LXG.V - Mispriced.

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, December 2020 and September 2021.

News Releases


Sep. 3 - MiQLab™ System Featured at Three Key Veterinary Tradeshows.


Sep. 6 -Files Preliminary Short Form Base Shelf Prospectus: The Shelf Prospectus, when made final, will allow the Company to make offerings of common shares, warrants, subscription receipts, debt securities, units or any combination thereof for up to an aggregate total of CAD$25 million during the 25-month period.


Sep. 7 - MiQLab™ Accurately Detects Multiple Strains of Pathogenic Bacteria in Polymicrobial Samples: 1) MiQLab detected both bacterial strains in polymicrobial samples in ~2 hours. 2) Culture and Sensitivity Testing (C&ST) failed to detect the minor pathogen population in individual mixed samples, with final test results taking up to 11 days. 3) MiQLab testing can improve treatment decisions, particularly for infections caused by drug resistant strains.


Sep. 16 -Cooperative Research and Development Agreement (CRADA) with the United States Army’s DEVCOM: This

CRADA aims to foster innovative biothreat defense capability development, which is part of the U.S. Army’s Combat Capabilities Development Command (DEVCOM) current technology priorities. LexaGene will demonstrate the capabilities of the MiQLab to DEVCOM for the purpose of determining the system’s ability to detect Bacillus anthracis and Yersinia pestis, which cause anthrax and plague, respectively. DEVCOM will determine the system’s sensitivity (e.g., limit-of-detection) for these two pathogens as well as evaluate the system’s quantitative detection capability. This work will be conducted at both LexaGene and DEVCOM Chemical Biological Center at Aberdeen Proving Grounds, MD.


Sep. 17 - Adopts Corporate Governance Charters and Policies: The Board also announced that it has filed and obtained receipt for, a final base shelf prospectus (the “Shelf Prospectus”) allowing the Company to offer up to $25,000,000 of common shares, warrants, subscription receipts, debt securities or units or any combination thereof (collectively, the “Securities”), from time to time during the 25-month period that the Shelf Prospectus is effective.


Sep. 30 - Reports on Recent Veterinary Trade Shows


Oct. 1 - Expands Brand Awareness at Key Investor Conferences


Oct. 7 - Largest Study Validates Accuracy of its Veterinary Test Panel: Successfully utilized its MiQLab™ System to correctly identify bacteria and determine the presence of antimicrobial resistance (AMR) markers that predict resistance to commonly prescribed first-line veterinary antibiotics. LexaGene’s MiQLab’s overall percent agreement in study: i) >99% for pathogen identification (106 samples) ii) >96% for drug resistance markers in sequenced CDC bacterial strains (32 samples) iii) >92% for drug resistance phenotype in canine urinary isolates with culture-based drug resistance profiles (74 samples). An in-depth version of these data is being compiled for a peer-reviewed publication.


Oct. 25 -Completes Analytical Studies for FDA EUA of COVID-19 Testing: LexaGene is in the process of completing the necessary work to have the FDA rule on authorizing the MiQLab™ for COVID-19 testing.


Oct. 26 - To Host Corporate Update on November 3


Oct. 29 - Completes First Stage of U.S. ARMY DEVCOM Agreement:


We are now progressing to the second stage of the Army CRADA, during which the MiQLab’s sensitivity and quantitative ability for biothreat detection will be tested at the Army’s DEVCOM Chemical Biological Center at Aberdeen Proving Grounds, Maryland. Due to the Army’s facility and personnel availability, these studies are planned to begin during the week of November 15th, and we will ship multiple systems to the Army for this start date.” -LXG.V's CEO.


Nov. 1 - Finalizes Design of Pneumonia Panel: for companion animals and completed initial multiplex testing. In June 2021, LexaGene and Ethos Discovery partnered to develop a pneumonia panel to expand the utility of the MiQLab in veterinary diagnostics. Since then, LexaGene has been working closely with Ethos Discovery to design and validate a panel for rapidly determining the cause of pneumonia while simultaneously screening for antimicrobial resistance factors that should be taken into account when treating such infections in companion animals. Respiratory illnesses can cause significant health concerns for the animals and can have significant financial impact on pet care businesses, such as hospitals, kennels, shelters, and dog daycare camps, which often have to shut down in the event of an outbreak.


Nov. 2 -Receives 2021 BioTech Breakthrough Award: Molecular Diagnostics Solution of the Year.


Nov. 9 - Expands Bio-Pharma Contamination Panel by Adding Test that includes a Biothreat Agent: A Burkholderia test for use on its MiQLab™ System. Burkholderia cepacia complex, a group of about 24 related environmental bacteria, is a problem contaminant for the bio-pharma industry. B. cepacia is the most common microbial contaminant in nonsterile pharmaceutical products accounting for up to 39 percent of product contamination.


In July 2021, the FDA advised drug manufacturers to test for Burkholderia, which has increasingly been found to be the cause of recalled products, including a skin gel, an ultrasound gel, and a mouthwash.


Bio-pharma manufacturing 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.


Nov. 15 - Dr. Jane Sykes, Joins Board of Directors


Nov. 2 - Intends to Pursue Full Panel Pathogen Testing through the FDA: To pursue both 510k clearance and CLIA-waiver from the FDA to utilize the full potential of the MiQLab System™ for syndromic testing at the point of care.


Syndromic testing allows medical providers to simultaneously test patient specimens for multiple pathogens that produce overlapping signs and symptoms. MiQLab’s broad multiplexing provides this capability and also allows for testing other clinically important markers such as antimicrobial resistance genes.


LXG.V has decided it will no longer pursue an EUA application for COVID-19, but instead pursue 510k and CLIA-waiver for broad-panel pathogen testing, focusing on MiQLab's intended use of syndromic testing at the point of care.


Dec. 17 - Announces Results of Annual General and Special Meeting


Dec. 3 - Closes MiQLab Sales: Two orders: Kuma Veterinary Clinic & Emergency Veterinary Services of Roanoke.


Jan. 3 - Starts the Year with Additional MiQLab Sales: Three additional purchase orders for MiQLab™ Systems from veterinary clinics in Michigan, Minnesota, and New York.


Feb. 8 - Announces $6.4 Million Investment by Strategic Institutional Investor: Meridian LGH Holdings LLC, (the “Investor”) has agreed to make an investment in LexaGene for a total of CAD$6,475,000 (USD$4,995,000).


The Company and the Investor intend that the investment will occur by way of non-brokered private placement (the “Private Placement”) anticipated to close in two tranches. Terms $0.35 cents (Warrants at 0.45 cents).


The first tranche closed today; 13,115,725 units for gross proceeds of CAD$4,590,503.75 (approximately USD$3,541,245.75.


The Company intends to use the proceeds of the Private Placement towards purchasing inventory for manufacturing more MiQLab™ Systems, supporting sales, marketing, and continued R&D.


Upon closing of the financing, the Investor will hold roughly 13.41% of the issued and outstanding common shares. Pursuant to the terms of the Investor Rights Agreement, the Investor will be granted certain information and notice rights, and the right to participate in future financings in order to maintain its then-current percentage interest up to 19.99% for so long as the Investor maintains a minimum 10% equity interest in the Company.


Feb. 18 - Closing of Second Tranche of Investment: Meridian LGH Holdings, LLC of 5,384,275 units at CAD$0.35 (USD$0.27) per Unit for gross proceeds of CAD$1,884,496.25 (approximately USD$1,453,754.25).


Mar. 29 - Announces Advancements to its Sample Preparation Cartridge for the Veterinary Market:


Some sample types are easily processed for PCR testing, such as nasal swab samples, whereas other sample types, contain inhibitors that interfere with PCR. To better handle more complex samples, we have recently embedded a new chemistry into our sample preparation cartridge that greatly improves the MiQLab System’s ability to process samples that contain a significant percentage of blood, which is a powerful inhibitor of PCR." - LXG.V's CEO.


Apr. 25 - Corporate Veterinary Reference Laboratory Purchase: Three MiQLab® Systems for one location.


Testing in the veterinary industry is dominated by three corporate companies that have testing locations across the United States. These multi-billion dollar corporations compete against each other for business from veterinary hospitals and clinics that want faster results than the typical 3 – 5 day wait for culturing bacteria. Success in this location may result in additional purchases for their other locations and possibly start a wave of adoption in the other corporations.

-Dr. Jack Regan, LexaGene’s CEO and Founder stated,


In addition, LexaGene sold a MiQLab System to a university veterinary school in Florida. Also, LexaGene has become a Garnet Member of the American Animal Hospital Association’s (AAHA) Strategic Alliance Program.


May 3 -Successfully Completes CRADA with US Army: U.S. Army Combat Capabilities Development Command Chemical Biological Center (DEVCOM Chemical Biological Center) has successfully completed the evaluation of the MiQLab System for biothreat detection.


May 25 - Announces Multi-System Purchase from a Large Market Leader in Animal Health: A large veterinary animal health corporation has purchased 2 MiQLab® Systems for two of their locations.


A month ago, we announced our first multi-system purchase into one of the three major references laboratories servicing the veterinary industry. Today, we announced our first multi-system purchase into a large veterinary corporation that owns over 100 specialty and emergency pet hospitals and clinics across the United States. We believe that our technology will add sufficient value to their business to justify a more aggressive adoption of the MiQLab System throughout their organization.” -Dr. Jack Regan, LexaGene’s CEO and Founder.


Summary


MiQLab Milestones


Veterinary

A number of significant development milestones took place in the last period.


First, the detection of multiple strains of pathogenic bacteria in polymicrobial samples (defined as simultaneous or successive infections caused by two or more distinct microorganisms or different strains of the same pathogen in the same anatomical site) that varies in their antimicrobial resistance. In this case, (Staphylococcus spp and E. coli with and without AMR genes). MiQLab outperformed traditional culture and sensitivy testing (C&ST), with positive results of AMR gene markers reported in two hours vs. 5 to 11 days using traditional C&ST (Sept. 2021).


Second, LXG.V completed a large study that validated the accuracy of the Veterinary Panel for which MiQLab identified bacteria and determine the presence of antimicrobial resistance (AMR) markers that predict resistance to commonly prescribed first-line veterinary antibiotics (Oct. 2021). Results using the MiQLab Bacterial and AMR Test V2* were:


i) >99% for pathogen identification (106 samples)

ii) >96% for drug resistance markers in sequenced CDC bacterial strains (32 samples)

iii) >92% for drug resistance phenotype in canine urinary isolates with culture-based drug resistance profiles (74 samples)


*MiQLab Bacterial and AMR Test V2 detects 10 common pathogens and 33 genes and variants that confer resistance to four classes of antimicrobials (beta-lactams, lincosamides, sulfa-TMP, and tetracyclines).


Third, the design of the Pneumonia Panel for companion animals was finalized (Nov. 2021). Indeed, five months after the Ethos Discovery partnered with LexaGene to develop this panel to expand the utility of the MiQLab. It was also reported that the Pneumonia Panel will be able to simultaneously screen for antimicrobial resistance.


Fourth, a new chemistry was introduced in sample preparation cartridge that signficanly improves the MiQLab’s ability to process samples that contain a significant percentage of blood; a powerful inhibitor of PCR (Mar. 2022).


Bio-Pharma

November 2021, Lexagene expanded the Contamination Panel to include Biothreat Agent via a Burkholderia test.


Burkholderia cepacia complex, a group of about 24 related environmental bacteria, is a problem contaminant for the bio-pharma industry. B. cepacia is the most common microbial contaminant in nonsterile pharmaceutical products accounting for up to 39 percent of product contamination.


This test was developped as a direct response from a FDA advisory issued in (July 2021). Hence, three months.


Bio-pharma manufacturing 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.


US ARMY CRADA

Cooperative Research and Development Agreement (CRADA) with the United States Army’s DEVCOM was initiated in September 2021. The aim was to demonstrate the capabilities of the MiQLab specifically determining the system’s ability to detect Bacillus anthracis and Yersinia pestis, which cause anthrax and plague, respectively.


May 2022, CRADA successfully completed the evaluation of the MiQLab.


The results of this CRADA establishes the MiQLab System as a sample-to-answer platform with integrated sample preparation and open access capability that successfully runs PCR assays available from DBPAO with less than one minute of hands-on time for sample processing. The System detected both anthrax and plague with sensitivity and specificity.

-Dr. Randy Hofmann, Tech Group Leader, EXCET, Inc. in support of US Army DEVCOM Chemical Biological Center.


Award

Lexagene was the recipient of the 2021 BioTech Breakthrough Award: Molecular Diagnostics Solution of the Year


MiQLAb Sales

Two orders: Kuma Veterinary Clinic & Emergency Veterinary Services of Roanoke (Dec. 2021). Three additional purchase orders for MiQLab™ Systems from veterinary clinics in Michigan, Minnesota, and New Yok (Jan. 2022).


Three units to a Corporate Vetenary Reference Laboratory and a unit to a veterinary school (Apr. 2022) .Two units for a large market leader in Animal Health which owns more than 100 specialty & emergency pet hospital (May 2022).


Appointment

Dr. Jane Sykes to the board of director.


Financing

A Preliminary Short Form based Prospectus for $25M for 25 months was filed (Sep. 2021).


Recently, a $6.4M investment from Meridian LGH Holdings LLC via private placement (18.4M units) at $0.35 cents with warrants at $0.45 cents was completed in two tranches (Feb. 2022). The proceeds will be used towards purchasing inventory for manufacturing more MiQLab™ Systems, supporting sales, marketing, and continued R&D.


Meridian LGH Holdings LLC hold roughly 13.41% of the issued and outstanding common shares and will be granted certain information and notice rights, and the right to participate in future financings in order to maintain its then-current percentage interest up to 19.99% for so long as the Investor maintains a minimum 10% equity interest in the Company.


In short

In the last eight months LXG.V went from $0.59 cents to a muti-year low of $0.175 cents!


During that time, Lexagene advanced the MiQLab in three verticals: Veterinary, Bio-Pharmaceutical and Bio-threat detection. The improvements in the Veterinary vertical were notable and have translated in 11 MiQLab sales.


Of note, recent sales to the Corporate Veterinary Reference Laboratory and Large Market Leader in Animal Health represents a departure from mostly smaller practices. Both have extensive reach within their respective network.


Perhaps the most salient highlight of the period is the conversion of Meridian Veterinary Capital, LLC as a MiQLab client (June 2021) to an major investor (13% ownership) in Lexagene (May 2022) at $0.35 cents.


With the most immediate warrants at $0.45 cents (18.4M) in addition to the previous 16M between $0.52 and $1.10, there's still alot of upside possible from the last closing price ($0.195 cents). Recently, iA Capital Market issued a $0.75 cents price target: on revenues of $2.9M (2022), $8.1M (2023) and $15.8M (2024).


Given the numerous accomplishments, warrant profile and future upside to the IP, LexaGene is completely mispriced.

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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