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.