LXG.V - Yet to be priced in.

Updated: Dec 19, 2020

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.


We initiated coverage in December 2018 with notes on July 2019. and April 2020.


News Releases


May 28 - Places a Pre-Commercial Instrument for COVID-19 Testing in a Major Hospital Laboratory. Dartmouth-Hitchcock Medical Center in their Laboratory for Clinical Genomics and Advanced Technology in Hanover, NH.


The Company is also pleased to report that we have submitted our plan to the FDA for Emergency Use Authorization (EUA) for COVID-19 testing and anticipates completing the described studies in the near future.


Until these studies are completed and the FDA grants LexaGene’s instrument EUA for COVID-19 testing, all work using LexaGene instruments is classified as Research Use Only and cannot be used for human clinical diagnostics.


June 1 - Provides Update on Commercializing its Automated Pathogen Detection System. To support ramping up of final improvements to the pre-commercial system and manufacturing process, LXG.V has recently hired two additional members to the product development team in the areas of software and systems engineering.


LXG.V is in the final stages of selecting a contract manufacturer to assist beyond the Company’s in-house manufacturing capabilities in scaling up production of its analyzers in the fall.


June 11 - Discusses the Sales Strategy for Its Pathogen Detection Technology with the Stock Day Podcast


June 18 - Provides Status Update on COVID-19 Testing at a Major Hospital Laboratory. Dr. Jack Regan, LexaGene’s Founder and CEO, states, “From the samples tested to date, we have detected numerous positive COVID-19 samples as well as negative samples which are equally important. In contrast to many technologies that only provide a ‘yes’ or ‘no’ answer as to whether the virus was detected, LexaGene’s technology provides quantitative data on how much virus is detected".


By quantifying the amount of virus present, we can help clinicians determine if a patient is possibly early in the infection cycle, late in the infection cycle, or if their immune system successfully contained the growth of the virus.


Regarding the LXG.V’s FDA plans, LexaGene has recently received comments back on its submitted plan for Emergency Use Authorization (EUA) for COVID-19 testing. Since submitting the application, the FDA has updated its template for manufacturers, changing some requirements. The Company has amended its plan and is now awaiting further communication from the FDA, which it anticipates soon.


June 22 - Present at Lytham Partners Virtual Investor Growth Conference.


July 8 - Host Webcast on July 14, 2020


July 13 - Introduces its Commercial Product MiQLab™: is being manufactured for an anticipated commercial launch prior to the end of September 2020. We have finished incorporating the feedback from beta testing and have begun manufacturing our commercial instrument, the MiQLab genetic analyzer.


MiQLab is a fully automated genetic analyzer that is designed to deliver reference-quality data at the point-of-need. MiQLab’s technology screens samples for up to 27 different targets at once—looking for pathogens and/or antimicrobial resistance factors—and returns results in approximately one hour. It is designed to be operated at the site of sample collection to avoid the delay associated with shipping and manually processing samples.


This technology is designed for use in multiple markets, including human and veterinary diagnostics, as well as food safety testing ($12.9B1, $2.2B2, and $23.4B3 markets, respectively). To start, the Company anticipates offering three sets of chemistries, namely a COVID-19 test ($5.2B market in 2020), a bacterial and antimicrobial panel for veterinary diagnostics that will screen for 8 different pathogens (E. coli, Proteus, Klebsiella, Enterobacter, Pseudomonas, Staphylococcus, Streptococcus and Enterococcus) and 12 antibiotic resistance factors including methicillin and vancomycin resistance, and an open-access panel to facilitate customized genetic testing.


July 14 - Hires First Direct Sales Executives: Dr. Jack Regan, LexaGene’s CEO and Founder, states, “To start, we’ve hired a Director of Clinical Sales and a Veterinary Sales Representative. Both have a wealth of experience in their respective fields and will begin working full time for LexaGene. We will continue to hire additional salespeople later in the summer and early fall. It’s very exciting to be at the stage where our first sales are right around the corner.


LexaGene is also pleased to announce that 99% of the warrants that were set to expire on June 29, 2020 were exercised. The proceeds from these 4,375,271 warrants brought in CAD$2.8M to the treasury. These monies are being used to support general manufacturing and commercial operation.


Aug. 17 - Engages Contract Manufacturer to Support Product Launch: Pleased to announce it has engaged LaunchWorks to support the commercial launch of MiQLab™ prior to the end of September 2020. Launchworks will manufacture the assay panels and buffer sets used in LexaGene’s fully automated MiQLab system.


This is an extremely exciting time for LexaGene. Our initial hires in sales are working out exceedingly well and we are in the home stretch for manufacturing and qualification. By the end of next month, we expect to begin selling and fulfilling delivery of our first units, which will be a huge milestone for the Company.” - LXG's President and Co-Founder.


Aug. 18 - Announces $7.5 Million Bought Deal Public Offering. An aggregate of 8,824,000 units at a price of C$0.85 (Warrant $1.10) for aggregate gross proceeds of approximately C$7,500,000. LXG.V intends to use the proceeds of the Offering to scale up production, build inventory and for general corporate purposes.


Aug. 19 - Increase to Previously Announced Bought Deal Public Offering: An aggregate of 13,600,000 units at $0.85 per Unit (Warrant $1.10) for aggregate gross proceeds of approximately C$11,560,000.


Sept. 9 - Announces Closing of CAD$13.29 Million Financing: The Company issued 15,640,000 Units at a price of CAD$0.85 (Warrant $1.10) one-half of one common share purchase warrant, with each whole warrant entitling the holder to purchase one Share at the price of CAD$1.10 per Share until September 9, 2023.


Sept. 18 - Engages Research Group. Tailwinds Research Group to provide digital content distribution.


In addition, LexaGene granted a non-executive Director 350,000 options at $0.66 CAD/option to replace options priced at $0.33 CAD/option that had expired on June 27, 2020. LexaGene also granted a second non-executive Director 170,000 restricted share units (RSUs) to replace an equal number of RSUs that expired on September 12, 2020.


Sept. 21 - Provides Video Update and MiQLab Demo: Video message of MiQLab Demo along with the appointment of Dr. Shelley Rankin to LexaGene’s Scientific Advisory Board.


Dr. Rankin is a Professor of Microbiology at the University of Pennsylvania’s School of Veterinary Medicine (Penn Vet). She is the Chief of Clinical Microbiology and Head of Diagnostic Services at Penn Vet’s Ryan Hospital


Oct. 5 - Provides a Corporate Update: Treasury currently stands at $11.3M USD ($14.9M CDN), putting the Company in a strong position to support its development goals for the next year and more.


Despite Covid-19 Delays: started an Early Access Program for key opinion leaders in veterinary and open-access markets. I expect we will be shipping our first unit(s) for this program by mid-Q4 of this year.


Covid-19 Testing: Although LexaGene is making steady progress, due to the stringent nature of this process and its complexity, it is possible the Company will not start the study until the end of December.

In preparation for the clinical study portion of the FDA study, LexaGene is pleased to announce that it has signed a Clinical Evaluation Study Agreement with the Dartmouth Hitchcock Medical Center, which will conduct the clinical portion of the study for the Company in their laboratory.


Nov. 10 - to Present at Two Upcoming Investor Conferences


Nov. 16 - Receives Purchase Order from a Multinational Biotechnology Company: The biotechnology company that has provided LexaGene a purchase order is a manufacturer of biologics, vaccines, and chemicals. Many of these biologics are grown in bioreactors that can be thousands of liters in size. During scale-up manufacturing, it is possible to have a bioreactor become contaminated with bacteria. The failure to detect such bacteria during the transfer of the product from a small bioreactor to a large bioreactor can cost the company hundreds of thousands of dollars to a million plus.


To help prevent massive product losses late in the manufacturing process, the biotechnology company was looking for an easy to use and reliable sample-to-answer system that could process bioreactor material looking for a variety of different bacteria. One of the slower growing bacteria they are targeting can take as much as two weeks to grow sufficiently to be detectable by traditional plate-based culture methods.


LexaGene’s customizable MiQLab system solves this problem by automating a PCR test for this slow growing bacterium. PCR amplifies targeted sequences by > 1 billion-fold to provide much earlier detection than is possible when waiting for culture. Earlier this fall, the biotechnology company requested an in-house demonstration of LexaGene’s MiQLab.


Nov. 18 - Places MiQLab System at the University of Pennsylvania’s School of Veterinary Medicine: as part of its Early Access Program. Penn Vet provides testing for animal patients at both the Ryan Veterinary Hospital and patients of practices across the US, processing thousands of samples each year.


Penn Vet will evaluate the instrument with a range of specimen types, and data collected from the MiQLab will be used to help further determine sensitivity, specificity, and antimicrobial concordance in relation to clinical standards.


Dec. 9 - To Participate at the 13th Annual LD Micro Main Event Conference: In addition, the Company is pleased to announce that it has engaged Native Ads, Inc., of New York, New York to perform strategic digital media services, marketing and data analytics services including, but not limited to, content development, video production and editing, website development, media buying and distribution, and campaign reporting and optimization. This 12-month campaign is scheduled to begin in January 2021 and will continue until $150,000 USD of services are rendered.


Dec. 15 - Receives Purchase Order for MiQLab from Ethos Discovery: Dr. Chand Khanna, DVM, PhD, DACVIM (Onc), DACVP (Hon), the President of Ethos Discovery, comments, “We are very excited to purchase a MiQLab system and look forward to using the validated test panel to quickly diagnose infections. In veterinary health, there are many unmet clinical diagnostic needs where LexaGene’s technology can be of great value.” He continues, “In 2021, we will collaborate with LexaGene on expanding the MiQLab’s capabilities to pursue additional diagnostic innovation in areas that are important for Ethos. We are thrilled to have the first point-of-care molecular diagnostic instrument available to veterinary health professionals and look forward to bringing this technology to Ethos hospitals in the future.”


Dec. 17 - To Place MiQLab Systems at Two Leading Specialty and Emergency Veterinary Care Hospitals: LexaGene will provide access to its point-of-care technology to both Veterinary Specialty Hospital (VSH) of Palm Beach Gardens, Florida, as well as to Denver Animal Emergency (Denver) in Denver, North Carolina. Both practices will evaluate the MiQLab system and MiQLab Bacterial AMR Test in specialty and critical care settings using a range of sample types.


MiQLab-generated data will be evaluated against traditional culture and sensitivity testing that typically takes 3-5 days for results. By contrast, MiQLab provides results fast enough to allow care providers to make knowledge-based decisions for timely patient care. This is important for appropriately treating animals infected with multi-drug resistant pathogens.


Summary

Last eight months have been very busy for LXG.V.


COVID-19

As per our last note. In February 2020, LXG.V reported the ability to detect Corona Virus RNA. In March 2020, it has submitted an applications for Emergency Use Authorization (EUA) for COVID-19 Diagnostics. In Mid-April, it filed a Patent regarding its expanded capabilities relating to COVID-19 and other clinical lab testing including Food Safety.


In late May, it placed a pre-Commercial Instrument with the Dartmouth-Hitchcock Medical Center and submitted a plan to the FDA for the (EUA) for COVID-19. At the time, it anticipated completion of the study in the "near future".


Mid-June, LXG.V provided an update on its COVID-19 Diagnostic capacities. One key finding was the ability to detect the extent of COVID-19. Indeed, LXG.V's instrument goes beyond the binary response (‘yes’ or ‘no’) in detection.


LexaGene’s technology provides quantitative data on how much virus is detected. By quantifying the amount of virus present, we can help clinicians determine if a patient is possibly early in the infection cycle, late in the infection cycle, or if their immune system successfully contained the growth of the virus.


In early October, LXG.V explained the issues it encountered relating to the FDA EUA process. Because LXG.V goes beyond a simple PCR test, the application process for the company is much more complicated.


Prior to starting the study, the FDA requires LexaGene to completely lock down all aspects of its technology, including the chemistry, microfluidic scripts, software, firmware, hardware (optical and heating elements), and the configuration of the sample preparation cartridge. There is a significant amount of optimization time required to lock down each component so they work seamlessly and robustly together such that the system reliably generates high quality data.


FDA has increasingly raised the bar for achieving EUA by putting in place more requirements to ensure the reliability and accuracy of testing procedures. In addition to the requirements for PCR chemistry-only kits, namely, sensitivity (limit-of-detection), specificity, and stability testing, LexaGene must also complete suites of tests on the system to demonstrate ship durability, electrical safety, system-to-system variability, as well as software validation and then finally perform an in-laboratory clinical study with patient samples.


Hence, LXG.V revealed that the COVID-19 study would not start before 2021. However, for the clinical portion of the FDA study, a signed Clinical Evaluation Study Agreement with the Dartmouth Hitchcock Medical Center is in place.


Appointment

Early June, LXG.V hired (software and system engineering). In mid-July, its first Sales Executive: Director Clinical Sales and Vetenary Sales Representative. In Late september, LXG Appointed Dr. Rankin to its Scientific Advisory Board. She is a Professor of Microbiology at the University of Pennsylvania’s School of Veterinary Medicine (Penn Vet). She is the Chief of Clinical Microbiology and Head of Diagnostic Services at Penn Vet’s Ryan Hospital.


MiQlab Evolution, Placements and Orders.

"MiQlab" was launched in July. It had been manufactured in-house prior to its a commercial launch.


To start, the Company anticipates offering three sets of chemistries, namely a COVID-19 test ($5.2B market in 20208), a bacterial and antimicrobial panel for veterinary diagnostics that will screen for 8 different pathogens (E. coli, Proteus, Klebsiella, Enterobacter, Pseudomonas, Staphylococcus, Streptococcus and Enterococcus) and 12 antibiotic resistance factors including methicillin and vancomycin resistance, and an open-access panel to facilitate customized genetic testing.


MiQLab is a fully automated genetic analyzer that is designed to deliver reference-quality data at the point-of-need. MiQLab’s technology screens samples for up to 27 different targets at once—looking for pathogens and/or antimicrobial resistance factors—and returns results in approximately one hour. It is designed to be operated at the site of sample collection to avoid the delay associated with shipping and manually processing samples.


In August, LXG.V hired LaunchWork a contract manufacturer, by late September a video update with a demo. Six week later (Nov. 16) LXG.V announced a first PO for a Multinational Biotechnology Company. Two days later, LXG.V reported having placed (as part of its Early Access Program) a MiQLab at the University of Pennsylvania School of Vetenary Medicine, Ryan Veterinary Hospital. Three days ago, LXG.V received a PO from Ethos Discovery. Yesterday, it announced the placement of MiQlab System at Veterinary Specialty Hospital (VSH) of Palm Beach Gardens, Florida, as well as, to Denver Animal Emergency (Denver) in Denver, North Carolina.


Financing

On August 18, LXG.V announced a$ 7.5M bought deal (8,824,000 units) at C$0.85 (Warrant $1.10). The next day it was expanded to 11.5M. In early September LXG closed its oversubscribed financing totaling $13.29M.


In Short

For COVID-19, the reasons of the delay in the FDA's approval of the Emergency Use Authorization (EUA) are sound. MiQLab is a complex product for which the requirements are much more strenuous than standard PCR testing methods. Nonetheless, The Clinical Evaluation Study Agreement with Dartmouth Hitchcock Medical Center is a strong endorsement of the interest in MiQLab, especially for its potential as a "triage tool" for health professionals. This is somewhat very timely as the incoming US administration has a plan to address COVID-19 testing nation-wide.


The appointment of Dr. Rankin to its Scientific Advisory Board was a significant accomplishment. Not only did it lead to a placement of MiQLab at Ryan Veterinary Hospital but also appears to have proliferated to other establishments such as Veterinary Specialty Hospital (VSH) of Palm Beach Gardens, FL, and Denver Animal Emergency in Denver, NC. As such, LXG.V is executing its strategy of mobilizing key influencers.


In addition, LXG.V was able to secure two Purchase Orders. One from a Multinational Biotechnology Company (unnamed) and another from Ethos Discovery. Key to both orders is the ability of LXG.V to customize the MiQLab's cartridge to the end client's needs. This is a major differentiator compared to other rapid testing diagnostic tools.


In late May, Industrial Alliance Securities set a price target of $1.05 which it updated in mid-July to $1.70. Meanwhile, Brookline Capital Initiated coverage with of Target $2.19. On October 5th, LXG.V reported having $14.9M in its treasury.


Yesterday, LXG.V closed at $0.83 cents slightly below the levels of the last financing ($0.85 cents) which occurred prior the three placements in Veterinary Hospitals and the last two Purchase Orders. Hence, it appears that the recent developments made by the company have yet to be priced in.


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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