By Knox Henderson, Financial Press Editor.
When asked “what is a polymer?’, Jonathan Gluckman, Ph.D., president and CEO of Sixth Wave Innovation, quips ‘many, many mers’. The roots of the word polymer are actually very descriptive of a polymer. The root ‘mer’ means unit, and poly means ‘many’. Taken together, the word polymer can be deconstructed as many units.
Polymers are materials made of long, repeating chains of molecules. The materials have unique properties, depending on the type of molecules being bonded and how they are bonded. Some polymers bend and stretch, like rubber and polyester. Others are hard and tough, like epoxies and glass. Most people would associate polymers with a popular synthetic version, plastic, however there are multitudes of natural polymers such as rubber and glass. It is the world of developing applications for its synthetic polymers where Sixth Wave has a unique competitive advantage in a variety of applications.
Put succinctly Sixth Wave Innovations is a nanotechnology company that uses patented molecularly imprinted polymers (MIPs) for detecting, capturing, and releasing substances at the molecular level. The company is currently focus on three areas of application with trademarked, patented and patent pending solutions: IXOS® for mining, specifically the extraction of gold, silver, lithium, and mercury; Affinity™ for cannabinoid extraction and purification; and AMIPs™ for rapid diagnostics of infectious diseases such as COVID-19.
The products are complex and the barriers to entry into this field are exceptionally high. After nearly 10 years and nearly $20 million spent on its R&D, Gluckman feels his company is now in a position to catapult itself into the market with fully developed turn-key products.
“We can recover gold cheaper; we can purify cannabis faster and cheaper and we can detect viruses more reliably and efficiently than the standard methodologies and antigen tests out there,” he says. “At the end of the day, that’s all the investor cares about. What’s the competitive advantage and why is a product going to succeed? So we choose our products on the basis that yes, we can make a lot of money, but our customers are going to make more. Even though we’re going to make a healthy sum, they’re going to get more gold at less costs, or in the cannabis space spend less money get higher yield for higher quality product; or take a rapid COVID test at a fraction of the current cost of the antigen tests out there—with more accuracy. In fact, our COVID technology has detection levels that allow for identification of asymptomatic and contagious individuals which is NOT a capability of any of the existing antibody or antigen tests.”
Given that sentiment, let’s delve deeper into the company’s core competencies in the three key verticals:
Mining – Sixth Wave’s IXOS is a line of extraction polymers formulated for deployment in the gold mining industry for the extraction of gold and silver from cyanide leach solutions. The system replaces the activated carbon process for separating gold from cyanide solution at the molecular level.
For example, an IXOS pilot plant was deployed at the Kinross Bald Mountain gold mine which processes 19,000 litres of cyanide solution per minute. The IXOS absorption media bed contains 5kg of IXOS beads/tank and the IXOS Absorption columns accepts dilute cyanide solution at 22 litres per minute. The entire process results in a faster, cheaper, cleaner process than activated carbon. The system boasts higher adsorption efficiency which results in less gold lost in tailings and more poured gold per cycle. Based on a pilot scale test for this and other facilities the cost savings at this level of gold extraction equates to about $100 USD per ounce of gold.
“It’s a replacement for the traditional use of activated carbon to separate minerals. You use the IXOS product to selectively remove the gold and/or silver just like you would use activated carbon in that circuit. However, polymers are more efficient for about 70% of the capex of an equivalent carbon circuit with about a 70% savings in operational expenses and somewhere on the order of 3-5% increase in gold yield simply due to not having carbon fines and other advantages.” IXOS is fully commercialized and Sixth Wave is currently working with a variety of major and junior mining companies worldwide toward deployments.
IXOS® Gold Extraction
Cannabis – The company’s Affinity system streamlines the traditional processing of THC and CBD. Affinity, empowered by MIPs, is designed to capture cannabinoids to ensure the purest end product and the highest yield. Affinity can replace antiquated processes including winterization, fractional distillation, and chromatography depending on the targeted end product. Gluckman argues that their system is about 1/8 the cost of legacy systems, does not required skilled staff (chemist) to operate, has unlimited scalability with a small footprint and is highly automated, rapid and efficient. The Affinity solution boast 99.7% cannabinoid retention and a 10%-15% higher yield.
On May 18, Sixth Wave announced a memorandum of understanding (MOU) with Retro Cannabis and Hemp Extracts for the purchase and operation of the Affinity cannabinoid purification system.
Retro is a microprocessor located in Atlantic Canada with strong and trending growth expectations in the coming year. The installation will be a Discovery version of the Affinity System which allows compliant processing under the existing license. Retro is a sister company to Advanced Extractions Systems Inc., a company that Sixth Wave is in the process of establishing an exclusive worldwide royalty bearing licence with “The flexibility to process high THC cannabis on-site at Retro and process material from other extractors will facilitate continued process and design improvements,” says Gluckman. Retro and AESI, in concert with Sixth Wave, will utilize the Discovery operating system as a ‘commercial demonstration facility’ for other licensed producers and potential customers. They with also evaluate and compare the Discovery System with Sixth Wave’s full size Affinity system to completely understand the value proposition and efficiency of the system.
Affinity™ System for Cannabinoid Extraction
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Infectious disease testing – in response to the global pandemic and currently in development, Sixth Wave’s Accelerated Molecularly Imprinted Polymer (AMIPs) is a Rapid Virus Test empowered by MIPs, for the selective identification of Covid-19 that can give results within minutes. According to Gluckman, AMIPs will allow for high volume, point-of-use screening in public sector, private industry, hospitals, long-term healthcare facilities, and various forms of public transportation. The test strip, used in a Lateral Flow Assay is exposed to a bodily fluid (nasal swab, saliva or breath) of the potential carrier and provides a binary (yes/no) result within seconds. The company is also developing tests for livestock targeting viral and bacterial diseases such as Avian and Swine Flu. Animal diseases causes the loss of at least 20% of livestock production globally, according to the World Organization for Animal Health (OIE).
On May 24 the company announced that AMIPs technology successfully detected the SARS-CoV-2 virus at s 250 times lower more sensitive than commercially available rapid antigen tests. This makes AMIPs sensitive enough to detect both symptomatic and asymptomatic persons before they are contagious to others, an achievement that cannot be claimed by rapid antigen self-tests.
(Note that the Company is not making any express or implied claims that its current AMIPs product can eliminate, cure, contain, at a commercial level, COVID-19 (or SARS-2 coronavirus) at this time.)
AMIPs™ – Rapid Detection of Viruses
So how are all of these varying systems monetized for the company and its investors? Gluckman says it a combination of direct sales and licencing/royalty fees depending on the vertical you are looking at. Under the royalty revenue model, a standard unit assumes 30L of solution processed over 300 days at $200 per kilogram of product. Total estimated annual recurring royalty to SIXW is $1,260,000 for two units, $2,520,000 for 4 units (SIXW already has agreement of delivery of 4) and $3,780,000 for 6 units. Effectively only 5 units of production generates a royalty revenue that exceeds the company’s entire operating costs. The company has a prospective pipeline of inquiries for 250 Affinity systems. Currently it projects about $600,000 in associated revenue for 2022 to $3.5 million in 2023 based on 4.25 operating systems.
As for rapid detection of viruses, the company is ready to begin its productization of multiple versions of its AMIPs rapid test. When funded, Sixth Wave could launch human test products for fall of 2022. Sixth Wave is seeking licensees or strategic partners to take the product to consumer marketing and establishing inroads to government and commercial entities for purchase and distribution. Entering into this market, Gluckman claims his competitive advantage in this market include a more accurate test, particularly for the pre-symptomatic and asymptomatic, that can scan for multiple viruses in one test, all at a fraction of the cost of current antigen tests.
Despite ‘COVID fatigue’ the market opportunity is enormous, the global COVID-19 diagnostics market size was estimated at USD $97.4 billion in 2021 and expected to grow at a compound annual growth rate (CAGR) of 7.7% from 2022 to 2030, according to Grand View Research. The OIE estimates the loss of 20% of livestock production is $300 billion per year globally. Licencing opportunities are under discussion with several parties for both the human and live-stock applications.
The lions share of revenue is expected from gold products in a combination of outright sales to the major producers, to leasing equipment and charging ‘bumper-to-bumper’ service fees.
“When you’re dealing with majors, they like to buy everything, so they don’t mind capital equipment costs,” says Gluckman. “And there’s a replacement cost, the beads don’t last forever, but they do last for at least a couple of years so there is a recurring replacement revenue stream. For junior miners, they may prefer to lease the equipment. Early-stage miners have asked if we would finance the entire system in return for a percentage of the gold that is refined, almost like a gold stream. We have also talked about leasing of beads on which we would just take a monthly fee with a bumper-to-bumper warranty on it. Obviously, the cheapest scenario for the mine is an outright purchase, but for mines that are not cash rich, the leasing opportunity allows this to be part of the fixed operating expenses.:
Sixth Wave has completed extensive testing (in North and South America) in laboratory and field trials with some of the world’s largest gold mining companies, with confirmatory testing completed by independent mine sites, independent laboratories, and two major chemical corporations. Revenue projections are about $300,000 in 2022 and $6M for 2023 assuming just the 1 pilot plant.
With a market capitalization of $8.6 million, the company is seeking further funding to fuel its growth, which could prove to become exponential in the coming year given its ability to pivot into diverse industries. “These products are done, they’re cooked, they’re baked,” says Gluckman. “Some of them need approvals, partnerships, but we’re well on the way to commercialization and significant profits.” With SIXW trading off its year high of $0.39 its share price is suffering along with the rest of venture markets at $0.08. Given its stage and pipeline, success in future financing looks promising to fuel its continued growth and a higher future valuation.
Legal Disclaimer/Disclosure: The content contained in this article is a paid publication. No information contained within should be construed as investment advice to buy or sell any mentioned securities. The author’s opinion does not necessarily reflect that of Financial Press. Associates of Financial Press may own shares of the companies mentioned in this article. A licensed financial advisor should be consulted prior to making any investment decision.
Knox Henderson is a paid contributor to the FinancialPress.com and is not currently a shareholder of Sixth Wave. All opinions expressed are his own.