Marc Davis, CMM
Market Herald logo


Be the first with the news that moves the market

It’s the technological evolution that could transform the US $84.4 billion Covid-19 diagnostics market.

Vancouver-based life sciences company XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT) (OTC: XPHYF) expects its rapid Covid-19 test system to be approved in Europe by early March.

The test kit provides results within just 25 minutes, which is significantly quicker than the “rapid” PCR tests that are already shaking up the market and significantly more accurate than disposable antigen tests.

This innovative technology from XPhyto and its German partner, 3a-Diagnostics GmbH, could arm healthcare providers with a vital weapon when combatting the Covid-19 pandemic. It also has the potential to reinvigorate the global tourism, travel and events industries as they bid to get back on their feet.

The speed and convenience offered by this test kit makes it exceptional within the diagnostic testing world. It essentially combines the accuracy of PCR with the speed of disposable screening tests, which represents a major innovation within this sector.

The test kit – called COVID-ID Lab – requires  less equipment and training than conventional PCR kits. It comes with reduced operating costs and increased convenience and portability, so the team can target thousands of airports, cruise ship terminals and pharmacies that currently lack this testing capacity.

The World’s Fasting PCR Testing: Targeting an April Launch

A European sales launch is slated for April 2021, with other jurisdictions to follow. The company’s partner, 3a – a firm with a strong track record in developing diagnostics for infectious diseases – expects approval as a medical device manufacturer within several weeks.

The next step is to launch commercial sales of COVID-ID Lab. Already, XPhyto is organizing commercial manufacturing and distribution agreements in Europe and the Middle East.  

In fact, XPhyto has secured exclusive marketing rights for this commercial launch. To that end, the company has assembled a sales team consisting of “world-class clinical and pharmaceutical executives and service providers” to bring the right level of expertise to the task of rapidly rolling out COVID-ID Lab across the world.

“We are extremely fortunate to now have a team with deep expertise in medical diagnostic product commercialization,” says Hugh Rogers, CEO of XPhyto.

“The team has extensive experience from regulatory approval to international production and sales. Our goal was to create the fastest and most portable Covid-19 PCR test on the market. We are confident in our prospects for an expedited approval and look forward to commercial launch in short order.”

What Makes this Super-Fast PCR Technology So Unique?

Healthcare facilities, key workers and tourism chiefs are on the hunt for robust, effective testing solutions that help them get on with their work as quickly, safely and efficiently as possible. The need is urgent.

Consider this: in November 2020, home appliances giant Bosch  hit headlines across the globe after claiming to have created the world’s fastest PCR test. It returns a result in 39 minutes.

However, XPhyto’s 25-minute test appears to be considerably quicker than anything currently on the market and does not require a full-scale laboratory, which makes it a potential game-changer for airports, cruise ships, hospitals, pop-up labs and other businesses.

So how accurate is XPhyto’s COVID-ID Lab?

According to the company, it has exhibited a very high diagnostic level of accuracy in sensitivity and specificity. The company says it is looking forward to publicly divulging this sensitive data once it has commercial approval. However, COVID-ID Lab is expected to easily surpass the threshold for accuracy in testing technology required by the World Health Organization, as well as by government regulators in North American and Europe.

It bears repeating that this technology is especially disruptive because of its convenience, speed and accuracy. Additionally, it requires less equipment and training than conventional PCR tests (also known as molecular diagnostics). Hence, XPhyto has the opportunity to distribute the test in small venues like pharmacies or pop-up community-based testing facilities, which would not otherwise be able to use PCR testing due to logistical constraints.

This reality promises to become a powerful catalyst for the company’s share price in the weeks and months ahead.

A Multi-Billion-Dollar Opportunity

The global Covid-19 diagnostics market was valued at US $60.3 billion in 2020. It will be worth US $84.4 billion this year, according to analysts at Grand View Research and BCC Research, and it is expected to reach US $96 billion by 2025.

The market is driven by rising government initiatives targeted towards mass testing. For example, German Health Minister Jens Spahn announced last week that the government would cover the cost for rapid Covid-19 tests.

Mass testing is also key part of the UK’s strategy as it seeks to emerge from a lengthy national lockdown, and it has already spent billions of pounds on “Operation Moonshot.” Similar initiatives are underway across the globe.

Many of these schemes relate to antigen tests, which have become controversial due to their inaccuracy and inconsistency. However, it is important to note that the World Health Organization has long regarded PCR tests as the gold standard for Covid-19 diagnosis due to their accuracy and reliability.

Remember that XPhyto’s COVID-ID Lab blends the speed of an antigen test with the accuracy of a PCR test, so it could make a compelling option for both the public and private sectors.

Why PCR Testing Will Remain Crucial for Years to Come

Let’s be clear: vaccines will not make Covid-19 testing redundant. It would be a mistake to think that.

Vaccines are being rolled out in some developed nations, but it will likely take years to inoculate enough people to build up herd immunity on a global basis. PCR testing will also be crucial in determining the efficacy of these vaccines, something that has not yet been demonstrated at scale.

These gold standard frontline diagnostics tools will therefore continue to be deployed for many years as humanity battles to stem the spread of Covid-19, and they are likely to be used to detect various other infectious diseases long into the future.

To that end, XPhyto and 3a are developing a portfolio of test kits designed to detect H1N1 swine flu, H5N1 avian flu, influenza A, and group A strep, as well as several oral health tests for stomatitis, periimplantitis, and periodontitis. Those additional test kits should be launched in Q4 2021.

Covid-19 now appears to be endemic. As the developing world battles to contain the virus, testing will play a critical role in containment at border crossings and transportation hubs indefinitely.

In other words, this is a solid, long-term, sustainable business. The coronavirus pandemic cost the global economy US $11.7 trillion in 2020 alone, according to the charity, Oxfam. Governments will therefore be prepared to spend significant sums on testing in a bid to reopen their economies. 

Investment Summary

As the co-developer of this pioneering technology, XPhyto has the exclusive marketing rights for the commercial launch. It therefore looks poised to become a major player in the rapidly expanding Covid-19 diagnostics market in the EU and subsequently in North America.

The commercial opportunity for PCR tests is vast, and it has attracted some of the biggest names in the healthcare business. For example, China became the world’s largest market for PCR tests after it adopted a mass testing strategy and imposed PCR testing requirements for travelling.

Three companies – F. Hoffmann-La Roche, Cepheid, bioMérieux and Abbott Laboratories – account for around 50% of the market in China, and they have a combined market cap of around US $500 billion.

By contrast, XPhyto is an ambitious, up-and-coming player in this sector, with the agility to move quickly when responding to demand. Its team has broad experience in executive leadership, business development, regulatory compliance, product launch, international marketing and sales, production, and quality assurance. Additionally, the company has forged a strong partnership with 3a.

XPhyto has a very tight share structure, with only around 65 million shares outstanding. This scenario typically acts as a powerful catalyst to higher share prices in response to upbeat news flow. This appears very likely in the coming months.

The firm’s current market cap is around CDN $200 million. Yet its competitors include heavyweight companies with multi-billion-dollar market caps. Therefore, the upside potential for XPhyto remains considerable, to say the least. Indeed, the company believes that its Covid-19 test kit can super-charge its future growth, which includes a diverse pipeline of other biotech projects.

In the near-term, the addressable market is substantial, and demand for these kits is set to spike as lockdowns end and the global economy starts to reopen.

It’s important to reassert that PCR test kits could pave the way for the travel, hospitality and events industries to open up again. They are therefore crucial to kick-starting an economic recovery, and XPhyto looks poised to make significant inroads into this lucrative sector.

If the firm hits its target of initiating commercial sales in April, it should receive a swift stock market re-rating to the upside, and its prospects of a strong share price performance would be compelling.

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, (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV.

Business writer Martin Green also contributed to this article. 

More From The Market Herald
The Market Herald Video

" Thematica Insights Report: How cannabis entered the mainstream

An investor’s guide to the opportunities within the cannabis market. Click here to access the report.

" Alzheimer’s Breakthrough: Why the Experts are Betting on NervGen

It’s the disease that most of us regard with the greatest dread – especially since nearly one in every three people will eventually

" XPhyto: Is Mescaline the Next Big Mood-Modifying Medicine?

It has the potential to be the next frontier in the psychedelics renaissance, and it represents an unprecedented opportunity to innovate a notable

" XPhyto: Readying a Next-Generation PCR Test Kit for Marquis Sales Opportunities

Ambitious start-ups are always delighted when they receive a blitz of media coverage after announcing a technological breakthrough.