StageZero Life Sciences Ltd. (TSX: SZLS) is a life science and telehealth company that recently launched Aristotle®, which is its next-generation, proprietary clinical test for the early detection of cancer. From one blood sample, it can screen for 10 cancers.
On the same day as it officially launched Aristotle®, StageZero announced that it entered into a Letter of Intent (LOI) to purchase Health Clinics Limited and Health Clinics USA Corp. (together, the “HC Companies”).
Founded in London, England in 2013, the HC Companies use telemedicine to provide clinical services across Europe and North America.
Under the trade name Care Oncology Clinics, the HC Companies offer cancer (oncology) treatment services and, under the trade name AVRT, focus on early disease detection utilizing proprietary treatments.
James Howard-Tripp, Chairman and CEO of StageZero, explained the rationale behind the transaction,
“Together with Health Clinics, we are taking three of the highest growth areas within healthcare – liquid biopsy, early detection of disease and telemedicine – and combining them into one innovative company that with ground-breaking technology, will find disease early (as opposed to late and with presentation of symptoms), diagnose and treat, or diagnose and seek to prevent late stage disease, with a telemedicine reach in both North America and the UK/Europe.”
According to market research by Fortune Business Insights, the Telehealth market is estimated to be US$559 billion by 2027 and Reports & Data estimates the Early Disease Detection market to be worth US$115 billion by 2027.
The continued rise of cancer cases and deaths has shifted the attention towards the adoption of early detection and diagnosis techniques for cancer, to help lower health costs and increase survival rates.
Source: StageZero Company Presentation (April 1, 2021)
StageZero – From Point Solution to Circle of Care
With the COVID-19 pandemic, many physician practices are closed, so patients are not visiting their doctors in person but are connecting via telehealth.
To illustrate the dramatic decrease, according to an article last month by the National Cancer Institute, the COVID-19 pandemic led to a sharp decrease in the number of cancer screening tests. One example from Massachusetts General Brigham Hospital recorded a 74% decrease in cancer screening tests during the same 3-month period in 2019 (pre-pandemic) versus 2020.
Unlike COVID-19 tests, cancer tests in the U.S. have to be prescribed by a physician. Therefore StageZero needed to find a way to reach patients with doctor support.
The HC Companies acquisition immediately filled this requirement and more, as it provides an existing network of physicians as well as patients, a marketing group, and a 24/7 support team.
StageZero believes that launching Aristotle via AVRT will have a bigger impact than trying to launch a stand-alone cancer-detection service and positions it uniquely in the market.
In addition, the Company commented that the release of Aristotle® via AVRT is just the first step and StageZero will continue to develop a broader market for the product including physician networks, health care insurance providers, and employers.
StageZero’s new cancer-testing platform Aristotle® becomes integrated with HC Companies’ AVRT service. The AVRT program focuses on finding diseases early, notably cancer, and then would work with the primary care physicians and oncologists of HC Companies’ Care Oncology Clinics to establish appropriate treatment.
Therefore StageZero will have a fully integrated telehealth platform that supports both its cancer diagnostics program as well as treatment services – creating the “Circle of Care” – and now multiple revenue streams.
Source: StageZero Company Presentation (April 1, 2021)
Lab Expansion for COVID-19 and Aristotle® Testing
StageZero continues to expand its CAP-accredited and CLIA certified high complexity reference laboratory in Richmond, Virginia. Being CAP-accredited and CLIA certified ensures that the testing facilities and test results are meeting or exceeding the industry standards for clinical laboratory testing.
Last year, to help out during the COVID-19 crisis, StageZero launched a COVID-19 testing service, offering both the serology point-of-care and lab-based polymerase chain reaction (PCR) tests.
The Company’s revenue benefited from offering various COVID-19 tests as fourth-quarter 2020 results released last month had revenue at US$2.6 million, up 77% quarter-over-quarter and up over 5,000% from the same period last year.
StageZero forecasted that COVID-19 testing-related revenue should be even higher in the first quarter of 2021.
Expanded Testing in Canada with Ichor Blood Services
Yesterday, StageZero announced that its partner Ichor Blood Services will distribute StageZero’s COVID-19 PCR saliva test kits through Canadian retail outlets in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario starting immediately.
James Howard-Tripp commented: “StageZero is proud to make these kits available to Canadians to enable immediate and convenient PCR testing, at home, via supervised telehealth, for families, companies, and travelers. COVID-19 PCR testing is considered the gold standard for helping to determine if someone is infected with SARS-CoV-2, the virus that causes COVID-19, and saliva-based PCR testing is an easy, non-invasive way to collect a sample”.
Final Thoughts
The recent C$7.2 million financing has strengthened the Balance Sheet and revenue from the COVID-19 testing brings additional cash flow that should enable the Company to meet its current obligations, complete the HC Companies acquisition, and commercialize its new offering.
StageZero should continue to benefit from the market’s shift to telehealth and book revenue growth from its COVID-19 testing service and product offering.
With the growing need for both COVID-19 and cancer testing, revenue could double for the Company this year.
StageZero closed today at C$0.77, up 22% on the day, and currently has a Market Cap of over C$41.2 million.
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