XPhyto Therapeutics Corp. (XPHY:CSE; XPHYF:OTCQB; 4XT:FSE) is a Canadian life sciences company that has just announced highly successful trial results for its "supercharging" PCR test kit, which is being developed in Germany.
This breakthrough development demonstrates an ability to dramatically accelerate turnaround times for PCR-based COVID-19 testing in analytical laboratories, hospitals and a diversity of point-of-care other settings. In a company that is tightly held trading on the CSE and German exchanges, XPhyto is just breaking into the U.S. market on the OTCQB trading as XPHYF. Current market capitalization is about $100 million, a pricing level the company initially earned through its drug development and drug delivery divisions. This breakthrough, a non-antigen COVID-19 test, looks like it could significantly increase the company's overall valuation and push its share price to new levels as the test rolls out commercially.
Why? In trials that were verified by a large third-party laboratory in Austria and released this week, "The newly developed SARS-CoV-2 RT-PCR test system has demonstrated diagnostic level accuracy (sensitivity and specificity) in its ability to detect SARS-CoV-2 RNA within 25 minutes. Robustness, repeatability, and laboratory precision have also been confirmed. The test is designed to be conducted with only minimal laboratory processes and equipment."
Most importantly, as this employs a "molecular RNA-Probe," the test is effective for pre-symptomatic and asymptomatic screening, the critical timeframe when people unknowingly spread the virus. While Pfizer and Moderna vaccines have achieved emergency approval, it will take months, years to inoculate the globe. And, testing will be critical for years to come to monitor the efficacy and safety of vaccines. The demand for rapid, effective testing will be the essential stop-gap in airports, public facilities and gatherings for entertainment. The global COVID-19 diagnostics market size is expected to reach US$7.8 billion by 2027, registering a CAGR of 5.96% during the forecast period, according to an Aug. 4 report by Grand View Research, Inc. The market is enormous and the demand for more accurate testing is immediate.
Notably, this high degree of accuracy in such a fast, definitive COVID-19 diagnosis is no overnight scientific achievement. It is largely thanks to the deep experience and expertise of 3a-Diagnostics GmbH, which is XPhyto's partner in this business collaboration. The Stuttgart-based company is a well-regarded European leader in the development of saliva-based diagnostics for infectious diseases.
Next up, XPhyto and 3a intend to apply for regulatory approval in Germany with the mandate of gearing up for an anticipated near-term commercial launch in Q1 of next year. Best of all, XPhyto has exclusive marketing rights to Europe for the prospective launch of what promises to be very disruptive diagnostic product in a multi-billion-dollar marketplace.
A "CE-IVD" certification is expected in Europe in January. This is the final regulatory step before the anticipated commercial launch of the test kits. It requires that the technology demonstrates conformity with strict health and safety regulations for commercial products manufactured within the EU, which the company believes it has comfortably satisfied.
Assuming that regulatory approval in Germany and the EU will be granted, XPhyto plans to follow up with an application for approval from the U.S. Food and Drug Administration (FDA), as well as Health Canada.
Keep in mind the fact that diagnostics are considered to be medical devices, which do not typically require years of testing before they are deemed safe enough to bring to market, unlike pharmaceutical drugs.
So what does this news really mean for forward-thinking investors who want to get ahead of the curve? It means that XPhyto is on target to enjoy the prospect of exponential revenue growth in 2021 in a burgeoning business for pandemic-fighting diagnostics.
How XPhyto's Super-Fast PCR Test Kit is a Game Changer
XPhyto's test kit only requires a single PCR cycle that is complete in 20 minutes (with the whole testing process taking less than 30 minutes) while most PCR test systems require at least an hour and sometimes several hours to complete a multi-step viral RNA amplification process and additional laboratory processes that take time and expensive equipment.
By way of explanation, PCR is an acronym for "polymerase chain reaction," which is the gold standard for coronavirus diagnostics due to its reliability for generating accurate results. It involves detecting COVID-19's viral genome markers by magnifying them millions of times with the kind of diagnostic equipment that is ordinarily only found in laboratories.
PCR testing's key advantage is its high degree of accuracy, versus other testing methodologies, such as antigen tests. But slow PCR processing times in large, centralized labs are the technology's key disadvantage. It can take anywhere between four hours to over a week to get definitive diagnosis results.
Therefore, the fact that XPhyto and 3a have successfully compressed testing turnaround times and eliminated the need for full-scale laboratory equipment represents a very dynamic competitive advantage.
This innovation comes at a time when the medical community is now deploying a new generation of less complicated, portable PCR testing machinery that can be used in a wide enough range of point-of-care settings. The net result promises to be the relatively inexpensive immediate testing of vast numbers of people in a much wider variety of settings.
These point-of-care settings typically include clinics and doctor's offices. Other environments that are ideal for such usage include transportation hubs, such as airports and cruise ship terminals, industrial facilities, hospital triage settings and mobile sample collection sites.
Making a Big Splash in the COVID-19 Testing Market
PCR testing is already expanding outside of laboratories and into point-of-care settings, which are the frontlines in the battle against COVID-19. Albeit a scaled-down version of laboratory-based testing, this innovation is nonetheless equally effective. And it is desperately needed in real-world settings.
The expectation that XPhtyto will become a key player in this dynamic new market segment is supported by the test kit's low cost to manufacture and inexpensive projected price point, which is expected to be competitively priced.
Key Takeaways
The company has just celebrated a major milestone in the co-development of its proprietary PCR test kit. It has demonstrated in laboratory trials that it is able to help generate a high degree of accuracy in PCR testing, while reducing the processing time from a few hours to less than 30 minutes using only minimal equipment. Such super-fast testing turnaround times in satellite or mobile labs promise to be instrumental in helping to contain the COVID-19 pandemic in 2021 and beyond.
Along with being a co-developer of this breakthrough PCR technology, XPhyto also benefits from exclusive marketing rights for Europe and North America for this proprietary test kit. Therefore, the company stands to benefit from access to a multi-billion-dollar marketplace in the EU and subsequently in North America.
Being a first-to-market entrant (or at least an early-market entrant) therefore represents an unprecedented opportunity for XPhyto to earn significant market share.
Knox Henderson is a journalist and capital markets communications consultant. He has advised for a broad range of small cap companies in the resource, life sciences and technology sectors for more than 25 years.
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