NEW COVERAGE ALERT!
RELAY MEDICAL (CSE:RELA)
RELA could hold the key to life returning back to normal
If you missed out on SONA, you won't want to miss RELA
For months, we have been looking for a stock in the COVID-19 space with the potential to fix some of the damage done to businesses by the pandemic. Last week, we discovered a company that has the potential to solve the COVID-19 problem for hospitals, airports, sporting events, conferences, cruises, office real estate, concerts, schools, military bases, mines… basically any location with high-price points of entry, and large congregations of people. The company is Relay Medical (CSE: RELA, OTC: RYMDF, Frankfurt: EIY2), and so far, the market has failed to recognize its capabilities or potential.
Relay Medical: The Missing Piece for Covid-19 Testing
For investors in the COVID-19 space, specifically in small caps, it’s been tough to know which deals were real, and which were using keywords as promotion. Since the pandemic started, we held the belief that competition in rapid testing was too high and the majors with large market caps and huge resources would ultimately win that battle. We believed that testing kits out of Asia would increasingly become faster, cheaper, and more accurate, wiping away margins of many small cap companies entering that space. Unfortunately, because of this belief, we missed out on the majority of the move in Sona Nanotech Inc., which soared from $1.13 in May, to a high of $15.20 in July (currently trading at $6.84). We do not want our subscribers to miss out on RELA, which now operates within the same space, but potentially has a better business plan.
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Relay Medical’s recent royalty deal with Fio Corporation for a Mobile COVID-19 Testing and Tracking Platform has flown under the radar. By owning Relay, investors are buying the income stream generated from Fio’s hardware devices. The idea is, Fionet mobile testing centres will be placed anywhere requiring a negative COVID-19 test for entry. Anyone coming in, must pay for a rapid test by credit card, or tickets would include the cost of the test in the price of entry. The device automatically records the test result on a central system, allowing for safe entry of individuals, and when business hours are finished, the test data is stored on the cloud. Currently, rapid tests take 10-15 minutes to obtain results, and operate like pregnancy tests, using lateral flows. However, Fio’s system can be adapted to any rapid response test, offering investors security knowing that as different tests become obsolete, Relay’s income stream will remain, charging for each new test recorded.
Investors should also note that the founders of Fio, including the CEO, Dr. Michael Greenberg, once founded and later sold Cedara Software in 2005 for $476.6 million to Merg Eflim out of Milwaukee. When investing in junior companies, you're often investing in the people who run the deal. That $476.6 million number gives us confidence that our money is in good hands.
We spent most of the weekend brainstorming all the places that need this type of device. Our whiteboard wall did not have enough space for everything we wrote down, and we quickly realized that the opportunities for this type of technology do not not have an upper bound. If the choice is masks and stay home, or a rushed vaccine, or point of entry tests for a safe, normal life, we choose the latter, and we believe the majority of the rest of the world will too. Would you prick your finger to enter a sanitized arena to watch an NBA finals or NHL Stanley Cup game? Everyone we know certainly would. If Relay’s management can begin to roll out deals for the implementation of their vision, then we have no doubt that Relay will become a takeout target for one of the other testing majors looking to corner the testing market.
Too good to be true? How did Relay obtain the keys to such a powerful technology?
Fio was originally focused on African markets and has been around for quite some time. The company was financed by the Bill and Melinda Gates Foundation, and Warren Buffett’s foundation, amounting to almost $100 million USD in capital invested. Fio’s mobile devices have completed over 1 million tests for malaria, dengue, ebola, and HIV across four continents. However, in recent years, Fio experienced a legal dispute, and financing dried up. Luckily for Fio, the Covid pandemic enabled a natural shift to adapt their tracking machines for testing of COVID-19. The legal dispute was resolved, but left the company in need of a white knight to save the deal. Relay Medical’s management recognized the opportunity to ‘buy when there’s blood in the streets,’ as all savvy investors should. Now, fortunately for us, Fio’s technology is included in a public vehicle where investors can take a cheap risk on a COVID-19 technology with massive potential returns.
Relay Medical’s management recognized the opportunity to ‘buy when there’s blood in the streets,’ as all savvy investors should. Now, fortunately for us, Fio’s technology is included in a public vehicle where investors can take a cheap risk on a COVID-19 technology with massive potential returns.
But what happens to Relay in a post-Covid-19 world?
If you are selling us a rushed vaccine story, available in the near term, we aren’t buying. Ask your local doctors if they are willing to risk being first in line for a new vaccine. Trust in a vaccine’s efficacy and safety normally takes many years. And while medical technology is better today than it was in the past, COVID-19 vaccines are no different, and will take years if we ever get one that works safely. We look forward to the day the investment world turns on the failed vaccine companies with uber rich valuations as a short opportunity.
If you think COVID-19 is just going to go away, you have not read the reports on just how contagious it can be. Psychologically, this pandemic will have lasting policy effects on the way the world treats health and disease. This will not be the last pandemic the human race faces. Fio’s device is the first of potentially many upgraded versions. Think of how far the iPhone has come since its first generation was distributed. The device can measure diseases of all types, so we believe many points of entry will keep it as a security measure.
But what if other point of entry, community-based testing devices are created? Competition is a risk, but it seems that Relay has a first mover advantage. They must move fast to secure this position in an attempt to become the industry standard, at least in some specific markets. The COVID-19 medical space is an arms race, with the winners earning a huge financial prize. We like to make bets in niche markets, which tend to have much higher margins than high competition mainstream markets. So far, Relay has ticked all the boxes for our investment requirements.
We regret missing the run up in SONA’s stock. If RELA is able to sign even a small minority of the deals they could implement, then the company’s investors will be purchasing all those high-priced entry tickets requiring COVID-19 tests with profits earned from buying Relay’s stock.
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Good fortune to all subscribers,
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