (11), Proteus (11), Enterococcus (8), Klebsiella (2), and Streptococcus (1)).

Mar. 5 - Successfully Detects Pathogenic E. coli. Specifically, E. Coli O157:H7 Bacteria from Romaine Lettuce Wash. In the United States, the O157:H7 strain of E. coli causes an average of 73,000 illnesses annually. with an annual cost of illness of $405M. In 2018, two separate outbreaks of E. coli O157:H7 contaminated romaine lettuce occurred, causing an estimated 272 illnesses and 5 deaths.

Mar. 11 - LexaGene’s CEO Invited by USDA to Present a Seminar on the Benefits of Adopting Rapid Genetic Testing to Improve Food Safety.

Mar. 13 - Announces C$1.95 Million Private Placement. Strike price of $0.65 cents with Warrant at $0.85 cents. The net proceeds to fund beta development of the LX Analyzer and related corporate activities involved in marketing its technology to the food safety and veterinary industries.

Mar. 29 - Closes Oversubscribed Private Placement non-brokered placement for total of $2,843,926 CAD at $0.65 cents (W $0.85 cents).

Apr. 3 - Former Head of Food Safety at Chipotle Mexican Grills Joins LexaGene’s Scientific Advisory Board.

Apr. 16 - Engages Bristol Capital Ltd. to Provide Investor Relations and Communications Services.

Apr. 24 - Identifies Genetic Mutations Directly from Cheek Swabs. LX Analyzer confirmed single-point gene mutations at locations within the AKT1and COMT genes in 100% concordance with sequences generated by Human Genome Project. In addition, the LX Analyzer was used to process cheek swab samples and the generated data was found to be clear and conclusive for the targeted gene sequences.

The applications for genotyping (i.e. understanding genetic sequences in areas of scientific/clinical importance) are vast, including research focused on cancer and neurological diseases, as well as pharmacogenomic testing to determine a person’s genetic response to medication.

Apr. 30 - Successfully Detects a Common Fungus That Damages Agricultural Crops. LX analyzer successfully detects Botrytis cinerea, also known as Gray Mold, which is a common agricultural pathogen responsible for $10 to $100 billion in agricultural losses worldwide each year.

May 15 - Completes Development of Antibiotic Resistance Panel. The panel comprised of 12 assays targeting antibiotic resistance genes commonly found in bacterial pathogens. This further expands the Company’s capabilities in providing a complete testing solution for veterinarians to rapidly determine the cause of an infection and whether any antibiotic resistance factors are present.

June 5 - Places its First Beta Prototype into Massachusetts Veterinary Referral Hospital (Mass Vet). Mass Vet is one of 24 hospitals owned and operated by Ethos Veterinary Health. Following the placement at Mass Vet, we will continue placing our devices at various other US sites.

June 6 - Host Investor Webinar.

July 10 - Beta Prototype Exceeds Expectations at Mass Vet. The test results from its first beta prototype were found to be >98% concordant with reference laboratory generated data. Also LXG.V's test results correctly confirmed that 56% of the animals tested did not need antibiotics.

They focused on processing canine and feline urine samples, but were given the opportunity to load other sample types onto the instrument such as swabs from surgical incisions, cervical swellings, and neck and chest wounds.

July 17 - LexaGene Files Three Additional US Patents. Safeguarding the proprietary science and designs of the LX2™ technology.

LXG.V has been busy in the last six months. It started and completed a Pilot Clinical Study. The results demonstrated that the LX Technology was able to: a) detect six different pathogens: (E. coli (43), Staphylococcus (11), Proteus (11), Enterococcus (8), Klebsiella (2), and Streptococcus (1)). b) detect antibiotic resistance factors and c) detect the presence of two different pathogens in one canine urine samples.

Last month, it installed its first Beta Prototype of the LX2 at the Massachusetts Veterinary Referral Hospital. Last week, it reported its first Beta results there: >98% concordant with reference laboratory generated data, as well as, being able to confirm that 56% of animal tested did not need antibiotics!

As a reminder: "Currently, in the US alone, there are 90 million dogs, with an estimated 5.4 million tests performed for urinary tract infections. These infections can be caused by at least 69 different pathogens, but 95% of these infections are caused by just 8 pathogens. In 2017, the global dog diagnostic market was valued at over USD $722.7 million, with the global companion animal diagnostics market expected to exceed USD $3.2 billion by 2024." - LXG.V's December 10, 2018.

Additional accomplishments for the period included a) The detection of E. Coli O157:H7 Bacteria from Romaine Lettuce Wash - just prior the invite from the USDA to discuss the benefit of genetic testing on Food Safety. b) Detecting genetic mutations using cheek swabs in humans (personal genotyping), as well as, c) Isolating Botrytis cinerea, also known as Gray Mold, a fungus that damages agricultural crops. These results represent additional verticals for the instrument, with each having a significant total addressable markets.

In spite of these achievements, valuation has remained relatively stagnant. This is explained in part by recent financing; LXG.V just completed a non-brokered oversubscribed private placement of $2.8M at $0.65 cents (warants at $0.85 cents). The above chart clearly shows that the pivot point (P) is slightly above the strike price. In contrast, the last two rounds of financing were bought deals (December 2017 - $5M at $1.15. July 2018 - $5.75M at $1.00).

The fact that LXG.V is trading lower than prior bought deal strike price is unfortunately not surprising but certainly noted. Although it is a given that LXG.V will require more funds in the near future as it plans to enter its commercial phase by Q2 2020, the recent accomplishment are not priced in.

Hence, the progression of the instrument and its future potential value does not appear to be reflected in the current share price. Instead, the current price is a reflection of future financing needs. Nonetheless, this is bound to flip at some point but for now LXG.V continues Beta testing.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.


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