MAP released their quarterly this morning followed by a webinar run by CEO Luke Reid.

MAP categorises itself has as having three areas of business:

1. Growth – faecal test kits, primarily the Metaexplore test sold in Australia and the UK.
2. A base Supplements & Strategic Partners business
3. Legacy research

At (1) is the hope of the business and where the meaningful revenue comes from. At (2) revenues continue to decline. At (3) is going to zero next quarter, however Luke holds out hope there will be some kind of a Pharma deal with the early stage research MAP have done to date. Maybe, maybe not.

As of Sept 26 qtr MAP had $14m of cash, with another $3m R&D rebate expected before the end of the year.  

For the last 7 quarters cash flows losses have been:

March 24 - $4.2m

June 24 - $3m

Sept 24 – $5.5m

Dec 24 - $2.5m

March 25 - $4.5m

June 25 - $6.3m

Sept 25 - $5.7m

Some of the losses, particularly the earlier ones were largely due to their legacy R&D program which will go to zero this calendar year.  

MAP are aiming for “Regional Breakeven” this financial year and “breakeven in the next few years”. To do this would mean selling 24,000 tests per year and they claim they will achieve this, with a Q1 FY26 exit run rate of around 20,000 tests.    Just what ‘Regional Breakeven” means in dollar terms is unspoken.   Company level breakeven predicted “in the next few years” and includes a plan for entry into Europe and the USA markets.

There is every possibility there will need to be another capital raise in the next 12 months.  A tough business. Maybe the best thing would be for Sonic to buy the other 80.1% they don’t own and put MAP out of its ASX misery. 

The scene is a desert waste land in Texas, two horsemen slowly ride further into the sparse wilderness. Their only company is sand, rocks, a cactus plant and the blazing afternoon sun. All that can be heard is the soft voice of Gene Autry crooning “Tumbling Tumbleweeds” to a piano accordion accompaniment.  On the trailing horse, the shorter swarthy man with a ponytail speaks:

Kemosabe, I have an idea.

What’s your big idea now Tonto?

An idea to make us some money.

Oh right make money eh! If wasn’t for me you’d be back at the kids summer camp - with tomato sauce painted over your pointy nose, all togged up in that phoney Red Indian gear. Getting photos taken with kids for 10 cents an hour.

Well, we have all got to earn a living……….

Earn a living? Your not even a Red Indian. Your lot are from bloody Calabria. If it was not for me introducing you to this movie racket you might not even be at Summer camp. You’d be back flipping dough making pizzas. And I’ll remind you: the stuff you go up to making pizza’s was a bloody scandal.  I mean who presses their dick into the pizza dough and serves it up and thinks its funny?

 Well Kemosabe, there was some method to it. You know how on meat pies they sometimes put a little pastry symbol on top so you can tell what sort of pie it is.  Well that was what I was kind of doing with the meatasaurus pizzas. You know, just so customers could easily identify it was a meat one.

They put the symbol on the top of the pie because you cannot see inside the pie! Hardly difficult identifying a pineapple from a tomato pizza is it? You numbskull! You want to know why you pressed your cock into the pizza dough? Do you want to know why! Because you a werido Tonto, a bloody weirdo! 

And once word got around what you were doing, the only pizza orders that were coming in were vegan. I’m not surprised.  And you didn’t have to serve up an impressed pizza to the Police Chief either! You’re a sick bastard. A bloody sick weirdo bastard Tonto. No wonder you were sacked and run out town.

Well that’s all in the past. I don’t want to………..

Yeah well, the movies are not selling and non-one is listening to our stupid radio program anymore!  What the hell are we going to do? The kids of today only want to watch computers, play Grand Theft Auto and any spare time after that they just watch porn and jerk off.  When I was younger it was just us boys and Becky Bang Bang, down by the back of the old woodshed..…. 

Err Komasabe………I know we are all alone in the middle of the West Texas desert, but still I think its best you don’t talk about that part of your life. 

Well, we’re broke! Things are getting desperate round here. We’re so broke when we get into town I’m not even going to be able afford to take me pants to the laundromat. Reminiscing about Becky has caused me………... (mercifully the voice trails off and is inaudible).      And my Strawman membership fees are due soon. And I have FA Strawman dollars, cos no one presses “like” for Scoonie anymore. I don’t think they get the gags.

No Kamosabe its not that. Strawman members have standards, and taste. 

Standards eh….. you know that bloody Sam Goldwyn at MGM, he robbed us! Bloody robbed us! That money hungry fat J…

Kamosabbe, you are back on one of your irrational rants again. We didn’t ever work for MGM studios. Not a single frame. Never even stepped on the lot.

See that proves it! That greedy prick Goldwyn wouldn’t give us a contract! Miserable fat keg-on-legs. Wouldn’t even give you a cold! That F%$#&% K…

Kamasabe, enough!  Now, lets focus on making money, so you will never have to work for an imaginary studio boss again. Here’s the idea:

Listed on the ASX is a company called Microba Life Sciences (ASX: MAP), and the good thing is the shares are on the bones of their arse. They are down below their recent capital raise price of less than 9 cents and well below their 45 cent 2022 float price, and February’s price of 32 cents.  

What do they do?

They are an early stage biotech whom specialise in gut health. They are scaling back their research side and focusing in on the commercialisation of two faecal tests, Metapanel and Metaexplore. These are sold through mainly GPs here in Australia and Britain. They have a tie up with the listed Sonic Healthcare (ASX:SHL) and Metlabs, the world’s largest biotech lab company. Also SHL own just under 20% of MAP, and have also participated in this month’s capital raise.

Faeces research and testing yousay?

Yes, mainly testing, patients pay MAP for the test kit, the patient carry out the sampling at home and SHL does the lab testing.

Oh, only a small sample then. I’ve had to eat a lot of shit in my life, so I suppose I could still consume a small amount if I had to. I could probably just eat a small plate of shit, with maybe some beans followed by hot coffee.....

No! No! Kemasabe, you haven’t got to eat faeces. Its just a test they are selling ….. you take a sample and send it to the lab. 

Oh Right….

Look, all we have to do is to buy the MAP shares - it has many of the hallmarks of a winner. And the good thing is the market hates it, and Phil King at Regal Funds Management has not invested in it either, so it is bound to be a success.

Yeah, well we all know what an all-round loser Phil is.

Look this whole gut health thing is like the human brain - science really doesn’t know all that much about it.  Yest there are millions of people out there who suffer from intermittent or chronic poor gut health. This is a huge addressable market, MAP talk about a near term addressable market of around $6b. Just numbers I know, but the potential market is very large and for all their stumbles MAP are a leader in the field, at least in Australia and Britain.  According to the CEO, MAP have the capacity to do with relatively low capex, 1 million tests per year. Currently they are working at an annual rate of 12,500. So, plenty of room to grow. Their technology appears to be superior to the existing PCR testing , for example MAP claim they can pick up 175 pathogens versus the current standard of 25.

MAP claim they can get to cash flow positive in Aust and Britain (not company wide) with this latest cap raise ($14.5m) by the end of FY 2026. It is not out of the question, and even if they get close it is likely the market will give them a re-rate for just continuing to grow at pace.  It is currently selling at the cap raise price of around 9 cents but could conceivably in 9 – 12 months re-rate to around double. 

Essentially they are now going all out for sales on their test kits in Australia and Britain. The research side of the business has been scaled back. They realise that they need income, and as we all know it is presently a very hostile world for biotechs without income. 

Mmmmm, juicy.….

And look Sonic has just over 19% of the company. They are Australia’s leading pathology company and are number 2 or 3 in England, number 2 or so in Germany and number 4 in the USA. Sonic are always on the look-out for ways to increase market penetration and get those labs working more efficiently.  I don’t think they are not going to let MAP fail - at least not while it is represents a further window into the growing market of gut pathology testing. So even if MAP don’t reach the targeted sales and stumbles, I suspect Sonic will step in and take MAP over. I don’t think you will see MAP go to zero.

Right, but SHL having 19% is a disadvantage, they effectively have their foot on MAP, no one else can take them over? 

True to a large extent. However better to have someone who is dedicated to the business success and knowledgeable in that ownership position. Other owners are Perennial (14%) SA Microba Holdings Ltd (an investment vehicle for Directors and insider mates) (7.5%), Thorney (6.7%) and Mercer (5%). But as I said those funds and owners are not going to let MAP slip away to Sonic for nothing, even if things don’t turn out as planned.

What are the financials?

In the quarter to 31/3/25 they lost $3.8m and 9 months to the 31/3/25 $11.5m (ex govt grants of $6m). They had $12m in cash as at 31/3/25. So their post raise cash will be around $25m. So they have about 18 months to turn it around. To get the UK and Australia to operational cash flow break even they need to double the number of test kits sold. This looks as though it is achievable.

Go back and listen to the July Strawman meeting. They lost $2.2m in the June 2024 quarter and the Mr motor-mouth CEO was intimating cash flow breakeven was not far off and they were going after market share at the expense of profit. All very tantalising – but they are losing MORE now 9 months later!  So explain that pastry-dick? 

Well I can’t, except to say, when have you seen one of these rollouts in the medical field like this go completely to plan?  If they can get sales up, as they have been the inflection point will come.  Look, everyone one else has given up on them as evidenced by the share price. What I am saying is don’t write them off just when things are getting tough. Sonic hasn’t. That’s our opportunity.

Maybe, tell us about management

The directors are a credible group, deputy chair is Ian Frazer a world renown immunologist another biotech professor and the chair is a Pasquale Rombola an ex investment banker. The CEO is Dr Luke Reid a Phd in biotechnology, a smart and articulate young fellow of about 35 – as you know, you can hear him on Strawman in the July 24 interview.  What the company needs is someone who can drive sales.  I would say, I think if Dr Reid cannot get some traction in the next couple of quarters he will be replaced.  

 What else can go wrong?

The key risk is they just do not deliver on their sales ambitions. Look biotech is a really hard business, particularly where you are selling something that is new. Just look at 4DX (ASX:4DX) superior science but are they having a real tough time of getting those sales.  Or look at Protonomics (ASX:PIQ), Bcal (ASX:BDX), Rhythm Bioscience (ASX:RHY) and Pacific Edge (ASX:PEB) - all blood testing companies in the investor reject bin.  

Each of them has their own particular problem/s, but what unites them in collective catastrophe is they are all pre-revenue.  In contrast MAP has a decent product and sales, has new capital funding as of this month, has a functioning sales organisation with a foothold both the Australian and British markets, has strong business links with Sonic and is run by competent people.

Nothing is certain, but there is a strong probability the cap raise ambitions will be delivered on. And MAP is on sale. If you buy now, you could just get a very decent New Financial Year bounce in the share price come Tuesday.  Note, however the SPP shares (around $2m worth assuming all entitlements are taken up) will be available for trading on the 14/8/25, and this may weigh on the share price.   

And MAP is just a sardine with a market cap post the raise of around $55m (at the raise price, and a current market price of around 9 cents). And it is nice illiquid for little tackers like us. Currently no funds can buy this one on market. Its unpopular now, but you have to go where the puck is, not where it has been.

Right Trusty Scout, Microba(ASX:MAP) is a BUY.   Just as well I thought of it. Lets get a move on, the tax loss selling period will end on Monday. We will need to get to Colby by nightfall. At Colby there is mobile reception, even for the shit Vodafone service we have.  Hi yo Silver!  

So I am "Trusty Scout” now am I?  You really need treatment for your bipolar disorder. You f&*%ken egomaniac on a horse.  

Microbia Life Sciences (ASX:MAP) is a microcap who’s main products are two gut health testing kits Metaexplore and Metapanel. From a patient faecal sample MAP claim to be able to identify and help propose solutions for a host of gut related illnesses.  It has been a long slow slog for MAP and it is yet to reach cashflow breakeven.  No doubt the reason for today’s announced capital raise, and a recently precipitously falling share price.    

Despite some early successes MAP has yet to reach anything like the testing volumes they need for profitability.  In part I suspect this goes back to GPs limited understanding of gut health problems and skepticism of the tests and solutions offered by MAP.  You might think the dietitian/naturopath and “allied health professional practitioners” would be a more successful sales channel. However this doesn’t seem to have gone too well either.  Maybe a significant barrier to further sales of the tests, is the reluctance of people to poke a little plastic rod into their own shit to obtain the necessary sample.

We know this because the Australian government sends out free bowel screening tests to citizens between the ages of 50 and 74 and typically gets a return rate of only around 40%. This is despite bowel cancer being the second leading cause of cancer after lung cancer and the test kit is delivered to your door free.  Potentially, for very little effort you may avoid a grisly death or in many cases being forced to have a plastic poo bag strapped to your chest for the rest of your life. Yet the majority of Australians refuse to take the test.

As a counterpoint, people will endure all sorts of discomfort when it comes to their personal appearance.  Including botox needles to the lips, all sorts of painful surgical enhancements, ripping hair from almost any part of their bodies and tattoos from the top of their arse cracks to just about anywhere else.   But they will not undertake faecal testing.  

Whilst in the last decade the incidence of on line Shit-Posting has skyrocketed, Shit-Poking remains very unpopular. This is curious in itself, with so many in society behaving as if what comes out their rear end doesn’t stink, you would think for most faecal sampling would not be an unpleasant activity.

MAP CEO Luke Reid who was a Strawman guest in July of last year.   He is likeable and slightly serious young chap, as well he might be. He is dealing with serious shit. 

Notes from interview of Microbia (MAP) CEO Luke Reid (LR).

What is MAP about?

MAP’s  vision: “In time we will be routinely measuring organisms in the gut and this will lead to therapeutic drugs.  This is what Microbia is about”.

Founding vision is about both microbiome diagnostics and therapeutics. Human genome is difficult to modify is hard  Microbiome much easier to do.

We do R&D and try to deliver value immediately from the technology.  Data bank had to be built by MAP – started back in 2017. People were demanding to understand their gut health in a scientifically rigorous way however typically the treatment prescribed was only a dietary modification.

MAP does:

1. Diagnostic – Metapanel - gastrointestinal pathogens
2. Therapeutic – Metaexplore. MAP looked at what is the biggest unmet needs. Hence MAP have 3 core programs

• Inflammatory bowel disease
• Oncology
• Autoimmune conditions.  

Test results are only useful if you can intervene with a therapy – hence the need for Therapeutics.

Therapeutics will drive the testing – ie testing no good if you can’t intervene to assist the patient.

What is MAP disrupting and how does MAP differ from competitors? 

 QPCR tests are the current standard of care. 95% of organisms are in the gut - this is a large and overlooked market MAP is addressing. Pathogen testing are done by Metapanel. 

In Gastrointestinal conditions: The first question is there a pathogen? Current standard testing only identify about 20% of gastrointestinal pathogens. QPCR test panel only picks up around 25 pathogens. MAP picks up 175 pathogen targets.  

MAP is doing next generational DNA sequencing. 

LR described MAP’s “unfair advantage” that being the genesis of MAP. This being the work of Professor Philip Hugenholtz and Professor Gene Tyson Gene. Both are among the top 1% of cited researchers in their field. Both came back to Australia for the US to the Uni of Qld – this is where MAP originated from.

How does work ?

From a fecal sample extract the DNA.  A QPCR test will take the material and amplify al little fragment of what you are trying to measure. this means there are limitations to the number you can do or “multiplex” – limited to about 25, though are getting better.

MAP is next generation DNA sequencing – MAP sequences all the DNA. Then it becomes a computational challenge. This the basis of Metagenomics that Phil and Gene pioneered in 2004. All patented + software trade secrets (software difficult to protect). “We see more than everyone else around 30% + more accurately”. This advantage will not be held forever. Everyone is trying to get to the biological truth. Others coming after it – however MAP is ahead and got there first and winning markets.

What is the revenue model?

• Firstly: deliver a non-diagnostic test. This is a test that gives results but no diagnosis. GP then at least has the information. This was used to help build a data bank.
• Now MAP have the diagnostics.
• Research institutes have come to MAP and MAP partnered with them – this resulted in a couple of $million /yr + MAP got data.
• People will pay out of pocket + MAP has a reimbursement plan focused on North America.   “MAP want to be the Natera of the microbia business.”  (From website:  Natera™ is a global leader in cell-free DNA (cfDNA) testing, dedicated to oncology, women’s health, and organ health. of the microbiome business”).

Who are the customers?

• Metapanel (cost $345) then $520 for a further Metaexplore test, after a pathogen is ruled out. 
• Traditionally patients will end up being diagnosed as having: “Irritable bowel syndrome” a diagnosis of exclusion. Another way of the GP saying: “I have no idea what is going on”. After 5 years 50% of sufferers get no resolution.  
• Metaexplore – needs referral by GP. Currently an out of pocket cost. MAP is working to get its tests as a Standard of Care and reimbursed.
• Irritable bowel syndrome, has 3 elements: Messaging to the brain + Condition of the lining of the gut + Structure of the biome. Biome is where Metaexplore comes in.

What is the process with the GP if you present as a patient with a gut issue?

Currently you get a Doctor referral – then you pay – then MAP sends kit (or gets kit from Sonic office) - sample goes to MAP lab. MAP do the tests in Brisbane.  Map also has a lab in the UK.

What is the current capacity of the test lab?

MAP want to grow to 1 million tests. Current lab can flex up to 1 million tests. Have ability to further scale at low cost. Main cost is in the equipment – MAP have the only Aluma(?) machine in Qld.  Qiagen and others come to MAP as thought leaders when testing new machines.

What is the biggest costs?

R&D is MAP’s biggest cost. Last quarter completion of Ph1 for MAP315 + large program with Ginkgo Bioworks (located Boston + NYSE listed) accounted for large part of spend.  MAP (had 10 -15 people in Boston) with Ginkgo worked on a data driven platform then honed-in on 200 organism that they thought might have impact on autoimmune disease. Ginkgo did it in Boston – they had 3 million data points and got 6 therapeutic leads.  Finished at end of this financial year.

What next with Ginkgo?

Ginkgo – the results conversation with big pharma is active. When is the right time to partner? Currently looking at.  MAP is moving the program along and are putting the results into animal models now to test.  Gingko – continued active engagement in what we do next together with maybe with a Pharma partner.

Does MAP compete with GSS in pathogen testing?

MAP does not compete with them.  QPCR – GSS play into this space with their 3 base technology. GSS do this QPCR test better. Clinicians can utilise GSS testing – then go to Metapanel. If MAP covered by an insurer (planned by MAP in time) then just go straight to MAP’s Metapanel .  

Luke believes the market will eventually go to next generational DNA testing as provided by Metapanel.   LR gave example of testing expectant mothers for genetic abnormalities. Once there was a test for specific mutations, now a test is done that covers a range of genetic abnormalities at once with next generation DNA testing.

(Scoonie comment: GSS raised $30m in June 24 to launch their FDA approved pathogen test in the US. Luke Reid insinuated their product will be superseded). 

Lack of awareness of GPs? 

Leveraging credibility of world class partners – Synlab (Europe’s largest medical lab testing) + Sonic (20% stake) – both key partners.

Targeted marketing:  KOLs MAP working hard on these + publishing. LR believes this will then set up MAP for reimbursement and as a standard of care treatment.

LR indicated MAP had a unique opportunity – such is the deficiency in Standard of Care that sufferers will pay out of pocket. Large amounts of real world evidence data.

How much will you eventually get for your products?

Metaexplore, currently - $500. However when they get to North America will charge more. Metagenomic test for sepsis in blood – got priced in the US at $2,000 per test. Expect US pricing will be between $500 and $2000.

LR asked about cash burn generally:

A balance is needed between growth and adoption and cash burn. This is a key Board discussion going into each financial year. We are very careful. MAP is proving it out in distinct markets – eg Metapanel is just being tried out in the Sydney metro market.  Once get this market right, MAP will replicate this elsewhere.  Also have heavy weight partners – logistics not needed – have Sonic o board.  Sonic also has significant sales people -  but need to control own destiny.

Sensitive question asked (as best it could be) about will be cash flow positive?

In relation to the cash burn and a financial inflexion point LR said: “We can see it”.    Decision MAP has to make: – run at breakeven quickly or go for growth. Don’t want growth at all costs: “Somewhere in the middle”. 

If not careful MAP could miss US opportunity and create mediocre business in Australia if it goes for cash flow positive. Australia is the test market.  Where we can we leverage non-dilutive funding or work with a Partner.

AP asked, what have we missed?

LR: Where does it all go? What does success look like? In a position to be the first company to medicalise microbiome testing – this should be a “ginormous opportunity”. Cited two large US listed biotech companies that were bought out.

On therapeutic side – develop and validate drug products – full clinical trials – attractive assets for big Pharma.   MAP thinks we have a goose that lays golden eggs – have some eggs in our hands – MAP now need to demonstrate they are golden eggs and Phase 2 results will do this. Cited recent sales of inflammatory bowel drug. Prometheus with a Phase 2 drug sold to Merck for $10b. This was for a 40 person company.  

The opportunity is huge.

Comment from Scoonie (for what it is worth):

MAP appears to be putting some genuine science around gut health, in an area of medicine still loaded with quackery . It will be a long haul.  

It might take 3 to 4 years before investors see the sort of multiple of current market cap returns most are expecting. MAP has a m/cap of around $70m and for the 12 months to the 30/6/24 lost $17.5m.  Cash sits at $21m. No doubt there will be cap raising/s along the way.   

However there do appear to be a number of very strong positives:

• Looks like world leading (for now) technology + first mover advantage (as much as I dislike that term),
• Tie ups with ASX listed Sonic (20% shareholder) + Synlab and Ginkgo (3% shareholding)
• Luke appears a very competent CEO backed by some smart people.

Nothing is certain in this life, however for the patient you could eventually do well out of this.