LexaGene has a better test for COVID-19, iA Securities says

There should be still more gas in the tank for micro cap biotech company LexaGene Holdings (Lexagene Stock Quote, Chart, News TSXV:LXG), according to Industrial Alliance Securities analyst Chelsea Stellick, who provided an update to clients on Friday where she maintained her “Speculative Buy” rating and 12-month target of $1.05 per share.

Based in Beverly, Massachusetts, LexaGene is a medical technology device company developing a fully-automated pathogen detection instrument to prevent and diagnose disease in a number of sectors, including food safety, veterinary and human diagnostics and water quality monitoring.

LexaGene on Thursday announced it has laced its pre-commercial instrument for testing for SARS-CoV-2, the pathogen that causes COVID-19, in a hospital in the Dartmouth-Hitchcock Medical Center’s (DHMC) Laboratory for Clinical Genomics and Advanced Technology (CGAT) in New Hampshire.

The company says its instrument cuts down on the number of false negatives delivered by other testing procedures because it screens for many pathogens at once and performs “gold-standard chemistry for exceptional quality.” LXG’s genetic analyzer is especially useful, the company says, in the case of COVID-19 where patients can present with respiratory symptoms caused by other viruses and thus be falsely diagnosed with COVID-19.

“Our breadth of detection allows users of our technology to generate informative data for the vast majority of people with respiratory symptoms,” said LexaGene founder and CEO Dr. Jack Regan, in a press release. “This is particularly important as healthcare providers are increasingly questioning negative results from COVID-19 only tests, wondering if the test result is a false negative or the person is sick from another pathogen.”

At the moment, LexaGene’s genetic analyzer is classified in the United States as for Research Use Only and can’t be used for human diagnostics, but with the new announcement, management said it has submitted its plan to the US FDA for Emergency Use Authorization and is anticipating completing its studies in the near future.

On the new announcement, Stellick said LXG’s open-access technology could help with the testing bottlenecks currently being faced in relation to COVID-19 testing. LXG’s open-access feature would allow hospitals to use their own assays without having to send them to a reference lab, which leads to a longer turnaround.

“While LXG is still pursuing FDA EUA, we see this news as positive for the Company in penetrating the world of human clinical diagnostics,” Stellick wrote in her report. “There are currently ~50 FDA EUA approved molecular tests for SARS-CoV-2, most of which can only detect for the SARS-CoV-2 strain and not other pathogens causing respiratory symptoms. We believe this continues to separate LXG’s technology from other tests on the market.”

At the time of publication, Stellick’s $1.05 target price represented a projected return of 28 per cent.

LexaGene, which went public in 2016, saw its share price peak at $1.64 in October 2017, and while the stock tumbled with the rest of the market in late February and March, LXG has climbed out of the rut, doubling in value since early April.