LXG.V - Attractive.

LexaGene Holdings Inc. (LXG.V) is a molecular diagnostics company that develops molecular diagnostic systems for pathogen detection and genetic testing for other molecular markers for on-site rapid testing in veterinary diagnostics, food safety and for use in open-access markets such as clinical research, agricultural testing and biodefense.

End-users simply need to collect a sample, load it onto the instrument with a sample preparation cartridge, enter sample ID and press ‘go’. The MiQLab™ system delivers excellent sensitivity, specificity, and breadth of detection and can return results in approximately one hour. The unique open-access feature is designed for custom testing so that end-users can load their own real-time PCR assays onto the instrument to target any genetic target of interest.


Coverage initiated December 2018 with notes on July 2019. April 2020, and December 2020.


News Releases


Dec. 30 - Starts FDA EUA Study for Point-of-Care COVID-19 Testing:


Obtaining FDA authorization for use at a POC setting is a complicated and time-consuming process especially for a novel technology such as LexaGene’s where FDA had no prior opportunity to evaluate the MiQLab System. We are confident that we can demonstrate to FDA the value of the MiQLab system and its COVID-19 assay to combat this pandemic through POC testing. I look forward to having deeper conversations with the FDA and presenting our data to them.” -LXG.V 's CEO.

Jan. 13 - Initiates Program to Identify UK and South African COVID Sequences:


At this time, LexaGene has no plans to incorporate these new tests into the FDA studies for Emergency Use Authorization (EUA) for COVID-19 testing, which began late last month.


Feb. 10 - MiQLab Successfully Detects Mutant UK and South African COVID-19 Sequences:


Just three weeks ago, we designed assays to detect the UK and SA variants to demonstrate proof-of-principle that these assays could be quickly ported onto the MiQLab. After just two full work days of having these reagents in-house, we verified our MiQLab could detect mutations associated with these variants". -Dr. Jack Regan, LexaGene’s CEO


Feb. 12 - Change in Management and New Member to the Board of Directors: Daryl Rebeck resigned from the Board and as the President of the Company and Stephen J. Mastrocola has joined LexaGene’s Board of Directors.


Mar. 2 -Receives $3.6M from the Exercise of Warrants: $3.6M CAD in warrant exercises since the start of 2021.

the Company is anticipating robust demand for the MiQLab. In anticipation of this demand, the Company is now hiring additional sales representatives for the veterinary and open-access markets, with a focus on adding sales representatives in the West Coast, Northeast, and Midwest regions of the United States.

Apr. 1 - Provide Corp Update: In late 2020, LXG.V secured sales in the contract drug and vaccine manufacturing market and in veterinary medicine. Both sales were the result of successful technology demonstrations.


As of today, we have built 20 MiQLab systems and have enough parts in-house or on order to build an additional 70 systems. Through a partnership with an FDA-compliant contract manufacturer, we have the capacity to rapidly scale the manufacturing of our consumables to meet demand.

The FDA study involves multiple additional analytical studies, which we need to complete prior to starting the point-of-care clinical study. At this time, it is difficult to predict the length of time we will need to complete this work.


May 11 - Expands its Sales Team: Announce the hiring of four additional sales representatives, including three for the veterinary market and one for the contract drug manufacturing market.


There are 77M dogs and 58M cats in the United States1, and many pet owners spare no expense on caring for their animal companions. The overall size of the veterinary diagnostics market is expected to soon reach $4B and is growing at a compound annual growth rate “CAGR” of 8.8%2. Currently, there are 18,600 private practice veterinary clinics that see enough animals per day to be target customers for LexaGene.3,4”


In addition, LexaGene is announcing that on May 11, 2021, the board of directors approved inducement grants totaling 396,000 restricted share units (“RSUs”) and 396,000 share options. Each option is exercisable into one common share at a price of CAD$0.66 per Share, for a period of ten years from the date of grant.


June 1 - Taking steps to list its common shares on the Nasdaq Capital Market: with the goal of submitting its application prior to the end of 2021. Reserved with the Nasdaq Exchange the ticker symbol LXG.


Second, in anticipation of filing the Registration and Annual Report for Canadian Securities Form (Form 40-F) with the US Securities and Exchange Commission (SEC), the Company has retained Latham & Watkins LLP . Lastly, the Company has engaged RSM US LLP for audit, tax, and consulting services.


Applying for a Nasdaq listing is subject to first meeting the listing and regulatory requirements of the Nasdaq and SEC. There is no guarantee the Company will meet these requirements in the future, but if it does, the Company will issue a press release once an application has been formally submitted to the SEC.


On May 28, 2021, the board of directors approved inducement grants in accordance with the Company’s Omnibus Incentive Plan for executive officers totaling 690,000 share options. Each Option is exercisable into one common share of the Company at a price of CAD$0.59 per Share for a period of ten years from the date of grant.


In addition, the Company’s executive officers have been granted an additional 690,000 share options at CAD$0.59. The conditions are associated with 2021 performance milestone goals set forth by the board of directors for executive management and are as follows: meeting the requirements to list the Company Shares on the NASDAQ and filing Form 40-F with the SEC. Based on the current number of outstanding shares, the Company will have to organically raise its stock price to ~CAD$0.77 to achieve the ~CAD$90M (~USD$75M) minimum market cap required for a Nasdaq listing. If the performance criteria are not satisfied on or before December 31, 2021, the grant will be cancelled.


June 3 - Partners with Ethos Discovery: Ethos Discovery was an early adopter of the MiQLab technology, and is now interested in expanding the use cases for the MiQLab to help in the diagnosis of other disease conditions.


After in depth discussions, as a first step, LexaGene has decided to partner with Ethos Discovery on prioritizing the development of panels specific for severe pneumonia, diarrhea, and effusions.

Ethos Discovery is providing consulting services for the identification of the relevant targets in each panel based on disease prevalence, the magnitude of the unmet need, and alignment with the MiQLab technology. These panels will include additional tests for species of bacteria not covered in the UTI panel, as well as new tests for viruses, protozoa, fungi and other disease targets. LexaGene will develop and validate these tests for each of the target organisms and antimicrobial markers, and use Ethos Veterinary Health’s Wheat Ridge Animal Hospital in the greater Denver area for clinical validation studies, which are anticipated to start for the pneumonia panel in late summer/early fall.


June 7 - Sells a MiQLab System to Denver Animal Emergency: Dr. Andrew Pierce, Owner and Medical Director of Denver Animal Emergency in North Carolina, states, “We have been using LexaGene’s MiQLab for several months as part of their Early Access Program. We’ve compared the accuracy of the MiQLab to results generated by culture and there was such high concordance, we have found that we are running MiQLab more often than we are sending samples out for culture.”


June 10 - Detects a Slow-Growing Bacterium At Least 36-Times Faster Than Conventional Methods: 1) MiQLab detects 100% of acnes samples 36-times faster than a culture started from ideal laboratory conditions (in 2 hours versus 3 days). 2) MiQLab can be as much as 168-times faster than a culture started from a bioreactor sample (2 hours versus 14 days). 3) Adopting MiQLab could lead to significant cost savings for biopharmaceutical manufacturers.


Successfully utilized the MiQLab™ System to detect the presence of a slow growing bacterium, responsible for millions of dollars of damages to biopharmaceutical manufacturers. Contamination within bioreactors is common occurrence as it is dependent on mammalian culture. Its critical to keep bioreactors free of unwanted microorganisms.


June 14 - Closes Sale to Alpine Veterinary Hospital, Announces Conference Appearances: Alpine Veterinary Hospital in Concord, CA provides a wide range of services including emergency and orthopedic surgeries in the Bay Area.


June 17 - MiQLab Offers Rapid Plague Detection for Bioterrorism Threats: In order to demonstrate the MiQLab’s capabilities for biothreat agent detection, LexaGene developed a plague test and completed an analytical evaluation.


June 24 - MiQLab Sales Propel Early Diagnostic Testing in Veterinarian Practices: Meridian Veterinary Capital, LLC has purchased a MiQLab System to be used by the emergency and specialty veterinary hospitals across the country.


June 28 - Engages LHS as Integrated Investor and Public Relations Agency of Record: LaVoieHealthScience (LHS) as its investor and public relations (IR and PR) agency of record for USD$18,000 per month.


June 29 - Announces Fourth Quarter and Full-Year End February 28, 2021, Financial Results


July 2 - Advances Towards FDA Emergency Use Authorization: Continues to systematically advance the MiQLab™ System to meet the Food and Drug Administration (FDA) criteria for Emergency Use Authorization (EUA).


Over the last few months, LexaGene has made great progress and completed many of these requirements. Namely, we have passed electrical safety testing, passed ship testing, finalized our master mix and carrier fluid formulation, finalized our test assays and their configuration, finalized our internal amplification control and internal process control, and completed our user manual to a state acceptable for an EUA submission.


We are making great strides on the remaining requirements. Namely, we are in the process of verifying our longer reagent shelf-life (i.e., stability of our on-board reagents). We are also working on completing system software validation, including error handling. We’ve also been working on verifying an automated microfluidic scheduler as well as further refining our standard scripts for automated sample preparation and assay assembly. We continue work required to verify our thermal and optical parameters for optimal PCR amplification. Likewise, we are working on validating our signal processing algorithm and ensuring our reports are consistently accurate. Finally, we are making process improvements so we can scale manufacturing. Once the Company fully completes these necessary steps, the MiQLab will be fully optimized and ready for analytical and point-of-care clinical validation for EUA submission.” - LXG.V's Chief Operational Officer.


July 7 - Launches 2nd Generation Bacterial and Drug Resistance Test: LXG.V’s first Bacterial and AMR Test screened samples for seven different pathogens and 13 different antimicrobial resistance factors. This first panel was largely built around pathogens and resistance genes commonly encountered in urinary tract infections (UTIs), and was well-received within the veterinary community. LexaGene’s 2nd generation assay panel, taking advantage of the platform’s capacity for new targets, was expanded at the request of veterinarians to improve coverage for pathogens that cause other common types of infections, namely skin, soft tissue, and wound infections (SSTIs), and ear infections.


New panel offers extensive improvements for pathogen identification and drug resistance gene testing: Increases targeted pathogens from 7 to 10 (140% increase); Increases targeted drug resistance genes from 13 to 35 (270% increase).

Two-hour test for 45 specifc targets covers 10 pathogens and resistance markers for 4 classes of antimicrobials:

July 14 - Strategic relationship with Wolf Greenfield, an intellectual property (IP) law firm: Specializing in patents, licensing and royalty transactions, post-grant proceedings, and trademark and copyrights. Adding Wolf Greenfield to its representation portfolio strengthens LexaGene’s positioning towards possibly listing on the Nasdaq Capital Market.


July 20 - MiQLab Detects Common Bioreactor Contaminant up to 300 Times Faster than Conventional Methods: a) Mycoplasmas are thought to contaminate 15-80% of cell cultures worldwide. b) MiQLab rapidly detected 100% of the tested mycoplasma samples within two hours, with no false positives. c) MiQLab can be used inside biopharmaceutical manufacturers to rapidly validate their products as being free and clear of mycoplasmas.

These findings are significant for biopharmaceutical manufacturers and other life science companies. We are aggressively developing more tests for this industry so we can provide them a complete solution for their needs.

The results demonstrate that the MiQLab system can serve as a valid alternative to lengthy traditional methods for mycoplasma detection. MiQLab can be up to 300 times faster than traditional culture testing (~2 hours versus ~28 days) for a definitive result andcan provide a significant time advantage for biopharmaceutical manufacturers.


Aug. 12 - Demonstrates Simple, Inexpensive Multiplex PCR Chemistry with Shorter Lead Times: MiQLab™ System is the first point-of-need system that can be configured to perform PCR using either probe-based chemistry or SYBR Green chemistry coupled with melt curve analysis.


Traditional real time PCR uses expensive hydrolysis probes that have long lead times for manufacturing, whereas SYBR Green-based PCR uses inexpensive primers that have much shorter lead times.” - LXG.V's VP Applications & Informatics.


Summary


MiQLab


Accomplishments

Various announcements related to MiQLab were made. LXG.V initiated POC Covid-19 testing (Dec 2020), identified UK and South African Covid sequences (Feb 2021), and detected a slow-growing bacterium 36-times faster than conventional methods relevant to contamination of bioreactors with pharmaceutical manufacturers (June 2021).

1) MiQLab detects 100% of acnes samples 36-times faster than a culture started from ideal laboratory conditions (in 2 hours versus 3 days). 2) MiQLab can be as much as 168-times faster than a culture started from a bioreactor sample (2 hours versus 14 days). 3) Adopting MiQLab could lead to significant cost savings for biopharmaceutical manufacturers.


LXG.V also successfully completed a Rapid Plague Detection Test (June 2021), as well as, provided an update on the FDA Emergency Use Authorization (July 2021) :


“We are making great strides on the remaining requirements. Namely, we are in the process of verifying our longer reagent shelf-life (i.e., stability of our on-board reagents). We are also working on completing system software validation, including error handling. We’ve also been working on verifying an automated microfluidic scheduler as well as further refining our standard scripts for automated sample preparation and assay assembly. We continue work required to verify our thermal and optical parameters for optimal PCR amplification. Likewise, we are working on validating our signal processing algorithm and ensuring our reports are consistently accurate. Finally, we are making process improvements so we can scale manufacturing. Once the Company fully completes these necessary steps, the MiQLab will be fully optimized and ready for analytical and point-of-care clinical validation for EUA submission.” - LXG.V's Chief Operational Officer.


Furthermore,LXG.V launched a second generation of bacterial and drug resistance tests (July 2021).


New panel offers extensive improvements for pathogen identification and drug resistance gene testing: Increases targeted pathogens from 7 to 10 (140% increase); Increases targeted drug resistance genes from 13 to 35 (270% increase).

Two-hour test for 45 specifc targets covers 10 pathogens and resistance markers for 4 classes of antimicrobials:


Finally, reported detecting bioreactor contaminant significantly faster than conventional methods (July 2021)


a) Mycoplasmas are thought to contaminate 15-80% of cell cultures worldwide. b) MiQLab rapidly detected 100% of the tested mycoplasma samples within two hours, with no false positives. c) MiQLab can be used inside biopharmaceutical manufacturers to rapidly validate their products as being free and clear of mycoplasmas.


The latest announcement was the second in two months related to detection of bioreactor contamination.


Sales

Three sales were announced in the last period. 1) Denver Animal Emergency in North Carolina (June 2021) , 2)

Alpine Veterinary Hospital in Concord, CA (June 2021) and 3) Meridian Veterinary Capital, LLC (June 2021).


Appointment

Daryl Rebeck resigned from the Board and as President of the Company and Stephen J. Mastrocola has joined LexaGene’s Board of Directors (Feb 2021) . Four additional sales representatives, including three for the veterinary market and one for the contract drug manufacturing market were announced (May 2021).


Financing

In February 2021, the company reported to have received $3.6M from warrant exercises from beginning of 2019.


Manufacturing

April 2021, LXG.V reported to have "built 20 MiQLab systems and have enough parts in-house or on order to build an additional 70 systems". No further update were provided on the matter.


Options

May 2021, 396,000 restricted share units (“RSUs”) and 396,000 share options at $0.66 cents were granted. June 2021, 690,000 + 690,000 performance share options at $0.59 cents related to NASDAQ listings were granted.


Nasdaq Listings

June 2021, LXG.V disclosed that it planned to submit application prior end of 2021. The company retained Latham & Watkins LLP for filing and engaged RSM US LLP for audit, tax, and consulting services.


Based on the current number of outstanding shares, the Company will have to organically raise its stock price to ~CAD$0.77 to achieve the ~CAD$90M (~USD$75M) minimum market cap required for a Nasdaq listing.


July 2021, LXG.V indicated that it had appointed Wolf Greenfield a specialist in patent licensing, royalty transactions, post-grant proceedings, trademark and copyrights to support its strengthen its application for a NASDAQ listing.


Ethos Discovery

June 2021, a partnership with Ethos Discovery was announced. Ethos will provide consulting services for the identification of the relevant targets in each panel based on disease prevalence, the magnitude of the unmet need. LexaGene will develop and validate these tests for each of the target organisms and antimicrobial markers, and use Ethos Veterinary Health’s Wheat Ridge Animal Hospital in the greater Denver area for clinical validation studies which are anticipated to start for the pneumonia panel in late summer/early fall.


In Short

In the last nine months, LXG.V's was valued as high as $1.54 and as low as $0.46 cents.


The number of MiQLab sales announced during the period is definitely a sore point. Only three sales were disclosed: 1) Denver Animal Emergency in North Carolina (June 2021) , 2) Alpine Veterinary Hospital in Concord, CA (June 2021) and 3) Meridian Veterinary Capital, LLC (June 2021).


However, the second generation of the MiQLab panel was released in July 2021, which might explain the slow activity.


New panel offers extensive improvements for pathogen identification and drug resistance gene testing: Increases targeted pathogens from 7 to 10 (140% increase); Increases targeted drug resistance genes from 13 to 35 (270% increase).

Two-hour test for 45 specifc targets covers 10 pathogens and resistance markers for 4 classes of antimicrobials:


Another potential factor is the FDA's Emergency Use Authorization (EUA). Formally initiated December 2020, an important update was recently given (July 2021). While no timeline for completion was provided, progress was reported. Nonetheless, issues such as: reagent shelf life, system software and signal processing algorithm validation remained outstanding at the time. Using the EAU submission process to scale manufacturing was made clear.


"... Finally, we are making process improvements so we can scale manufacturing. Once the Company fully completes these, the MiQLab will be fully optimized and ready for analytical and point-of-care clinical validation for EUA submission.”

- LXG.V's Chief Operational Officer.


Despite hiring four salesperson and claiming to have built 20 MiQLab in the spring, LXG.V may have postponed closing sales after the launch of the second generation panel along with the resolution of EUA quality control issues.

This delay has certainly weight on valuation of late. However, the formal announcement of the partnership with Ethos Discovery is an important development given that the company is already an owner of the MiQLab.


In addition, the pivot toward biotechnology companies with bioreactor testings represents an important segment for Lexagen. Customization and speed at which the MiQLab can deliver results still remains a strong value proposition.


Financial were released today and as of May 31 2020, LXG.V cash position was $7,159,206; a decrease of ($2,802,243) . Assuming the same burn rate for the last three months, LXG.V may still have $3-4M. However, the intention of the Nasdaq listings might have accelerated the depletion of its cash resources.


Based on the current number of outstanding shares, the Company will have to organically raise its stock price to ~CAD$0.77 to achieve the ~CAD$90M (~USD$75M) minimum market cap required for a Nasdaq listing.


Note that a number of performance options were granted during the period at $0.59 cents and $0.66 cents.


LXG.V is currently valued significantly below the levels of its last financing; a bought deal for $13M at $0.85 cents.

And off course, slightly below the lowest strike price ($0.52 cents) of its exercisable warrants.

As such, in spite of the lack of sales, and potential need for financing, LXG.V is considered to be attractive.

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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