LexaGene Holdings Inc. (LXG.V) is a molecular diagnostics company that has commercialized the MiQLab System for fast and easy detection of biological contaminants, pathogens and other molecular markers. The System is designed for on-site usage and uses real-time PCR chemistry. Our customers include biopharmaceutical companies and veterinary hospitals. The MiQLab System delivers excellent sensitivity, specificity, and breadth of detection.
Coverage: December 2018, July 2019. April 2020, December 2020, September 2021, and May 2022
News Releases
June 28 - Files Form 10 Registration Statement with the SEC and Delay in Filing Year-End Annual Canadian Filings: Form 10 Registration Statement was filed for the fiscal years ended February 28, 2022 and 2021. A copy of the Form 10 registration statement has also been posted on SEDAR. The Company also announces that its annual Canadian financial filings, consisting of the Company’s annual year-end financial statements, its related MD&A, and CEO and CFO certifications, are being worked on, but will not be filed by the required filing deadline of June 28, 2022.
June 30 - Announces Management Cease Trade Order: Granted a management cease trade order (“MCTO”) under National Policy 12-203 – Management Cease Trade Orders (“NP 12-203”) imposed against certain insiders of the Company, precluding them from trading securities of the Company. The MCTO will be in effect until the Company’s annual financial statements for the year ended February 28, 2022, its related MD&A and CEO and CFO certifications (collectively, the “Annual Canadian Financial Filings”) are filed on or before August 29, 2022.
The Company is working on the audit and related procedures required to complete the Annual Canadian Financial Filings, and expects to be able to file the Annual Canadian Financial Filings within the next five to six weeks.
July 1 - Announces MiQLab® System Sale to Veterinary Hospital in Wisconsin: Once we complete our scheduled installations, we will have MiQLab Systems operating in 10 states across the US. Since the start of this year, our install base has increased 240% and we expect an even steeper increase in the latter part of this year.”
July 5 - Webinar by UC Davis Professor on Use of MiQLab® System for Diagnosis of Urinary Tract Infections: This will be a live event hosted by DVM360 and moderated by Adam Christman, DVM, MBA scheduled for July 26th.
July 12 - Provides MCTO Update: Staff and audit team continue to make progress and are proceeding without any known material issue. The Company expects filing by no later than August 29, 2022.
Jul. 27 - Completes Multi-Center Validation Study Using MiQLab® System for Diagnosing Urinary Tract Infections: The study was led by Professor Dr. Jane Sykes BVSc (Hons), PhD, MBA, DACVIM (SAIM) at the University of California-Davis (UC Davis). Urine specimens were also tested in the laboratory of Dr. Stephen Cole MS, VMD at PennVet, University of Pennsylvania (UPENN). Each site operated a MiQLab System equipped with a MiQLab Bacterial and AMR Test V2, which screens samples for 10 common pathogens and 33 markers for antimicrobial resistance factors. MiQLab System data were compared to standard culture and susceptibility testing.
July 29 - Announces Filing of Financial Statements, Revocation of MCTO & the Granting of Incentive Equity Awards: As a result, the management cease trade order (“MCTO”) ihas been revoked and is no longer in effect.
Aug. 10 - Reduces Time-to-Result by ~35%: The MiQLab System is designed for in-clinic use, requires less than a minute to initiate sample processing, and returns results on the presence of 10 different pathogens and 33 markers for antimicrobial resistance. The microfluidic system executes a complex series of scripts to complete three main tasks, namely sample preparation (the process of purifying genetic material from a complex sample), PCR reaction assembly, and PCR amplification and reporting. Previously, these three tasks took 120 minutes; now in 80 minutes.
Aug. 17 - University of Pennsylvania’s School of Veterinary Medicine to Evaluate New Gastrointestinal Panel: The MiQLab GI Pathogen Panel screens for the following: i) 5 bacteria (Campylobacter, Clostridium difficile, Clostridium perfringens, Escherichia coli, Salmonella); ii) 11 toxins from the following bacteria: (Clostridium difficile, Clostridium perfringens, enteropathogenic E. coli (EPEC),enterohemorrhagic E. coli (EHEC),enteroaggregative E. coli (EAEC),necrotoxic E. coli (NTEC), enterotoxigenic E. coli (ETEC),enteroinvasive E. coli (EIEC); iii) Protozoans, Cryptosporidium, Giardia, Toxoplasma gondii, Tritrichomonas; iv) Canine parvovirus and feline panleukopenia virus.
Aug. 24 - MiQLab System Generates Leptospira Results in as Soon as 30 minutes using Isothermal Chemistry: Successfully configured the MiQLab System to use isothermal chemistry for individual pathogen detection in as soon as 30 minutes, which complements our traditional real-time PCR chemistry that provides results in 80 minutes.
Aug. 29 - Verifies CDC Monkeypox Assay Works on MiQLab System
Sept. 1 - Announces MiQLab® System Sale to Veterinary Hospital in California:
Oct. 13 - Receives Signed Quote from Large Biopharma Company to Purchase a MiQLab System: Announce that it has received an indication that a major biopharma company intends to purchase its technology.
Contamination testing in the biopharmaceutical space was estimated to be a ~$10B market opportunity in 2021 with approximately 350 million tests run annually.1 Biopharmaceutical companies frequently test for contamination to avoid having a recall, as these events can cost tens of millions of dollars in investigation, cleanup, corrective actions, lost revenue, and manufacturing plant downtime.2,3 The biopharma industry is increasingly looking for flexible PCR solutions to handle complex matrices, screen for numerous targets, and report results quickly.
Oct. 20 - Large Biopharma Company Engages LexaGene in Statement of Work to Expedite Technology Validation: Signed a statement of work with the same biopharma company that purchased a System last week.
Dr. Jack Regan, LexaGene’s CEO and Founder stated, “The technology validation study outlined within the signed statement of work will provide this biopharma company much of the data they need to make future decisions in just a few weeks of time. This company has agreed to have the validation work done at LexaGene, and they will have a scientist embedded onsite during parts of the study. The biopharma company will provide some bio-reactor samples that are required for the study.” He continued, “If the data generated during this validation study meets this biopharma company’s needs, and our technology is adopted for in-process testing, we believe a single manufacturing plant would generate millions of dollars in revenue annually for LexaGene.
Oct. 24 - Enters into Secured Convertible Note Agreement: Entered into a secured convertible note agreement with Meridian LGH Holdings 2, LLC, an affiliate of an insider of the Company, in the aggregate principal amount of up to USD$1,600,000. The Note bears interest at 12% per annum and matures on March 1, 2023. The conversion price of USD$0.17 (CAD$0.23), the last closing market price of the Shares on the TSXV prior to the date of this press release.
Oct. 27 - Proposes to Amend Warrants Terms: Intends to amend the exercise price of certain common share purchase warrants (the “Warrants”) originally issued on October 29, 2019. An aggregate of 12,769,626 Warrants were initially issued with an exercise price of CAD$0.75 per common share of LexaGene (a “Common Share”) in connection with a public offering of units. The Company intends to amend the exercise price of unexercised Warrants to CAD$0.23 per Common Share. The Company also intends to extend the expiry date of the Warrants to November 28, 2022.
Nov. 1 - Closes Secured Convertible Note Transaction:
Nov. 22 - Successfully Completes Statement of Work for BioPharma Company: Announce the completion of a validation study with a major biopharma company that recently purchased a MiQLab System.
Dec. 7 - Proposes to Amend Warrants Terms: Originally issued on February 7 and February 18, 2022 to Meridian LGH Holdings, LLC and expiry five years after the date of issue. An aggregate of 18,500,000 Warrants were initially issued with an exercise price of CAD$0.45 per common share of LexaGene (a “Common Share”). The Company intends to amend the exercise price of unexercised Warrants to CAD$0.23 per Common Share.
Dec. 16 - Engages LexaGene in Second Feasibility Study: Announce the large biopharma company (>$100B Market Cap) that previously purchased a MiQLab System has engaged LexaGene in a second statement of work (“SOW”) that builds off of the previously completed SOW. The signed SOW focuses on maximizing our sensitivity for Mycoplasma, providing additional predictive analysis on our Mycoplasma tests, and incorporating a Mycoplasma factory standard curve into our software such that we can report genetic results in colony-forming-units per milliliter (CFU/mL), which is the unit commonly accepted in the industry.
As an update to LexaGene’s announcement on December 7, 2022 that it intended to reprice certain common share purchase warrants held by Meridian LGH Holdings, LCC, LexaGene confirms that it will no longer reprice the warrants.
Jan. 18 - MiQLab System Detects Mycoplasma at Minute Levels, Rousing Additional Interest from BioPharma:
Mycoplasma contaminates 15-80% of U.S. laboratory cell cultures. Confirming a culture or a biopharmaceutical biologic is negative for contaminating Mycoplasma takes 28 days by compendial methods. This delay not only shortens the time available to sell the product before expiration, but also puts the biopharma company at more risk during the 4-6 weeks of bioreactor growth. At these latter stages, often 10’s of millions of dollars’ worth of product is at risk should a contamination be detected. The industry is looking to adopt a PCR-based technology that can be operated inside the manufacturing plant which provides extremely sensitive detection in just a few hours.
Feb. 8 - Provides Update on BioPharma Sector: Dr. Jack Regan, CEO and Founder of LexaGene commented, “We continue to work with both of our biopharma customers - a more traditional biopharma company with a market cap that is >$100B and a leading Contract Drug Manufacturing Organization (CDMO) with a market cap that is >$40B. Individuals in both organizations have indicated that our technology has the potential to benefit their respective companies and that our technology can be of great value to the entire industry.”
Our traditional biopharma customer, they suggested presenting at the 2023 National Institute for Innovation in Manufacturing Biopharmaceuticals (“NIIMBL”) National Meeting being held in June in Washington, DC. NIIMBL is a public-private partnership whose mission is to accelerate biopharmaceutical innovation and advance other industry objectives. Our CDMO customer is in the process of submitting the data they’ve generated using a MiQLab System for a presentation at the 15th Annual Bioprocessing Summit, held in August in Boston, MA. The title is “Risk Reduction by Rapid Automated Detection of Common Biomanufacturing Contaminants.”
Summary
MiQLab Milestones
Veterinary
Two sales were reported. June 2022 - Sales of MiQLabs to a Veterinary Hospital in Wisconsin and September 2022, announced MiQLabs to a Veterinary Hospital in California.
Otherwise, a multi-center validation study using the MiQLab to diagnose Urinary Tract Infection (UTI) was completed. UC Davis and UPenn testing of 105 urine specimen to detect 10 pathogens and 33 antimicrobial resistance factors.
A total of 105 urine specimens were tested across the two sites, of which, 39 were deemed to be clinically relevant for a urinary tract infection. The MiQLab System successfully detected all Escherichia coli, Staphylococcus, Proteus, Klebsiella, Enterococcus faecium, and Enterococcus faecalis positive samples. One positive Streptococcus sample was not detected. When the entire data set of successful runs were compiled the sensitivity of the MiQLab System using the MiQLab Bacterial and AMR Test V2 for detecting pathogens was 97%, specificity was 91%, agreement was 93%, and kappa agreement was 0.86 (almost perfect).
The results obtain results had a detection sensitivity of 97% (July 2022).
In August 2022, UPenn School of Veterinary Medicine was to evaluate a New Gastrointestinal Panel.
Bio-Pharma
October 2022, LexaGene received a signed quote for the purchase of MiQLab from a large Biopharma company. A week later, it was contacted for a Statement of Work (SOW) to expedite the technology validation. By late November 2022, the SOW including the validation study was completed. In Mid-December a second SOW building on the first was initiated focusing on sensitivity for Mycoplasma. In January LexaGene reported the results to the market.
“In the process of completing the follow-on feasibility study with one of our biopharma customers, I’m thrilled to report that through this work, we’ve made an ~500X improvement in sensitivity for Mycoplasma. We’ve communicated this achievement, plus other development milestones, to our biopharma customers, who have in turn expressed great enthusiasm." - Dr. Regan, CEO and Founder of LexaGene.
In a recent update, LexaGene reported working with both biopharma clients company to expand its offering.
Other Notable Product Development
August 2022, LexaGene reported that it was able to process, analyze, and produce results in just 80 minutes. This is an improvement on previous time-to-result of 120 minutes. In addition, LexaGene reported that it successfully configured the MiQLab to use isothermal chemistry for individual pathogen detection in as soon as 30 minutes.
Financing
In addition to the $6.4M investment from Meridian LGH Holdings LLC (Feb. 2022), LexaGene entered into a secured convertible note agreement with Meridian LGH Holdings 2, LLC, an affiliate of an insider of the Company, for USD$1,600,000 at a conversion price of $0.23 cents (October 2022) which closed November 2022.
Also in October 2022, 12.7M warrants at $0.75 cents were amended to $0.23 cents. In December 2022, a similar attempt was made for 18.5M warrants at $0.45 cents to $0.23 cents. However, this effort was retracted.
As an update to LexaGene’s announcement on December 7, 2022 that it intended to reprice certain common share purchase warrants held by Meridian LGH Holdings, LCC, LexaGene confirms that it will no longer reprice the warrants.
In short
LexaGene continues to make progress in developing the MiQLab in both the Veterinary and Bio-Pharma verticals.
However, Veterinary sales have not materialize as anticipated with, only two sales were reported despite a significant amount of product development (i,e, Urinary Tract Infection study results and the testing of a new Gastrointestinal Panel). This is rather disappointing and suggests adoption in this vertical continues to be a challenge.
On the other hand, the recent success in the Bio-Pharma are very encouraging. The company has now two large clients for which it has sold a unit each and is advancing qualifications to potentially be adopted plant-wide.
“We have sold our technology into the R&D groups of both companies. Although this is a critical first step, our goal is to get into manufacturing where regular testing at an average-sized plant could generate ~ $5M in revenue per year, and the entire annual testing market opportunity is estimated to be $10B in size. - CEO and Founder of LexaGene.
So what happened today? Hard to know but from the beginning of 2023 valuation increased and stabilized in the twenties but it seems that the timeline in the last release provided a potential opportunity for re-balancing...
For our traditional biopharma customer, the execution of the feasibility studies was a great start and they have set aside time in April to start to a formal campaign within their facility that will focus on using the MiQLab System in the optimization of different manufacturing unit operations. These studies will include testing for Mycoplasma.
Also the Net House transaction today suggests that >54% of the buyers and sellers preferred to remain "Anonymous".
Beyond the volume from the TSX-V, other alternatives exchanges (Omega O and CX2H) were very active.
Source: Stockwatch.com
Also in addition to the USD$1.6M financing, in October 2022,12.7M warrants at $0.75 cents from a previous financing were amended to $0.23 cents while another set (18.5M warrants at $0.45 cents to $0.23 cents) was retracted.
“The Company originally pursued repricing Meridian warrants as an inexpensive and fast way to provide operating cash to the Company. LexaGene and Meridian’s management are sensitive to shareholders’ concern that the acceleration clause associated with the repricing may have the unintended consequence of limiting the possibility of LexaGene’s stock to appreciate. To avoid such a scenario, LexaGene and Meridian have mutually agreed to cancel the repricing and will seek alternative paths to capitalize the company.” - LexaGene's CEO.
Some irony today perhaps! And the retracted amendment (18.5M at $0.45 cents) do not seem to be included below.
Off course there is always cause for caution and concerns but as previously stated LexaGene continues to be mispriced on IP alone. Note that a similar downward movement was observed back in October 2022 prior the last financing, LXG.V touched $0.065 cents (52 week low). In contrast today's movement is below the "Lo 95" range but aligns with S1 ($0.145 cents) which happens to be a return to the valuation at the beginning of the year..
Are there concerns that additional funds will be needed to complete incremental testing with Bio-pharma clients? Perhaps, at November 30, 2022 the company reported to have USD$464,131 in cash.
Overall, the lack of Veterinary adoption is impacting valuation but the Bio-Pharma vertical seems promising despite an elongated time horizon to mass commercialization and added potential for further financing and amendments.
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