Good morning, and welcome to Microba Life Sciences Investor Webinar to discuss the company's Q2 FY2023 activities report, Appendix 4C. On today's webinar, we have CEO Luke Reid and Senior Vice President of Therapeutics, Trent Munro. To ask a question, please submit them via the Q&A button at the bottom of the screen. We'll do our best to get through as many of those as possible. I will now hand it over to Luke.
Thank you, Ben. Good morning, everyone. I'm very pleased to share an update on our progress following the close of the quarter ending 31 December , 2022. I've also asked Trent Munro, our Senior Vice President of Therapeutics, to share some positive updates on our therapeutic programs and a major catalyst that occurred in the sector during the quarter. 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, and we believe at Microba that we have the best technology in the world to unlock this.
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 move past that. Quickly, for anyone new to Microba, our commercial model to capture that opportunity is summarized here. We deliver testing services globally to clinicians, consumers, and research clients together with market-leading distribution partners. Those services build our large proprietary data bank with consented and de-identified customer data. We mine this large data bank to discover and develop multiple novel therapeutics to ultimately execute big pharma out-licensing transactions on those assets to drive them through the later stages of clinical development and into the hands of patients. Microba is a data-driven biotech company. We are commercial stage and already delivering global revenues. We continue to deliver strong year-over-year revenue growth.
We've established global microbiome testing distribution partnerships with market leaders, driving a scalable global testing business. We're delighted to have added global medical diagnostics leader Sonic Healthcare to that group of partners during the quarter. We believe we have the most valuable microbiome data bank in the world, and from that data bank we've established three therapeutic programs with our first lead drug candidate targeting ulcerative colitis, progressing towards an outcome, an upcoming phase I clinical trial. This is a fast growth emerging market which we're capturing with world-leading technology supported by peer-reviewed publications and our two co-founders, who are leaders in the field. Underpinning all of this, we have a truly world-class team, including one of Australia's most distinguished clinical scientists, Professor Ian Frazer, inventor of Gardasil, the cervical cancer vaccine, which now does over $5 billion in annual sales for Merck.
First, I'll provide an update on the progress of our testing services, which is driving our global revenue growth, and then switch over to update on the advancement of our therapeutic programs. First, a reminder of our strategy for our testing services business. We're building a leading microbiome testing company through a globally scalable distribution partner model. That distribution partner model enables our partners to access our platform to launch and deliver a microbiome test powered by our world-leading technology. We've achieved some strong milestones in the quarter, which have solidified the foundations of our healthcare distribution and setting up for growth ahead. I'll summarize the key milestones and then dive into the detail. The first milestone for the quarter was the transformational new partnership with one of the world's largest and most trusted medical diagnostic companies, Sonic Healthcare.
Sonic is a significant addition to our bench of leading healthcare and pathology partners. Secondly, our major distribution partner, SYNLAB, further activated their rights to expand distribution across Europe and Latin America. Following through with signing, operationalization, and first sales achieved in Italy and Portugal. Finally, we had a milestone and set date in November for full feature launch of our new healthcare product suite. Through engagement with the TGA, a different regulatory classification for a component of the new product suite was defined, which required some additional time to document and finalize. We've now defined and are on track for a new launch date set for February, and I'll provide a full update on that new product suite when the product officially launches in February. I want to zoom out for a second and put those milestones into perspective of our strategy.
To succeed in building a leading microbiome testing company through our distribution model, there are really two core ingredients. Firstly, we need to have market-leading testing products that deliver strong value and utility to clinicians and their patients. Our new healthcare product suite that we're preparing for full feature launch next month will significantly advance the clinical utility of microbiome testing in a healthcare setting and expand the total addressable market for Microba's testing products. I look forward to providing a further update on these products in February when they launch. Secondly, we need to have broad and deep distribution for those market-leading products, that's what's outlined on this slide. We're making great progress here. Sonic is a significant addition to our bench of leading healthcare pathology partners. Now together, Sonic, SYNLAB, Genova, and G42 Healthcare provide us with strong access into major global healthcare markets.
Sonic with U.K., Germany, Switzerland, Belgium, Australia, New Zealand, United States. SYNLAB, broader Europe and Latin America. Genova, deeper penetration into the United States. G42 Healthcare covering the Middle East with the GCC region. Regarding revenue, I would reiterate our previous communications that we were not expecting the increase in distribution base to impact revenues until the H2 of this financial year and through to FY 2024. There is a process of firstly operationalization, including API connections, wet lab protocol training, implementation and validation. Then the sales and marketing activation, including marketing material support, team training, and boots on the ground time engaging with key opinion leaders and other customers. Also, the launch of the new healthcare product suite is another foundational ingredient for that revenue growth.
We're laying all of the right foundations aligned to strategy and towards positive growth for this financial year in FY 2023, FY 2024 and beyond. These partners now provide us with access into 35 countries. When I updated in December, we'd activated operations into five of those 35 countries. Now I can report that we've increased that to seven, adding Italy and Portugal. Growth lays ahead of us as we progressively operationalize and activate these countries to provide their Microba Power testing to clinicians and their patients. By the end of the financial year, we expect to have eight countries operationalized, which would mean that we've doubled our distribution base this financial year. Into FY 2024, we'll continue to progressively roll out across more countries, and this is when we expect to see the impact of revenues from the new partnership with Sonic Healthcare.
To provide a further update on our Sonic Healthcare partnership, we agreed some initial terms of the distribution arrangements late last year aligned to their shareholding, but preserved the details for subsequent negotiation. I'm pleased with the progress here over the last couple of months across their seven countries and the associated federation companies that represent those countries. We've defined a staged approach with their leadership, starting with federation companies in Germany and Australia. We're actively working through the details and contracts for those two entities to get distribution into motion as quickly as possible. We expect that the timing of operationalization and sales activation will mean that the new Sonic relationship really starts to impact testing volumes and revenues in FY 2024. I'll keep everyone up to date as we continue to rapidly progress in that new partnership.
I'm also pleased to update that we're gaining some momentum with SYNLAB, Europe's largest medical diagnostic company. Although we signed the original partnering agreement with SYNLAB in 2020, we were largely paused with them until we came out of COVID last year. We were then able to get some [traction] with them in [Spain]. In October, based on those positive results in Spain, they further activated their rights to expand across Europe and Latin America. Following this, during the quarter, a first group of new country agreements were then signed for Italy and Portugal. Based on the foundations laid with SYNLAB in Spain, these countries were then able to be operationalized with their Microba Power test quickly because we already had the central data integrations and logistics established through Spain.
As a result, we were able to achieve first sales in those regions just before the end of the year. With the integrations and the rhythm we now have with them, we have a solid foundation to keep progressively expanding into more countries and driving sales through those regions. Italy is a particularly important market. It's the third largest market in the world in terms of probiotic sales, and the SYNLAB team believe that this is a key European market due to the awareness of the importance of gut health and how this can translate into demand for gut microbiome testing. This expansion activity as a whole with SYNLAB further exemplifies their conviction and commitment to the Microba testing technology. I'll continue to update you all as we progressively sign, operationalize, and activate sales into additional countries with SYNLAB.
Switching gears to our therapeutics business, we're making strong progress across all of our programs. I'll hand over to our Senior Vice President of Therapeutics, Trent Munro, to run you through the positive updates from the quarter. Trent, over to you.
Thanks, Luke. I'd like to give an overview of where we are with therapeutics. For those people new to Microba, based on our world-leading technology and proprietary data bank, we've established a repeatable platform for drug discovery from the microbiome, which is generating multiple potent therapeutic candidates. This slide provides a summary of how we use that human-first data-driven platform to go from our proprietary population data bank into designation of therapeutic leads, preclinical assessment, and then moving into human clinical trials. We've used this to establish three key programs which we think the microbiome plays a key role. They span inflammatory bowel disease, cancer immunotherapy, and autoimmune diseases. On the next slide, you can see some important milestones for our quarter.
First of all, our lead candidate for inflammatory bowel disease, which is progressing towards an upcoming phase I human clinical trial, was progressed through manufacturing, all the way to encapsulated drug product. This sets us up for GMP manufacturing as we head into our phase I trial. Secondly, we received formal positive feedback from the FDA on our pre-IND briefing book and preclinical package. This is a critical piece of information as it helps with planning for our upcoming HREC submission for our Australian phase I trial, but also supports the information that will be required as we plan for our global phase II efficacy study in IBD. In the next slide, to zoom out, you can see our three programs summarized, as I mentioned, across those pillars of inflammatory bowel disease, cancer immunotherapy, and autoimmune disease.
Here we continue to update investors on each of our programs and what milestones have recently been completed and what's upcoming, and I'll take you through that. For our inflammatory bowel disease program targeting ulcerative colitis, with manufacturing scale-up and pre-IND advice complete, we're now moving on to HREC submission, GMP manufacture, and clinical translation, which we anticipate will be scheduled before the end of the financial year. I think importantly for Microba, this transitions us from a preclinical company to a clinical stage company, an important advancement in our therapeutic development activities. For our cancer immunotherapy program, we are targeting the development of a therapeutic to improve response rates in cancer patients receiving immune checkpoint inhibitor therapy. This is obviously a very important opportunity. We look at the market. The leading product, Keytruda, is now generating in excess of $5 billion per quarter in sales for Merck.
The Microba team has identified multiple promising leads, and we've commenced preclinical animal model experiments in a hard-to-beat melanoma tumor model. Those models are just completing now, and we expect to announce the results in February. If those results are compelling, it represents a significant opportunity for the company to accelerate that program further. For our autoimmune disease program, we are targeting three primary diseases: lupus, psoriatic arthritis, and autoimmune liver disease. This is happening in partnership with Ginkgo Bioworks. Again, for those who may not be familiar on the Microba call, Ginkgo are a Boston-headquartered synthetic biology leader with a $3 billion market cap, and were a cornerstone investor into our IPO. We're pleased to report this program is also progressing quickly.
We've now been able to send to Ginkgo multiple batches of strains from Microba that we believe represent interesting biology, and we're looking forward to the results. They have initiated our co-design screening program, leveraging the unique high-throughput facilities at their Ginkgo Foundry in Boston. Our early data suggests that we're seeing promising reproducibility, and we expect additional in vitro data to be available this quarter, and we look forward to sharing that update with investors. We just move to the next slide. This is what Luke referred to earlier. We're pleased that we had now witnessed a major milestone for the microbiome sector in November. That was the FDA approval of the first live microbiome drug. Live microbiome drugs or live biotherapeutic products are an entirely new class of drug.
On 30th of November 2022, Ferring's REBYOTA received full FDA approval for their first-generation donor-derived, enema-delivered live biotherapeutic product for the treatment of recurrent C. difficile infection, an unmet need for patients. Importantly, this represents a clear regulatory path to market for the microbiome sector and is critical for drug developers and pharma companies to invest with confidence to bring these drugs to partners, to patients. This approval represents an important catalyst for the sector and supports our path to market for Microba's next-generation microbiome drugs. Next quarter, we're expecting to see the second FDA approval to be granted to Seres Therapeutics for another first-generation donor-derived product. However, the difference is this will be an orally delivered live biotherapeutic also for treatment of recurrent C. difficile infection. Seres has already been granted FDA priority review, and they have an action date for approval of 26th of April 2023.
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. The big opportunity is really in rationally developed biological drugs, which can be manufactured at scale to treat millions of patients globally, address major unmet needs in chronic disease settings, and Microba's therapeutic assets are at the forefront of this. With clear regulatory path, our transition into the clinic, we believe this puts Microba in a strong position to partner and transact with Big Pharma on our therapeutic assets at the right time and realize the value of those for shareholders, drive them through the clinic and onto market with those partners to support critical unmet needs for patients.
With that update, I'll hand back to Luke to close out and summarize the milestones ahead.
Thank you, Trent. Overall, with our world-class team and technology, we continue to make significant progress in capturing this rapidly emerging market. We have a range of important milestones over the next six months, which will advance the company and unlock value for shareholders. As at 30 December , 2022, we had AUD 42 million in the bank. The company is in a strong position to execute its services growth strategy and advance the company's therapeutic programs. I just recently got back from several weeks in the United States, including the JP Morgan Healthcare Conference. The positive change in temperature with major pharma companies was very clear following the FDA approval from Ferring, providing a clear path to market for these new drugs. Genuinely feel we're in the right place, the right time, and with the market-leading technology.
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. I'll stop there and hand back to you, Ben, for questions.
Thank you, Luke and Trent. Reminder, if you'd like to ask a question, please do so via the Q&A button at the bottom of the screen. First question, this one will be for you, Luke. The Sonic Healthcare partnership is exciting. What are the next steps to get distribution into motion?
We have a clear program, which we call the Partner Success Program, that we are progressing through. The first component that we get in place is to ensure that the scope and nature of the distribution agreement is right. Clear responsibilities, fees and pricing, volume commitments, legals, et cetera. Once the agreements are complete, we'll implement our full Partner Success Program, which covers technical API integration for report white labeling and delivery, logistics and wet lab implementation, including protocol training and assay validation when they're taking on the wet lab, and sales and marketing activation, which is everything from marketing material support to, you know, training the team, and their sales force, and boots on the ground time engaging with customers.
That ranges from starting with key opinion leaders that will influence other customers, and actually just boots on the ground time going throughout the customer network with the Sonic team. This is all progressing well with Sonic, with a focus first on Germany and Australia for stage one. We'll keep people abreast as we continue to progress through that Partner Success Program.
Thanks, Luke. Another one for you. What can we expect next from SYNLAB?
With SYNLAB, we'll continue to drive sales success in regions that are already operationalized. Spain, Italy and Portugal are the focus there. There's a huge amount of growth to unlock in those regions. We've only really just started to unlock some momentum in Spain, and we've just kicked off with first sales in Italy and Portugal. We expect to then progressively sign and onboard additional SYNLAB country affiliate organizations. We have momentum. We intend to keep that momentum growing. I believe there will be a number of new countries to come on. I believe that we can achieve a lot with SYNLAB over the course of this year, and we'll keep everyone up to date.
Thank you, Luke. This one's for you, Trent. The Ferring approval and upcoming anticipated approval are both what you call first-generation microbiome drugs. Can you further explain how what Microba is developing is different and what that means commercially?
Sure. I think really importantly, there's been a progression over recent years in leveraging the microbiome and understanding its critical biology for drug development. This really started with the first generation products, which you were referring to, which leveraged healthy donor material, but they were able to do the manufacturing under GMP to create a more consistent drug product. That was the evolution, I think, really from fecal microbiome transplants. This is what Ferring has received approval for, and it's also what we expect Seres is developing should they get their expected approval in April. That clears the path in terms of what the regulators expect, and FDA being a key global regulator for what this new modality of a live microbiome drug looks like.
Importantly, these drugs are also serving a clear unmet need for patients, suffering from recurrent C. diff infection. That's a debilitating disease. However, there's limitations that what, of what can be done with donor-derived products. As you might imagine, manufacturing supply chains remain complex and the big opportunity lies beyond infection, we believe, and into chronic disease. What clinicians, and pharma companies want are rationally designed biologics and products, microbiome products, that we can scale the manufacturing to really meet the demand in that chronic disease setting, but potentially for millions of patients. With Microba's precision data-driven approach, we've been able to pinpoint key signals and organisms, and associated biology to develop a next-generation microbiome product, which is actually a defined single-strain monoclonal bacteria.
Taking that really means that we can have a much more defined process, a repeatable process, a scalable process. All of that can be done under the expected GMP controlled conditions in a way of doing a more traditional type of drug development independent of donor supply chain, which I think is really important, and simplifying manufacturing based on that single bacterial strain that we'll use. In that setting, we've also been able to target the large unmet needs that we see in chronic disease. We've mentioned that.
Inflammatory bowel disease, the opportunity for people who don't respond to modern oncology drugs such as immune checkpoint inhibitors, and also into that autoimmune disease setting where we know the microbiome's critical. The partnership we have with Ginkgo, the ability to do that advanced screening, I think, you know, there's really outsized opportunities that sit there for us, and we're excited by that. As we've mentioned, we feel we're in the right place at the right time, with the leading technology, and now, that move towards the clinic is the next step for us.
Thank you, Trent. I think another question for you, Trent. The animal model results for the immuno-oncology program, you said are due in February. What should we be looking for in those results?
We're all eagerly anticipating that initial set of studies that we've initiated here. For our cancer immunotherapy program, we're obviously looking at the ability of a microbiome therapeutic product to improve response rates in cancer patients who are receiving checkpoint inhibitor therapy. We've seen the literature point towards that. We've seen some potential signals from others. We think that immune checkpoint inhibitors already been a breakthrough for cancer care obviously. But there's still a large proportion, up to 70% depending on indication of patients who don't respond. There's really, I think the key observation is that there's this real difference in the microbiome between people who respond and don't respond to that type of immune checkpoint inhibitor therapy. That really says that the role of the microbiome is important.
We've seen early data from fecal microbiota transplantation. We've seen meta-analysis look at the impact of antibiotics. The opportunity for us here is really to identify the key components of the microbiome which drive that effect, and then that product can be an effective adjuvant therapy to improve response rates to immune checkpoint inhibitor. That's really, if you look at the opportunity there, as we mentioned, Keytruda, $5 billion a quarter in sales. There are a number of other checkpoint products that are doing very well in the marketplace across a whole range of cancer indications. We think we are well-placed to develop an adjuvant therapy there that sits on top of immune checkpoint, where we've got the ability to pinpoint the key biology using our data-driven therapeutics platform. We completed a meta-analysis.
We saw some really interesting data in melanoma around how we look at that and the role of the microbiome in response to immune checkpoint therapy. We've identified our leads in the lab. We've moved them into these preclinical models. We're using a challenging animal model that's refractory to those treatments, using a melanoma model, as I mentioned. If we report a clear difference, I think in tumor size, by the addition of our microbiome adjuvant on top of immune checkpoint response, I think this should be taken as an exciting result, and could lead us to develop an effective future therapy for patients. It'd be a validation of our data-driven platform and give us another opportunity, have a compelling lead into a chronic disease treatment, which we're excited about.
Thank you, Trent. So that concludes the Q&A segment. We will respond directly to those individuals whose questions we weren't able to get to. I'll now hand it back over to Luke for closing remarks.
Thank you all for your ongoing support. As I said before, I'm very excited and optimistic about the path ahead based on the foundations that we've laid over the last months. Excited about what will be unlocked for shareholders ahead over the next couple of years, but in particular, these milestones that we have outlined in front of us. Thank you again, we'll update you shortly.