Morning, welcome to Microba's quarterly investor webinar for the period ending 31st March . On the line today we have the company CEO, Dr Luke Reid. Before I hand it over to Luke to go through the presentation released on the ASX this morning and up on your screen, I'll just remind you that you can submit questions through the Q&A panel at the bottom of the screen. We'll get to those at the end of the presentation. Luke, I'll now hand it over to you. Thanks very much.
Thank you, Simon, and good morning, everyone. I'm very pleased to share an update on our progress following the close of the quarter ended 31st March 2022. I'll kick off by stating that our investment thesis at Microba remains unchanged, that the trillions of organisms that live in your gut, known as your gut microbiome, represent one of the biggest untapped opportunities to improve human health. This will see microbiome testing and therapeutics become a routine part of healthcare. At Microba, we believe we have the best technology in the world to unlock this, and we're continuing to execute on establishing a dominant global position in both microbiome testing and in therapeutic development from the microbiome to capture this opportunity. This is our standard disclaimer. I'll just move past that. Quickly, for anyone new to Microba, our commercial model to capture this market opportunity is summarized here.
We deliver testing services globally to clinicians, consumers and research clients, together with market-leading distribution partners. These services build our large proprietary microbiome databank with consented and de-identified customer data. We mine this large databank to discover and develop novel therapeutics to ultimately execute pharma out-licensing transactions on those assets. Microba is a data-driven biotech company. We are commercial stage and already delivering global revenues through our testing services. We continue to deliver strong year-on-year revenue growth. We have established partnerships with market leaders across our business, including global medical diagnostics leader Sonic Healthcare, Europe's largest medical diagnostics company, SYNLAB, and New York Stock Exchange-listed synthetic biology leader, Ginkgo Bioworks. We believe we have the most valuable microbiome databank in the world.
From that databank, we have established three therapeutic programs with our first lead drug candidate targeting ulcerative colitis, a major form of inflammatory bowel disease, progressing towards an upcoming phase I clinical trial scheduled to commence before the end of this financial year. This is a fast growth emerging market, which we're capturing with world-leading technology, supported by peer review publications and our two co-founders who are leaders in the field.
Underpinning this, we have a world-class team, including Deputy Chair and Chair of our Medical Advisory Board, Professor Ian Frazer, one of Australia's most distinguished clinical scientists and inventor of Gardasil, the cervical cancer vaccine, which now does over $7 billion in annual sales for Merck. Together with our Head of Therapeutics, Professor Trent Munro, who joined us last year from California-based multinational biopharmaceutical company, Amgen.
Upfront, I want to highlight some of the key milestones achieved in the quarter, which I'll then unpack in further detail. Firstly, for our testing services, we continued to expand access to our testing across Europe with Europe's largest medical diagnostics company, SYNLAB, signing and operationalizing in Poland, Hungary, Romania, Croatia, Turkey and the Czech Republic. We also saw strong initial uptake of Microba's next generation test range, MetaXplore, which was launched to healthcare professionals in Australia just seven weeks ago. This is executing on a key part of our strategy to move microbiome testing deeper into healthcare and towards a state where it is standard of care and ultimately like a blood test. For our therapeutic programs, firstly, our inflammatory bowel disease program, we received formal ethics approval for the upcoming phase I clinical trial of Microba's lead drug candidate, MAP 315.
For our immuno-oncology program, we received first positive animal data showing a significant reduction in tumor size in our mouse model of melanoma. Finally, for our autoimmune disease program, we were very encouraged by the first positive in vitro data package from our collaborative partnership with Ginkgo Bioworks. First, I'll provide an update on the progress of our testing services, which is driving our global revenue growth, then switch over to update on the advancement of our therapeutic programs. First, a reminder of our strategy for our testing services.
We're building a leading microbiome testing company through a globally scalable distribution partner model. This distribution partner model enables our partners to access our platform to launch and deliver a microbiome test powered by our world-leading technology.
We achieved strong growth in our distribution base this quarter, which has solidified the foundations for our global testing services and driven growth in revenues. Across the first half of this year, my message regarding our testing services and revenue growth has been unwavering. We were expecting another year of positive revenue growth weighted to the second half of the financial year as new distribution partners and country expansion with existing partners progressed. I'm pleased to update that we have started to see the growth in revenue up to just over AUD 1 million for the quarter, up 61% over the prior comparable period and 12% year to date. This growth was importantly driven by Microba's scalable personal testing business, up 48% over the prior comparable period through growth in both domestic and international testing.
International personal testing revenues were up 43% on the prior comparable period, driven by G42 and country expansion with SYNLAB. Domestic personal testing services were up 52%, principally driven by growth in uptake from healthcare professionals. Revenue growth for the quarter was impacted by the delayed launch of the new MetaXplore test range and slower than expected timing of new countries and distribution partners being activated.
This resulted in the growth for the quarter largely being delivered in March, demonstrating an acceleration in growth towards the end of the quarter. We expect the next quarter to benefit from the recently launched MetaXplore testing range in Australia and from further international growth, particularly in the United States and in Europe. I want to zoom out for a second and put these milestones into perspective of our strategy.
To succeed in building a leading microbiome testing company through our distribution model, there are two core ingredients. Firstly, we need to have market-leading testing products that deliver strong value and utility to clinicians and their patients. We launched the MetaXplore test range during the quarter, which significantly advances the clinical utility of microbiome testing in a healthcare setting and expands the total addressable market for Microba's testing products.
Now, seven weeks post-launch, we are seeing strong uptake, which I'll update more in a moment. Secondly, we need to have broad and deep distribution for those market-leading products, and we're making great progress here. From the Q3 results, this is translating into revenue growth. Sonic, SYNLAB, Genova, and G42 Healthcare provide us with strong access into major global healthcare markets. Sonic into U.K. Germany, Switzerland, Belgium, Australia, New Zealand, and the United States.
SYNLAB, broader coverage over Europe and Latin America. Genova, deeper penetration into the United States. G42 Healthcare covering the Middle East and, in particular, the GCC region. These distribution partners provide us with access into 35 countries. When I updated the market in January, we'd activated operations into seven of those 35 countries. I'm now pleased to report that we have increased that to 13 countries operational, adding Poland, Hungary, Romania, Croatia, Turkey, and the Czech Republic. Countries and partners are the leading indicator for our revenue growth. By the end of the financial year, we expected to have doubled our distribution base from 4- 8, but we've now significantly exceeded that plan with 14 countries now contracted, and 13 of those countries now operational. Not just operational, but importantly with first sales delivered.
Into FY 2024, we expect to further progress our partners and roll out across more countries. In FY 2024 is also when we expect to see the impact from revenues from our partnership with Sonic Healthcare. To give some further detail on our services growth, I've summarized here where we are at with our distribution partners and countries. We have a clear partner success program that we're progressing partners through for each country.
Stage one encompasses planning and contracting, where we ensure the scope and nature of the distribution agreement is right, clear responsibilities, clear execution plan, legals, et cetera. Stage two is operationalization, including API connections, wet lab protocol training, implementation, and validation procedures. Stage three, sales and marketing activation, including marketing material support, team training, boots on the ground time, engaging with key opinion leaders in that market and other customers.
Then finally, stage four, execution and growth, scaling sales and optimizing conversion through time. Important to highlight that we've made great progress in getting these distribution partners and country deployments operational, but we're still only just at the start of unlocking the potential. With most at stage two, with sales and marketing activation, and still over 20 in stage one in planning and contracting to then progress through to operational sales activation and growth. That is where the recent Sonic Healthcare partnership sits in planning and contracting.
I'm pleased with the progress here across their seven countries and associated Federation companies. We continue to execute a staged approach with Sonic, starting with Federation companies in Germany and Australia.
I remain consistent with my previous messaging, that with the timing of operationalization and sales activation, we expect the new Sonic relationship to start impacting revenues in FY 2024. I'll keep everyone up to date as we continue to make progress with Sonic. Microba has world-leading technology for analyzing the human gut microbiome.
This is the foundation of the company, which enables us to deliver accurate and comprehensive testing solutions and build the data set to discover novel therapies at the forefront of this rapidly growing field of health and medicine. We launched our first testing product using this technology to consumers in 2018 to equip them with accurate information to manage their gut health through personalized dietary change.
Based on the growing demand that we've seen from healthcare professionals and how the clinical science has progressed, we've been working to develop and bring to market a test that can support practitioners to understand and use this information to support better patient management. After a significant body of work, we've launched that test to healthcare professionals in Australia just seven weeks ago.
This test combines diagnostic gastrointestinal health biomarkers together with Microba's advanced metagenomic gut microbiome markers. This targets a large addressable market in patients with disorders of the gut-brain interaction related to the bowel, which impacts over 30% of the population, together with individuals with a chronic health issue which may be influenced by their gut microbiome, estimated at over 20% of the population. This test represents a significant expansion to the total addressable market for Microba's testing products.
Following the launch in Australia, we expect to roll this new test out with our international distribution partner network. The new test range, MetaXplore, provides the most comprehensive GI testing solution available on market. This has been built hand in hand with clinicians, and I'm pleased to update that the response from the market has been strong over the first seven weeks following launch, with over 300 healthcare professionals from across Australia registering for referral access, initial patient referral and sales demand exceeding our internal expectations, and completing 12 regional roadshows that have reached over 140 healthcare professionals. In addition to growing testing revenues, those services also generate high-value data which enables us to discover and develop novel therapeutics, and we're making strong progress across our therapeutic programs.
For people new to Microba, this part of Microba's business has really taken shape since our ASX listing early last year. We're moving into the clinic and will soon be a clinical stage company. We recently saw the first FDA approval of a live microbiome drug, REBYOTA, by Ferring Pharmaceuticals. Microba is in a prime position at the forefront of the microbiome drug development field through our ability to pinpoint the therapeutically relevant biology using our data-driven platform to develop precision microbiome therapeutics.
We have a pipeline delivering compelling biology with distinct mechanisms, strong preclinical safety profile, and we've demonstrated the ability to scale manufacturing. Matching this, we have a strong multidisciplinary team with experience from across the globe and a range of valuable global partners supporting these development efforts.
The heart of all of this is our data-driven platform for drug discovery from the microbiome, underpinned by our world-leading microbiome analysis technology and proprietary databank. This platform is now generating multiple potent therapeutic candidates. This slide provides an overview of how our human-first data-driven platform works to go from our large proprietary population databank through to therapeutic leads, preclinical assessment, and into human clinical trials.
We have three key programs spanning inflammatory bowel disease, cancer immunotherapy, and autoimmune diseases. Our inflammatory bowel disease program is targeting a novel therapy for patients suffering from ulcerative colitis. With ethics approval received, we are now finalizing GMP manufacture and progressing to phase I commencement scheduled before the end of the financial year. Importantly, this will transition the company from a preclinical stage company into a clinical stage company, an important advancement in Microba's therapeutic development activities.
For our cancer immunotherapy program, we're targeting the development of a therapeutic to improve response rates in cancer patients receiving immune checkpoint inhibitor therapy. We recently received compelling first animal model results from our therapeutic leads, showing a significant reduction in tumor size, which I'll share more on in a moment.
For our autoimmune disease program, we're targeting 3 autoimmune disorders: lupus, psoriatic arthritis, and autoimmune liver disease. During the quarter, the program generated first positive results across multiple in vitro assays, which I'll also share more on in a moment. Particularly for those who are new to Microba, I wanna spend a moment providing a bit more detail on the opportunity for our inflammatory bowel disease program and lead drug candidate, MAP 315, as we progress into the clinic. This is an important opportunity for the company.
There are 7 million inflammatory bowel disease patients globally. Ulcerative colitis is one of the major forms. The existing drugs servicing these patients are focused primarily on anti-inflammatory and immunomodulatory activities to dampen the disease and control symptoms, but don't get to resolving the problems at the root cause.
As a result, more than 50% of those patients are unable to achieve sustained remission from this debilitating condition. This is where we have the potential at Microba to provide a novel and important therapeutic through addressing a key gap at the root cause of this disease, which is healing the gut lining, what's known as epithelial restitution and mucosal healing. We know this is associated with remission and reduced risk of surgery. The current drugs simply don't address this.
Our lead drug candidate, MAP 315, has demonstrated that it delivers potent epithelial and mucosal healing activity in preclinical models, and could be an important new treatment paradigm for patients living with this debilitating disease. This is a big market, which saw drug sales of over $7.5 billion last year. We're very excited for the upcoming phase I trial commencement scheduled before the end of the financial year.
For our cancer immunotherapy program, I want to provide a quick recap on our recent positive data. Again, here we are targeting the development of a therapeutic to improve response rates in cancer patients receiving immune checkpoint inhibitor therapy. This is a big market opportunity for the company. The global immune checkpoint inhibitor market is valued at over $30 billion, so a novel therapeutic that increases response to these drugs represents a substantial commercial opportunity.
The market-leading drug from Merck, Keytruda, generated over $21 billion in sales in 2022. Last year, the team identified multiple leads and perma-commenced preclinical animal model experiments in a hard to beat melanoma tumor model.
What we saw and recently announced was important as first results from our leads, which demonstrated a significant reduction in tumor size in combination with immune checkpoint inhibitor treatment. We engaged experts in the field, this model specifically was selected because it is refractory to immune checkpoint inhibitor response, therefore what we saw to be the best first animal model to represent that immune checkpoint inhibitor non-responder patient population.
These first animal model results are very encouraging, and in response to this, the team have now accelerated a range of preclinical work which are already underway, and we look forward to providing further updates as the program progresses towards lead selection and clinical development. Next, I wanna update on our autoimmune disease program, which also generated first results during the quarter.
For those that are new to Microba, our autoimmune disease program is in partnership with Ginkgo Bioworks. Ginkgo are a New York Stock Exchange-listed and Boston-headquartered synthetic biology leader with a two and a half billion dollar market cap, and they were also a strategic investor in our IPO. First results have now been delivered across multiple in vitro assays, identifying leads with anti-inflammatory activity, effects on gene transcription associated with immune modulation, and other biological mechanisms of relevance to autoimmune and other chronic diseases.
This is a two-year program which kicked off in May last year. The whole basis for this partnership and program was that the combination of Microba's unique ability to identify and isolate human gut bacteria associated with health, combined with the high-throughput microbial capabilities of Ginkgo, has the potential to create a powerful drug discovery workflow. This appears to be holding true based on these first positive in vitro activity data packages.
Overall, we expect the program to deliver a deeply characterized biobank containing therapeutic leads for multiple autoimmune diseases, which could represent a substantial commercial opportunity for Microba. Alongside our progress, we recently saw a major catalyst for the sector in November last year. We saw the first FDA approval of a live microbiome drug. Live microbiome drugs or live biotherapeutic products are an entirely new class of drug.
In just over a week, the field is also anticipating a second FDA approval from a company called Seres Therapeutics. These first two drugs are important to show a clear path to market, but are both what we consider to be first generation and based on fecal donor materials. They're also targeting an unmet need in recurrent C. difficile infection.
At Microba, we believe the big opportunity is in rationally developed microbiome-derived drugs, which can be manufactured at scale to treat millions of patients globally and address major unmet needs in chronic disease settings, and our therapeutic assets that we're developing are at the forefront of this. With a clear regulatory path and our transition into clinic, we believe this puts Microba in a strong position to develop these valuable therapeutic assets for partnering and out-licensing transactions.
I wanted to close out the therapeutic update with some recent examples of transactions in the inflammatory bowel disease and microbiome space. Just this week, Merck announced a near $11 billion deal to acquire Prometheus Biosciences. At the J.P. Morgan Healthcare Conference in San Francisco, which I attended in January, Prometheus was the talk of the town with the announcement of their compelling phase II trial results.
Why this piqued our interest is because there are a lot of parallels with Microba. Not related to the microbiome, but this is a novel inflammatory bowel disease drug. They have a human data-driven platform spanning inflammatory and autoimmune related programs. They received a very appropriately large deal with a large valuation on those assets.
This demonstrates the value the industry is placing on novel drugs addressing major unmet needs for inflammatory bowel disease with a compelling data-driven development base. At a much earlier stage of development, Nestlé entered into an R&D collaboration and license with Enterome to develop and commercialize microbiome-based immunotherapies for food allergies and for inflammatory bowel disease. In this case, at a much earlier phase of development compared to Prometheus, Enterome will receive EUR 40 million up front and is eligible for other milestone and royalty type payments. What I think is important here is that there has been a significant investment activity in the field, and this trend is likely to increase both on the inflammatory bowel disease asset front and on the microbiome therapeutic asset front as we see more FDA approvals.
Again, with a clear regulatory path to market and growing appetite, for next generation therapeutic assets underpinned by data-driven discovery methods, I feel Microba is in the right place at the right time and with leading technology, and now moving into a clinical stage of development. Overall, with our world-class team and technology, we continue to make significant progress in capturing this rapidly emerging market. I'll now close out, for the upcoming quarters by looking at the outlook.
We executed on all milestones from last quarter with some outperformance on partner expansion. We have a range of important milestones over the next 6 months which will advance the company and unlock value for shareholders. As at 31st March 2022, we had just over AUD 35 million in the bank.
Microba remains in a strong position to execute its growth strategy, including a robust runway to progress the company's therapeutic programs to key milestones. I'm very excited and optimistic about the company's future and, in particular, what will be unlocked for shareholders over the next 24 months. Simon, I'll stop there, and I'll hand back to you for questions.
Great. Thanks much, Luke. Just first question just on Prometheus. How does their database compare with that of Microba's?
What Prometheus is doing is not related to the microbiome. They've captured a whole bunch of immune-related data, multiple data points, through time to develop a data bank which they could interrogate to define targets, leads, and ultimately develop their therapeutics. It's in a different part of the body. What Microba has done is essentially the same thing but targeting the untapped biology that exists in the human gut microbiome. We actually see that the future care model would include both of these strategies. You need to address the host, the patient, and then you need to address the organisms and the microbiome and the systemic impact that they're having on the individual and also the local impact that they're having on gut barrier function.
Great. Thanks, Luke. On average, how many scripts per registered prescriber have been registered for MetaXplore?
That's not data that we've put out publicly yet. It's still early days. We've just launched that product. The key number for people, which is a leading indicator for the positive uptake of that product, is that we've had 300 healthcare professionals register for referral access and now begin referring. We'll keep the market up to date as that progresses.
Great. Thanks. Just on Sonic, and potential impact on revenues in FY 2024, is this with the initial countries, and what's the time to U.S. impact?
We've got to focus on stage one for Germany and Australia. That's very clearly defined. Then we've commenced and engaged in the discussions and planning for the other countries. I'll have to continue to keep everyone up to date with the timing around stage two, but very clearly and up here in the milestones, we've outlined that we intend for the first Sonic partners to be operational in the first half of the new financial year.
Great. When do you think the diagnostic business will be at a stage to fund the clinical programs?
We view it a little bit differently, Simon. We view the objective is for both businesses to become profitable in their own right. We've got a testing services business that is executing a path to profitability as we scale internationally with our distribution partners. Then on the therapeutic side, we're preparing these valuable assets with robust IP packages around them to transact and do out licensing and partnering deals with big pharma. Where those ultimately become profitable in their own right as we realize the value that we've developed from that therapeutic platform.
Great, thanks. Just on pharma, you spoke about the ability to partner with pharma companies. Can you tell us a bit more about what you're aiming to achieve with these partnerships and what a deal might look like?
Yeah, absolutely. I'll kick off by saying that we've seen multiple deals done in an early stage of development. We've also seen big deals for later stage assets like the Prometheus $11 billion acquisition example this week. Let's talk about the early stage deals of relevance to Microba now. This would be a licensed transaction to a top pharma company. The total value of that license based on deal precedence could be between, say, half a billion to one and a half billion, broken down into three key parts. An upfront, maybe circa $50 million, development, regulatory, and sales milestone payments, a royalty on product sale ranging from mid-single digit up to low double digit, depending on the stage of development.
We continue to build relationships with major pharma companies, and they're tracking our progress as we move into the clinic. With our platform, programs, assets, and the intellectual property that we are protecting, we have the potential to do multiple of these big pharma transactions through time.
Great. Thanks, Luke. Going forward, how do you think the company's focus will be divided between the diagnostic and therapeutic businesses?
We continue to make sure that we are resourced and capitalized to execute confidently on both fronts. We've got an excellent bench of leading healthcare distribution partners. We're intensively focused on executing the expansionary activities and seeing them succeed in market to grow sales volume and ultimately the realized revenues. On the therapeutic side, we are unwavering in our focus on these three programs and the investments that we're making there, which are delivering positive results. We believe we're in a strong position to execute confidently on both fronts, particularly with our cash balance.
Okay. Thanks, Luke. Are you seeking to expand in Asian countries in South, Southeast Asia as well as China?
They remain on our radar, but we have a lot on our plate already. Much opportunity to unpack with our partners in the United States and across Europe. That doesn't mean that we are blind to the potential there, and we have quite a large pipeline of potential partners, including partners for the Asia region. I do anticipate that we will execute new partnerships in that region. Timing, yet to be seen.
All right, thanks. You talked to Seres Therapeutics and their product. What's the next most advanced microbiome therapeutic after them, and what other phase III products should we be watching?
Yeah, that's a good question, Simon. For me, the one that I would be looking at is Vedanta. They just published the details of their phase II results this, just this week for their VE303 candidate. They're also targeting recurrent C. difficile infection like Ferring and Seres. They have a second generation consortia containing eight strains, and they expect to enter a phase III trial this year. They're actually a part of the MTIG, Microbiome Therapeutics Innovation Group, together with Microba, Ferring, Seres, and other peers in the field.
Great. Thanks, Luke. Just on the Ferring approval and upcoming Seres approval, et cetera, can you further explain how Microba is developing it differently and what that means commercially?
Yeah. There's been a progression, over recent years in leveraging the microbiome and its critical biology for drug development. This started with those first generation drugs, which leverage healthy donor fecal materials processed under GMP conditions to create a drug product, and that's what Ferring received approval for and what Seres has developed and is anticipating approval for. These are important for clearing the path through the FDA for this new modality of a live microbiome drug. These drugs are also serving a clear unmet need for patients suffering from recurrent C. difficile infection. However, there are limitations to what can be done with donor-based products, and the big opportunity, we believe, lies beyond infection and in chronic disease. What clinicians and pharma companies want are rationally designed biologics that can scale in manufacturing to treat millions of patients globally.
With Microba's precision data-driven approach, we've been able to pinpoint the key signals, organisms, and associated biology and develop next generation monoclonal microbial drug candidates that can then be manufactured at scale under GMP-controlled fermentation processes. We've also been able to target big unmet needs in chronic disease settings like inflammatory bowel disease, oncology, and autoimmune disorders, and that's where we believe the outsized opportunities lie. As mentioned before, I think that all of that feeds into the sentiment that we are in the right place at the right time and with leading technology and now pleasingly moving into clinical development.
All right. Thanks, Luke. That concludes the Q&A segment. I might just hand it back to you for closing remarks.
Thank you, Simon. Nothing more from my side. Very pleased by the growth that we've been able to deliver this quarter, and stay tuned for further updates as we continue to execute on the upcoming milestones towards the end of the financial year and, most importantly, our progress into a clinical stage company. Thank you, everyone.
Right. Thanks, Luke. Thanks all for attending.