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Hodge’s “November 1: New FDA Mandate Sends This Device Into EVERY Restaurant in America”

What's the "November 1 pathogen-stopper device" pitch from Early Advantage all about?

By Travis Johnson, Stock Gumshoe, October 12, 2017


This article first appeared on August 3, 2017. It has been updated slightly.

Nick Hodge takes second place to pretty much nobody when it comes to teasing microcap stocks that he claims will have massive, massive market success and soar to “dizzying heights” … so when I first saw this pitch about a “new FDA mandate” and a machine that can stop every “life-threatening superbug,” I figured it was a repeat.

But nope, this was a new one back in August. To me, at least. And it’s now unchanged as we roll into mid-October, with a particularly aggressive push this week about the “November 1” date by which Nick Hodge thinks this 75-cent stock will start its run to “$5… $10… even $50.”

So what’s he pitching as he tries to corral subscribers for his fairly pricey ($1,299/year) Early Advantage?

The basics are in the top of his ad, which is essentially unchanged since August:

“A new device is emerging that’s promising to…

* Stop every pathogen from e. coli, salmonella, and bird flu… to life-threatening superbugs
* Unleash a $20 billion wave of wealth…
* Send the one tiny 75-cent stock with all the patents on it soaring to dizzying heights…

“All starting with a critical technology rollout on November 1”

So here’s the easy part — when someone promises you that a microcap stock is about to put a product into every single restaurant, or every single doctor’s office, or every single home, and that it’s going to happen quickly because of some hot new development… they’re almost certain to be wrong.

You know that, logically — you know that government mandates that focus on one single solution from one single company are exceedingly rare, and that tiny companies don’t become dominant global manufacturers overnight (or over hundreds of nights)… but still, the temptation is there: what if this is the one?

That temptation is what every microcap stock newsletter relies on in its promos — the hope that you’ll find the one company that goes from pennies to billions. And it’s relatively harmless to sniff around at them and daydream, as long as you don’t think of it as real investing or put your retirement or your kids’ college tuition (or the mortgage payment) at risk. So let’s see what stock this is, and see what perspective we can give you… ready?

“A groundbreaking solution has just been developed in a mysterious facility 40 miles east of Silicon Valley.

“You’re looking at the Livermore Lawrence Laboratory, a top-secret military site — home to major inventions like Google Earth and the Human Genome Project…

“Where scientists have just pioneered what could prove to be the lab’s biggest breakthrough EVER.

“A next-generation device that can stop deadly epidemics in their tracks in just one hour.”

We’re shown a little photo of the device, which looks like a fairly standard lab test machine — like you might see on a table in the back room at your doctor’s office. Here’s what Hodge says about it:

“In a matter of minutes, it tells you how clean your water is. How clean your food is.

“If and what kind of bacteria is in it, how dangerous it is, and what to do about it.

“And it does so with undisputed, dead-on accuracy.

“Nothing else is capable of achieving virtually real-time biometric updates like this!

“In fact, it’s so impressive, so powerful, and so one-of-a-kind…

“That the FDA just mandated the testing this device goes into every restaurant supply chain in America…”

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And that’s the real crux of the pitch from Hodge — that this little device is going to be forced upon every single restaurant, hospital, school, farm, cruise ship, etc., anywhere that pathogens might spread through food or water.

And the implication, of course, is that the FDA is requiring all these facilities to buy this particular device — by November 1 — and that’s obviously a huge deal for a tiny company. I hope you’re already skeptical about the specifics of that FDA requirement part, but let’s read on to see what else Hodge says:

“‘The Pentagon scientist behind this device just handed investors a massive opportunity …’

“Perhaps the biggest of 2017 or even the next decade.

“In order to fulfill the FDA’s mandate, and to get this device into the public’s hands…

“He founded a tiny company — holding all the patents — that just went IPO earlier this year.

“Since then, its share price already jumped 174%.”

What else? We’re told that this firm is valued “at a mere $20 million.”

And that November 1 will bring “a mandated rollout that will quickly disrupt a $20 billion market… in just a matter of months.”

He also notes that as the business quickly spreads, he thinks bigger companies will jump in with a “fierce buyout war” and drive the price up from the current 75 cents to “$5… $25… and beyond. Just in 2017.”

So that, along with the “there’s no time to waste” phraseology he uses, is the spur: This stock is going up maybe 3,000% this year, better get on it quick! Maybe it’ll be $122 this year, not just $25! Don’t stop to think! Just subscribe to the newsletter! Quick! You’re missing out!!!!

Sorry, got a little over-excited there. Perhaps because of the ridiculous and impossible to prove or disprove assertion from Hodge that “Every single time a technology or invention from Livermore goes to the private sector… It creates hundreds of millions, or even billions in wealth.”

So what’s the stock? This is, sez the Thinkolator, Lexagene Holdings (LGX.V, LXXGF), which is a tiny little company with a market cap of about C$45 million that is, as teased, trying to develop an easy-to-use testing machine aimed at the food safety industry. It was a 75-cent stock back in August… and just last week… though it has now gotten to about $1.15, thanks almost entirely, I’d wager, to this campaign by Nick Hodge.

And yes, in case you’re crossing those t’s and dotting those i’s on the clues, the company did go public within the past year, through a reverse merger on the Venture exchange in Canada (and it started trading on the OTCQB in the US in March)… it is based on scientific work done by the founder, Dr. Jack Regan, who invented this “pathogen detection system” and was previously at Bio-Rad Laboratories doing similar things with blood testing, and at Quantalife and Life Technologies. He did, sez his bio, do his post-doctoral work at Lawrence Livermore on automated testing of pathogens and bio-weapons — and the company has a “strategic relationship” with that lab and a couple defense-related board members.

If you need more, the background graphic of Hodge’s ad looks like it was taken from Lexagene’s website… and the basic pitch made is like an exaggerated version of the company’s investor presentation here.

The company does say that they are hoping to address a near-$20 billion market (they say $17.8 billion — that’s the combination of food safety, water quality testing, veterinary diagnostics, and aquaculture testing, and their selling proposition seems to be that their machine will make it easier and faster to do this kind of pathogen testing on site, using any kind of liquids and testing for a couple dozen different pathogens, starting with Salmonella and e. coli.

The presentation is fairly compelling in describing their opportunity — but, well, it’s an investor presentation, they’re supposed to be compelling. I have no idea how their machine will do when it’s in competition with all the other protocols and devices for food safety testing that are out there — it sounds like their machine will be faster and more accurate than some, it’s basically a microfluidics genetic testing machine, from what I can gather, and I don’t know if that’s really a better or more accurate or more cost-effective way of sampling the runoff from your lettuce farm for e. coli (or whatever).

How about that promise that this $20 billion market just lands in their lap on November 1? That’s pretty much hooey. The FDA does have a new food safety and testing regime that’s being gradually phased in — the regulatory implementation of a law that Congress passed back in 2010 to try to clean up the food supply. If you don’t remember, that followed on a few years of near-panic in some industries — there was an e. coli outbreak in 2006 thanks to spinach tainted with manure, then similar outbreaks tied to cheese and dairy products over a couple years, then a big salmonella outbreak in eggs. Congress acted to try to make the food safety and testing regime of the FDA a bit more proactive, requiring more testing and specific safety protocols, and, thanks to the complexity and cost of our national food supply, it has taken a very long time to actually implement those rules (which are still changing). Most of the rules apply first to the largest businesses — huge farms, big food distributors, retailers or restaurant chains, starting early next year, and it rolls downhill to the smaller players in subsequent years. There’s a pretty good rundown of the FSMA and its implementation on the FDA website here.

November 1 is not an important regulatory date for this Food Safety Modernization Act (FSMA), but it could be an important date for Lexagene — sometime in November is when they say they’ll have their prototype finished (the machine is being developed by a contractor, Boston Engineering). The “Pre-Alpha Prototype” was unveiled at a food safety conference in July (you can see the video here), and they’ve not announced any delays since then — from what I can tell they still plan to be testing the prototype(s) in November. This is what they said in their last earnings release:

“In early October, we anticipate progressing onto Phase IV of product development, when we will test the two alpha prototypes to ensure they meet all the pre-defined specifications. By the end of Phase IV, which is scheduled for the end of November, we expect to be able to successfully demonstrate the functionality of our fully integrated sample-to-answer pathogen detection instrument.

“Soon after Phase IV is completed, the Company will be looking to close another financing round to secure sufficient capital to sustain the Company through commercialization.”

That’s probably going to be fairly tight, as of last month they said they had about US$1.6 million in cash, and they have a loss of roughly $1 million over the past six months, so there’s not necessarily a lot of extra cash in there to get them through prototyping and testing if costs are higher than expected or testing these prototypes takes longer than a month.

And, of course, going from a prototype to actually building a machine is going to have a pretty dramatic impact on the cash flow situation, so I would assume that they are really hoping to drive the stock price up into the prototyping news releases so that they can raise a larger chunk of money at a relatively high price. All the more reason to both chat up newsletter writers to try to get attention, and to pay “investor relations” consultants and stock promoters to promote your stock to investors (they have a 9-month paid promotion campaign running with Pinnacle Digest that started back in April, for example).

They do have some “financial projection assumptions” in their presentation, which is probably a lot of guesswork since they don’t even have a prototype yet and we have no idea what their commercial production volume might be, assuming it ever becomes a commercial product… but the projections sound compelling — a selling price of $115,000 for the machine and $55 per sample for the disposable cartridge and testing reagents, which could provide a huge gross profit margin at a $40,000 cost of manufacturing the instrument and a $1.50 “cost of goods” per test, so gross profit could be pretty big if they can hit those projections (I have no idea whether those are rational or not) and produce a meaningful volume of machines… though that doesn’t incorporate the meaningful costs of operating the company and selling these machines.

Getting Nick Hodge on board to spread the news seems to have helped the stock a bit already, causing most of the price appreciation after that initial surge in the Spring (the stock shot up sharply in the Spring when they were starting trading and getting more press attention and doing private placements to raise cash, and gradually dwindled in the absence of any real news until Hodge got his hooks into it). I found it particularly notable that their actual unveiling of the “pre-alpha prototype”, at that conference back in July, didn’t have any impact on the stock price… but Nick Hodge’s wild promises have certainly helped the shares so far. Even the fact that Lexagene was profiled on Ed Begley’s Innovations show on Fox Business didn’t have much of an impact on the share price — the company says that their segment aired on August 26th and September 9th… the top-flight detective here at Stock Gumshoe notes that those are Saturdays, and August 28 and September 11, the following trading days, did not bring anything particularly notable for Lexagene (the stock dropped on 8/28 on very high volume, and rose a few percent on 9/11 on low volume). So it’s probably the “you’re going to get rich” promotional blather from Nick Hodge and Pinnacle Digest and perhaps others driving the shares, not just the awareness of this microcap company.

And that can be dangerous — if it’s just an ad campaign of “get rich starting November 1” that is driving the share price up, then you’re putting a lot of weight on that prototype finalization and testing process that Lexagene says they’re in the middle of right now. With ad campaigns like this, you generally end up with a lot of speculators who are excited about the big possible gains on that purported November 1 news, even though the company itself has not said they’ll be announcing anything on that date, and on the spurious allegation that the FDA will be requiring everyone to buy this nonexistent device starting in three weeks.

That means, in my experience, that the bottom can fall out of the stock really quickly as soon as the ads stop bringing in new speculators — that’s not what happens every time, and perhaps sometimes these overhyped little companies do come out with real fundamental news that supports the shares, but when it appears that only newsletter promotions and paid promotions are driving the shares, be mindful that sometimes just the absence of those promotions can be enough to let the shares collapse to their “natural” level in the future.

That’s doubly true if, as the company has already announced, there’s likely to be some substantial capital raise over the next month or two — folks who are speculating on a short-term price movement tend to hate it when the stock sells new shares, usually at a discount to the market price, and the stock can collapse as those short-term folks take their money away and look for the next opportunity.

The best news for the company in the long run would be a successful prototype testing program that goes as expected over the next month or two, and an announcement that they have some tentative orders for this prototype and will therefore be raising capital for manufacturing. Even that would likely bring the shares down if they raise a lot of money for that manufacturing investment, but it would give some reason to begin modeling out a positive future for the company and the product… but that does not seem like it’s going to be a six-week process, even for a tiny company like this.

My assumption, not being an expert on food safety or testing or the development of scientific instruments, is that the process of going from a pre-prototype to meaningful sales is going to be a lot longer than investors would prefer, and cost a lot more money. That leads me to not be particularly interested about a R&D firm like this, even if they seem, to a layman, to have an interesting device — my guess is that if this does eventually turn into a valuable product with real potential, there will be plenty of opportunities to buy it when it has grown up a bit, gotten some real-world exposure and feedback from (or even orders from) potential large customers, and after the marketplace has a chance to embrace or reject the idea of an on-site microfluidics testing machine like the LexaGene LX6.

And they’ll have to raise a lot of money to move the ball further down the field on this, so as you wait for the situation to be “de-risked” there may even be chances to buy it cheaper… but, of course, every now and then there is that exciting penny stock that seems to go up forever and become a real company or get bought out by a large firm, so waiting does always fight the “fear of missing out.” If you do decide to jump aboard, please get some additional perspective beyond Nick Hodge’s sales pitch so you can moderate your expectations accordingly.

So feel free to look into it — research the company, try to understand their competitive position in the emerging on-site testing marketplace, and think about the development timeline and their cash flow, and then let us know with a comment below whether you’d be interested in buying the stock. It’s not sounding compelling for me right now, but it’s your money — what matters is what you think, and how much risk you’re willing to take. We’ve kept the original comments appended from the original version of this article on August 3 as well, so you can see what folks had to say back then. Enjoy!

P.S. We’re compiling reader ratings of investment newsletters — if you’ve ever subscribed to Hodge’s Early Advantage, please click here to let your fellow investors know what you thought.

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microcapwiz
Member
microcapwiz
August 3, 2017 11:06 am

the last tsx deal in the space that claimed the same thing sold for $900,000. at $50m cap and not even a beta, it could get ugly on this promote.
Warnex Inc. (TSX: WNX) today announced that it has sold the assets of its pathogen detection business to AES Laboratoire, a leading French manufacturer and supplier of laboratory equipment based in Bruz, France. The transfer of assets was effective as of June 28, 2007.

“The sale of these assets is part of Warnex’s previously announced strategy to divest of the pathogen detection business and to focus on laboratory services,” said Mark Busgang, President and CEO of Warnex. “We believe that we have developed a robust, state-of-the-art technology and that this business will be an optimal fit for AES Laboratoire. Warnex will assist in the smooth transition of clients to AES Laboratoire in order to provide uninterrupted service to customers.”

Warnex sold the assets related to its pathogen detection technology from its subsidiaries Warnex Research Inc. and Warnex Diagnostics Inc. for the total price of $900,000 in cash, one third to be paid on closing and one third to be paid on each of the first and second anniversary dates of the closing. Kirchner & Company, Inc., a U.S.-based investment banking firm, acted as agent in this sale. As part of this agreement, Warnex will rent to AES Laboratoire 4,340 square feet of production facilities and laboratory space for a period of up to two years.

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sigmull
sigmull
August 3, 2017 11:10 am

I am not endorsing but the Lawrence Livermore Laboratories has done some pretty great things. I would definitely keep an eye on it.

sigmull
sigmull
October 12, 2017 8:02 pm
Reply to  sigmull

I did buy this penny stock on the basis of its LLL origin. It has worked out well as it is up 40%+ to date in just over two months. I also like the CEO.

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Sam
Guest
Sam
October 31, 2017 3:42 pm
Reply to  sigmull

What is the ticker symbol

philip ross
Guest
philip ross
November 2, 2017 12:32 pm
Reply to  Sam

lxg

Ana C Lugardo Zurita
Member
Ana C Lugardo Zurita
November 1, 2017 5:15 pm
Reply to  sigmull

Hi Sigmull, can you kindly give me the tickler I want to buy but don’t know the symbol…

DrKSSMDPhD
August 3, 2017 11:18 am

Travis, I invested in a ridiculously similar company in the late 90s, during a Chipotle-like scare of that era, and lost 100 percent of the investment. Why? Diagnostics plays like this are a dime a dozen. Profit margins in this space have to be gossamer thin for any player to compete. Barriers to entry are low. The technology is NOT high-falutin’, it is off shelf. A dozen other companies, at least, can do the same thing.

#notwithatenfootpole.

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Rog C
Member
Rog C
August 3, 2017 11:52 am
Reply to  DrKSSMDPhD

Well that saves me investing, thanks Dr K.

Michael Jorrin, "Doc Gumshoe"
August 3, 2017 3:21 pm

Unless this outfit has a miraculous new method of distinguishing pathogens from the myriad harmless organisms that abound in our food and indeed in the environment, it’s going nowhere. Each infectious organism has its own specific sneaky method of doing its dirty work, so this machine would have to be programmed to detect a huge number of infective pathways, and any pathway that it was not programmed to detect would provide a free entry to a nasty bug. Stay away!

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bludolphint
August 3, 2017 6:01 pm

First, I will say I have a small position in Lexagene. In my research before that, (not from an investor letter, I found and researched it myself), I found some interesting and for me compelling facts that assisted my decision. First and foremost the 2 Doctors are right this technology is available now from some co.’s, and you can say it is off the shelf. That is what prompted me to look deeper. The food industry already has very expensive testing facilities, so what is so great about this co.? The tests now takes about a day, and you need very skilled people to do the tests. Lex’s machine does it in an hour by anybody that is not brain dead. I think there is an appeal to that fact alone. Those patents they have are for those things. As well they can do more than 1 sample at a time. Now what machine would a co. choose that had a few tons of lettuce to test before it rots on the dock? That’s where they differ from others. They have already proved the concept with machines they have already built. Boston Eng., in July were quite pleased with there testing of the system and will complete the alpha prototype fairly quickly. Livermore would not let research $ to be spent on a technology that already existed, in the early days. Of course the tease is greatly exaggerated, but the story underneath is quite interesting. Stop and think for a minute would the patent office grant numerous patents when teaser said to a teck that already existed. As well the teaser is wrong I think about FDA forcing co.’s
to buy their machine. What I found quite compelling- the fact that co’s that look at the mach. will buy it on their own immediately to save a boatload of money on food before it perishes, and have a couple of employees trained in the use of the mach. instead of sending it to a lab and wait a couple of days for the result. The razor blade model is in place as well, as Travis mentioned the disposable test kits that the co. will have to continue to order. You also mentioned Travis that you didn’t see the need to rush in to invest in Lex. Which I agree with completely. The reason I invested early is that I see a real potential for it to be bought by numerous big co.’s farly soon after the machines start rolling off the assembly line or before; remember this has been proved on their previous prototypes that look a lot like a microwave oven in the day. It works and Boston Eng. has validated it. The question an investor has to ask themselves will a big co. wait very long before the machines are in production to purchase Lex or would they try to buy it early while it is very cheap? I usually am not so long winded but I have done some research on it and it influenced me to buy, but of course everyone should research it themselves before investing. Thanks

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Ken Z DDS, MS
Guest
Ken Z DDS, MS
August 11, 2017 2:40 pm
Reply to  bludolphint

you ‘re one smart cookie, looking in to the options LARGE co’s ahve RE: buyout

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mary555
October 13, 2017 4:15 pm
Reply to  bludolphint

Thanks for sharing your analysis, bludolphint. I too found this company on my own and made a small investment in it. Vets I know are excited about using it to diagnose pathogens while the “patient” and owner are waiting instead of sending samples to a lab and waiting days to weeks for a response. They say it could save a lot of misdiagnoses and over medicating.

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Doug
Guest
Doug
December 11, 2017 1:09 am
Reply to  bludolphint

Jack Regan has said that he never plans to keep LEX as an operating company and plans to sell the company at the point where the company starts manufacturing the beta prototype. The end game is to sell the company before the end of 2018. Gumshoe is very wrong about this one.

Jake
Member
Jake
February 20, 2020 6:53 pm
Reply to  bludolphint

Here it is, almost 2.5 years later. Are you still with the company? I just found the company a few months ago and got in very cheaply as well. Progress has been great and I am looking for great things this year. Obviously the timeline for a buyout, if it happens (I don’t think the CEO is as set on that as he was), was way off and I hope it doesn’t happen until organic growth gives us a strong return on its own merit. I can’t wait to prove the 2 posters above you wrong!!!

thinairmony
August 4, 2017 10:18 am

http://www.lexagene.com website check it out

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Risky Business
Guest
Risky Business
August 4, 2017 11:11 am

Back on April 23rd, Pinnacle Digest, a Canadian TSX venture trading company was paid by Lexagene $75,000 Canadian to promote their product. Nick has almost verbatim printed the same advice in his article. Pinnacle Digest is quite open about their position with the company and I do believe that multiple patents on the LX6 put it ahead of the competition. My research on this company has me interested. The producers from Innovations by Ed Begley Jr. sought out Lexagene and in the third quarter once its hits Fox News and is featured as 30 second air spots on CNN, Food Network, TLC, Discovery, etc. this stock will take off. They are confident in their product. Also, Lawrence Livermore National Laboratories and Boston Engineering are highly respected industry swingers. For these reasons I’m taking a change on this small cap and have joined the game. Take a look at Pinnacledigest.com to read more…

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bludolphint
August 24, 2017 9:33 pm

Yes Pinnacle is paid to promote the stock, but in this case they actually bought into Lexagene, which they don’t do with all of the companies they promote. I believe they are pretty selective in their purchases. I would note as well that the Doctor behind the LX is based in the US, and he will be uplisting to the Nasdaq in very quick fashion once they get going, (unless they are bought first), The lst co. that he was involved with was bought for $150 Mill.

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Risky Business
Guest
Risky Business
August 4, 2017 11:19 am

Correction, Pinnacle is a TSX venture investing company here in Canada

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Raj
Guest
Raj
August 4, 2017 10:06 pm

I completely love the way you describe stuff and bast teasers and gimmicks! Please keep the good work on!

Jonathan Rhoden
Guest
Jonathan Rhoden
August 10, 2017 6:52 pm

I want in on it right now what do I need to do

Ken Z DDS, MS
Guest
Ken Z DDS, MS
August 11, 2017 2:45 pm

The overall info originally written by Travis was /is wonderful. The thought processes are exemplary and causes one to pause and look forward. Thanks. KZ

bludolphint
August 24, 2017 9:35 pm
Reply to  Ken Z DDS, MS

I totally agree with your expression about Travis. He is great!

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Brian
Guest
Brian
August 11, 2017 11:34 pm

I’ll pass for now and that’s putting it nicely.Very nice write up, just bookmarked this website and pan to spend the next couple of hours exploring it. Really happy I found it, seems like one of the few that puts it’s users before profits and generally trying to inform and educate no sales pitches just good honest information. Really impressed, Thank You!

SoGiAm
August 13, 2017 1:04 am
Reply to  Brian

Welcome to the Gummunity Brian.
Best2You – Ben

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dunnydame
dunnydame
October 13, 2017 3:10 am
Reply to  Brian

Take out a membership, Brian, and become an Irregular. You’ll find it well worthwhile.
Penny

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Late to the conversatin
Late to the conversatin
August 21, 2017 9:07 pm

I’m looking at this as a short play on November. Watch the stock and buy just before Fox does their piece on it. What for run on the stock and get out after it spikes. Then keep an eye on the news by tagging it in MarketWatch. People now a days go after every little story and invest because of the get rich quick dream. Thanks Travis, you saved me from buying and canceling the subscription. That’s always very uncomfortable. Keep up the great work!

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Tom
Member
Tom
August 22, 2017 10:35 am

Does anyone know when Fox is supposed to broadcast their piece on the LX6?

Mary
August 26, 2017 12:04 am

Innovations airs tomorrow, Saturday, August 26th at 5 pm Eastern Time via Fox Business. Here is the link: http://innovationstelevision.com/healthandtechnology/
The show will air again on Sept. 9th and they have produced a number of 60 second bits to promote on other shows. Lexagene says they were approached by Innovations to do the show, not vice versa.

Fredua A Prempeh
August 26, 2017 5:46 am

I found it improbable that FDA will force a testing device upon the food industry within a couple of months without giving industry participants time to adjust to the new testing requirement!!

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Stockmarketwiz
Guest
Stockmarketwiz
August 27, 2017 2:43 pm

Dr. Jack Regan’s shell graduate and biotech promotion, Lexagene Holdings Inc. (LXG), rose five cents to $1.26 on 400,991 shares. Lexagene continues to work on its prototype for a device that detects pathogens in fluids. Pathogens are bacteria, viruses or other micro-organisms that can cause disease. Lexagene hopes to sell its device (some time in the future when development is completed) to food processing plants, water treatment plants, cruise ships and veterinary clinics. It also hopes to eventually sell the device to hospitals. (It takes a longer time to obtain regulatory approval for a medical product than for a food safety product or a veterinary product, neither of which has yet been completed.) On May 31, Lexagene had working capital of $1.58-million (U.S.). It expects to finish building its alpha prototype in October, then finish testing the prototype in November. Assuming a successful alpha prototype, Lexagene plans to work on a beta prototype next summer. The company’s chief executive officer, Dr. Regan, holds a PhD in virology.

Lexagene went public in October, 2016, through Nizar Bharmal’s shell, Wolfeye Resource Corp. Unlike Western Investment, Wolfeye did not list as a capital pool shell. It was a California gold promotion that peaked at a lowly 4.5 cents and then defaulted on its sole property. Mr. Bharmal took over as president of Wolfeye in June, 2014, around the time of the default. In May, 2015, the shell sold a $100,000 private placement at five cents. There were six subscribers, and we can tell you who they were because in 2015 the British Columbia Securities Commission was not hiding information on investors who were buying private placement shares at a discount to the market price. The BCSC started hiding the names of these special buyers last year, so now investors have no way of knowing who new large backers of a company, via private placement, may be. This deprives them of important information in deciding whether it is knowledgeable investors getting aboard, or if it is a group of know-nothings. The BCSC did this secrecy thing, hiding the names of private placees, once before but was shamed into reversing its policy by David Baines, who wrote about it in The Vancouver Sun. Mr. Baines is now retired, and so the BCSC is able to please an obvious lobby group without being criticized in a big-city newspaper. The six subscribers to Wolfeye’s nickel financing in 2015 preceded the BCSC’s hiding policy. They were: Daryl Rebeck, a former Canaccord broker and the president of Lexagene, who bought 100,000 shares; Maureen MacNeill, an associate of Howe Street promoter Jerome Rak and a legal secretary, who bought 500,000; Nicole Ridgedale, a marketing manager in Vancouver, who bought 400,000; Sheri Cosco, a jewellery designer in Vancouver, who bought 200,000; and husband and wife Stephen and Tina Fabbro of Coquitlam, who bought the remaining 800,000 shares. These names will be of interest to many in the investment community and beyond. If the six subscribers still hold their private placements shares today, then they would be doing marvellously.

Mr. Bharmal did not join Lexagene. Since the 1980s, he has been a chief financial officer or a director of dozens of public companies. These days, he is the CFO and a director of B.C. mining junior Arcpacific Resources Corp. (ACP: $0.05) and former Saskatchewan uranium promotion Gravis Energy Corp. (GVE: $0.005). Gravis has a pending merger with a development-stage pharmaceutical company in South Korea.

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gswelker
Irregular
October 1, 2017 2:20 pm

I’ve been looking at this one carefully ladies and gents, and I think it’s worth a $1k balloon float. Here’s why.

I’m a physician, and similar devices for medical diagnoses are having a hard time getting traction. One of these is the Biofire, which can detect any number of respiratory, GI, central nervous system, or blood-borne illnesses. If you don’t get how multiplex PCR DNA detection works, watch this video: https://vimeo.com/134785902 . Even if you do, the video is mind-numbingly cool. Watch it.

It is amazing what we can do now. I can send your sputum to the lab, and in less than an hour, determine the DNA of the pathogen that’s giving you pneumonia. 20 minutes, in fact.

The problem with Biofire is that A) Doctors are stubborn, and reluctant to let another machine do the workup for them, and B) who’s going to pay for the machine for $75k? So Biofire, made by BioMérieux, is getting a slow start.

The situation is different in the Chipotles and Fresh Expresses. At those places nobody is averse to getting an immediate answer to cover their asses. I think SOME kind of device to detect food pathogens is going to be the norm in the next few years, and eventually down to the individual restaurant level. It’s a crowded field – any number of devices can detect a single pathogen. Neogen Corporation, SCIEX, DuPont, BioControl, and many others make devices that can detect a single pathogen. The advantage that Lexagene has is that they will offer (hopefully in a few weeks) the ability to test for several pathogens at once, a technology that hasn’t hit the food market yet, as it has already hit the medical market.

Another thing is that the market is MUCH larger. Every egg farm, strip mall restaurant, vegetable processor, even supermarket chain is going to need to detect food pathogens before they reach the customer. Americans spend $3.5 trillion on food each year, and these devices could easily capture a piece of that market. How much? For medicine, the math would work differently. Each hospital would need one or at most two of these machines, and there are 5,500 hospitals. Call it 10,000 machines, and even if one company sold all of them, the tab would be at MOST $1 trillion.

So I think this one has some potential, because Lexagene will be first out of the gate with a multi-pathogen detector. It might double or triple, too, because the stock is cheap. After a few years, the big boys will join the party. But if Lexagene stays in the lead, I can see the stock getting to $10-20 in the 2020s. I think Nick Hodge is overstating the potential by a long shot, but 10x isn’t out of the question.

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M. Rogers
Member
M. Rogers
October 8, 2017 10:43 pm
Reply to  gswelker

Thanks Dr. Welker, for the general to specific input. I wanted to ask in what capacity these hospitals will be using the detector? Is it through infection control departments? I retired from the ER five years ago as a medic. It is a source of intense curiosity, so I will ask again: how do these fluid samples get collected in a hospital setting?

M. Rogers
Member
M. Rogers
October 8, 2017 11:00 pm
Reply to  gswelker

Oh, btw your vimeo film was indeed compelling. It is very cool when the second stage PCR are discussed.

mary555
October 13, 2017 3:56 pm
Reply to  gswelker

gswelker, I too think it is worth checking out. Their technology has two main advantages: First, it is open-access so it can screen for new or rare pathogens in addition to the usual culprits (6 pathogens at a time). Second, it is very fast (1 hour) and the tests can be run by ordinary people as opposed to microbiologists. In addition to its use in food safety, Vets (as in animal docs) are excited about it because it would save them misdiagnosing and/or over medicating if they can get results in an hour instead of the usual days to weeks. I bought a small stake months ago and plan to hold. The company says that they will have a model to demo for investors at end of November.

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mary555
October 15, 2017 8:53 pm
Reply to  gswelker

Cool video, Dr. Welker. I also like this presentation by Jack Regan, Lexagene’s CEO and chief scientist: https://lexagene.com/pathogen-detection-veterinary-medicine/
It’s targeted at vets but lays a foundation for understanding PCR testing and what Lexagene is doing differently.
BTW: If any Gummies are in San Francisco for the BioInvestor forum Oct. 17-18th, please try to book some time with Jack and report back to us. His talk is Wednesday, Oct 18, 10:45 AM – 11:00 AM – Elizabethan C. I live here but have to work so won’t be attending. Thanks!
https://www.bio.org/events/bio-investor-forum

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Janis Bell
Janis Bell
October 12, 2017 4:17 pm

Amazing and fine piece of writing. I always wondering what these newsletter editors had to gain by touting a particular stock. Thanks!

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tchouki miner
Guest
tchouki miner
October 12, 2017 7:46 pm

What is the name of the company that is producing this new device? It is not clear to me if it is possible to buy stocks in this comany right now. Name please.

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thinairmony
October 13, 2017 12:37 am

LexaGene Holdings Inc. (LXXGF)
Other OTC – Other OTC Delayed Price. Currency in USD
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1.1506+0.1006 (+9.58%)
At close: Oct 12 3:58PM EDT

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Arizona Slim
Member
October 12, 2017 8:09 pm

Will look into LXG, but off hand whenever I see the two words close together Nick and Hodge, I run not walk to the nearest exit.

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