XPhyto Expected to Announce PCR Test Kit Final Validation Results

It could be the Holy Grail of COVID-19 testing.


Remarkably, a small Canadian life sciences company, XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT) is becominga front-runner in the race to bring this breakthrough technology to market – starting with Germany.


This refers to the ability to definitively diagnoseCOVID-19 infections in a matter of minutes – and in a wide enough range of point-of-care settings to allow for the inexpensive testing of vast numbers of people.


XPhytois expected to make a major announcement any day now regarding the efficacy of its PCR “test kit”, which has just completed final validation trials. What would make this innovation highly disruptive is an ability to generate a definitive diagnosis within minutes, rather than hours.

Another key competitive advantage for XPhyto is that these test kits are compatible with and specifically designed to boost the operational efficiencies of standardgovernment-approved COVID-19 diagnostic testing instrumentation and machinery that is already in widespread use throughout the industrialized world.


In other words, the disease-detecting sensors in XPhyto’s test kits are employable in various kinds of PCR equipment that aremanufactured by the world’s leading diagnostics companies.


By way of explanation, PCR is an acronym for “polymerase chain reaction”, which is the gold standard for coronavirus diagnostics. It involves detecting COVID-19 by magnifying viral genome markers millions of times with diagnostic equipment that is ordinarily only found in laboratories.


Additionally, these test kits are also designed for use in less sophisticated, portable PCR testing equipment – a new generation of diagnostics that is increasingly being deployed in point-of-care settings, such as clinics and doctor’s offices. Other environments that are ideal for such usage include transportation hubs, industrial facilities, hospital triage settings, and mobile sample collection sites.


Q1 of 2021: Targeting PCR Test Kit Commercialization in Europe

Even though XPhyto is headquartered in Vancouver, Canada, this company’s lead product is being developed in Germany as a collaboration with a small German medical diagnostics firm, 3a-Diagnostics GmbH, which already has plenty of expertise in developing point-of-care screening systems.   


The joint venture partnership is targeting the commercialization of this technology in Q1 of next year. This is predicated on the assumption that regulatory approval will be forthcoming in Germany, as well as the rest of the European Union.


For this to happen, the partnership must demonstrate that this test kit satisfies the threshold for accuracy required in PCR testing by the World Health Organization (WHO). In this regard, the WHO requires a sensitivity (true positive rate) of at least 70% and a specificity (true negative rate) of at least 97%.


Company CEO Hugh Rogers says he is confident that XPhyto can meet all the regulatory requirements for a commercial product launch within a few months.


“We are already on the fast track process for regulatory approval in Europe,” he adds. 


In fact, XPhyto’s investors arefully anticipating that the company will soon announce that its proprietary PCR testing probes exhibit a very high degree of accuracy. This is because investorshave received plenty of encouragement to date with the emergence of scientific literature that supports the efficacy of the molecular RNA testing methodology that XPhyto and 3a are in the final stages of developing.


Filling the Void Left by Failed Antigen Screening

In recent weeks, health agencies across North America and Europe have been sounding the alarm about false positive readings generated by antigen screening, as well as by a smaller percentage of false negatives.


Antigen screening devices were first rushed to market in May in the United States in an effort to get millions of them into the hands of clinicians in point-of-care settings and triage centres. Their usage has since expanded throughout the industrialized world.


However, they are now being abandoned as a first line of defence detection tool because they yield results that Rogers refers to as being “predictably inconsistent.”


For instance, a recent independently conducted study found that the average “sensitivity” (ability to detect the virus) of a handful of recently-commercialised antigen tests was only 56.2%. Another recent study found that,in the case of asymptomatic patients, the “true positive” rate of the evaluated rapid antigen test was less than 32%, versus a laboratory-based PCR test.


This means that PCR testing is sure to replace antigen testing in point-of-care settings – and on a massive scale – especially now that definitive diagnostic results can be achieved in minutes, rather than hours.


Such a reality means that XPhyto is in the right place and at the right time to help fill this void with truly disruptive and highly proprietary PCR technology. The company also says that it can price its test kit very competitively while still realizing asignificant profit margin.

The Big Picture

Health authorities around the world realize that they need PCR-level accuracywith a faster turnaround.


After all, the failure of rapid antigen screening (the go-to protocol for fast COVID-19 screening until recently) in real-world situations has merely reinforced the imperative to replace them with large-scale, rapid PCR testing in point-of-care settings. This will surely prove crucial to containing the pandemic throughout 2021.


That said, there are sceptics who argue that the advent of at least two effective COVID-19 vaccines being commercialized in 2021 will make all coronavirus diagnostic technology more or less obsolete. This is a near-sighted and unrealistic assessment. It overlooks the fact that there are going to be massive logistical challenges to inoculating up to eight billion people twice per year on an ongoing basis.

Furthermore, there still remains considerable skepticism among an estimated two thirds of the population in North America and Europe about the safety of any vaccines that are being rushed to market.

The ubiquitous need for PCR testing is not going to fade away any time soon. Even after the introduction of COVID-19 vaccines, it will still be an integral tool in safeguarding peoples’ safety.In fact, capital markets analysts following the health care sector estimate that the rapid diagnostic testing marketplace will be worth as much as US $39 billion by 2023.

Accordingly, XPhyto stands to benefit immeasurably, assuming it succeeds in being one of the first-to-market in the timely detection of COVID-19 infections by way of rapid PCR testing.

Fast-tracking a Self-Use COVID-19 Screening Device

In conjunction with 3a, XPhytois also developing a disposable COVID-19 screening device, known as a lateral flow assay, that functions in a similar manner to inexpensive pregnancy tests.


Just like the PCR test kit, this screening device is also ideal for rapidly detecting a viral RNA. It is designed for at-home use, triage situations, and for identifying people who need follow-up testing, according to CEO Hugh Rogers.


XPhyto is also targeting a commercial product launch for these one-time-use devices for Q1 of next year. This is an aggressive timeline but not an unreasonable one considering how government regulators the world over, including Germany and the EU, are committed to fast-tracking screening devices for COVID-19.


Rogers also says that that its cost will likely be as low as a pregnancy test when produced at scale, and that the pricing will be comparable to industry norms for other commercially available lateral flow assay tests, like the home-use pregnancy ones.


That said, one would expect that XPhyto is willing to make bulk sales to sovereign state governments and large private buyers around the world for deep discounts, especially as a means of ensuring widespread adoption of its inexpensive screening devices.


Investment Summary

As countries tentatively re-open their economies, there is growing consensus that rapid PCR testing in point-of-care settings, as well as rapid, self-administered screening, will both be integral to keeping economies open while still protecting the world’s population, particularly vulnerable citizens. 


By being able to test, trace and quarantine anyone who is sick, health authorities should also be able to break the chains of transmission and finally bring COVID-19 infection rates under better control.


For now, XPhyto stands to play pivotal roles in the containment of the COVID-19 pandemic – the first step to ending it. The anticipated announcement of final trial validation results should go a long way towards establishing XPhyto as serious player in the COVID-19 diagnostics marketplace.


Accordingly, the company stands to benefit from access to a multi-billion-dollar marketplace in the European Union and subsequently in North America too. As an early market entrant, this represents an unprecedented opportunity for a small life sciences company to be transformed into a power player with a significantly higher market capitalization, and at much higher share price multiples.


On a technical note, XPhyto benefits from a very tight share structure of only about 62 million shares outstanding. When matched with a steady flow of upbeat news, such a scenario typically acts as a powerful catalyst to an ascendant share price trajectory. In other words, do not take your eyes off this company. Its share price will not likely remain inexpensive for long. Indeed, 2021 is shaping up to be a big breakout year for XPhyto.   


ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, WallStreetOnline.de (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV. He is also an enthusiastic shareholder of XPhto Therapeutics.

November 23, 2020