With thanks to the 'research assistant', Perplexity.

Projects Microba is working on

1. MetaXplore™ testing

Objective: Commercialize gut disorder diagnostics.

Milestones:

• 195% YoY sales growth in Australia (Q2 FY25)
• UK Early Access Program launched (Q1 FY25)

2. MetaPanel™ testing

Objective: Launch metagenomic pathogen diagnostics.

Milestones:

• NATA accreditation and Sonic Healthcare partnership (Q4 FY23)
• First sales in Australia (Q3 FY24)
• US commercialization plans (Q3 FY24)

3. Inflammatory bowel disease program (MAP 315)

Objective: Develop MAP 315, a novel bacterial therapeutic for ulcerative colitis.

Milestones:

• Phase I trial completed (Q4 FY23)
• Preparing for Phase II trial with IND submission (Q1 FY25)
• Partnering activities for non-dilutive funding (Q2 FY25) 

4. Immuno-oncology program

Objective: Improve response to immune checkpoint inhibitors (ICIs) using microbiome-based adjuvants.

Milestones:

• Preclinical data showing tumor reduction in melanoma models (Q4 FY23)
• Dataset expanded to 5,500+ patients (Q2 FY25)
• Collaboration with PrOSPeCT study for clinical samples (Q3 FY24)

5. Autoimmune disease program

Objective: Discover microbiome-based therapies for lupus, psoriatic arthritis, and autoimmune liver diseases.

Milestones:

• Completed Stage 1 screening (Q4 FY23)
• Stage 2 functional screening 70% complete (Q3 FY24)
• 6 leads validated for anti-inflammatory/antifibrotic activity (Q1 FY25) 

6. Allergy program (with IFF)

Objective: Develop microbiome-based allergy treatments.

Milestones:

• 6 lead species isolated (H1 FY25) 
• Safety/manufacturability assessments completed (Q2 FY25) 

Actual and potential business partners

1. Sonic Healthcare (ASX: SHL)

Role: Distributor for MetaPanel™ in Australia.

Milestones:

• Launched nationally (Q3 FY24)
• Presented at Australian Gastroenterology Week (Q1 FY25

2. Invivo Clinical (UK)

Role: Base for UK microbiome testing.

Milestones:

• Acquired in Q3 FY24
• MetaXplore™ Early Access Program launched (Q1 FY25)

3. Ginkgo Bioworks (NYSE: DNA)

Role: Autoimmune drug discovery partner.

Milestones:

• 2-year discovery program (Q4 FY23)
• Stage 2 screening completed (Q1 FY25)

4. International Flavors & Fragrances (NYSE: IFF)

Role: Allergy therapeutic development.

Milestones:

• Lead species isolation (H1 FY25)
• Custom assays underway (Q2 FY25)

5. SYNLAB/Genova Diagnostics/G42 Healthcare

Role: International distribution partners.

Milestones:

• 14 countries operational (Q4 FY23)
• Brazil partnership (Q4 FY23)

6. Clinical Microbiomics

Role: Acquired Microba’s Research Services (Q1 FY25)

Milestones: Up to $3M potential revenue over 4 years

7. PrOSPeCT study (Omico)

Role: Immuno-oncology clinical data collaboration.

Milestones: 3,500+ samples collected (Q3 FY24)

Key observations:

• Therapeutics Focus: MAP 315 (IBD) and immuno-oncology programs are advancing toward clinical trials, with partnerships critical for non-dilutive funding.
• Testing Growth: MetaXplore™ and MetaPanel™ are scaling in Australia/UK, with Sonic and Invivo as key enablers.
• Strategic Exits: Research Services transferred to Clinical Microbiomics to prioritize diagnostics.
• Pipeline Depth: Autoimmune and allergy programs offer long-term potential but are earlier-stage.

Microba’s partner network spans diagnostics (Sonic, Invivo), biotech (Ginkgo, IFF), and global healthcare distributors, positioning it for commercial and clinical growth.

I'm rather proud of the below graph so kindly excuse the labelling errors.

I started reviewing quarterlies and now understand why the guy on HC was implying there was some cherry-picking. Anyway, nothing a bit of AI can't fix and it's forced me on a learning bender with Perplexity.

The first thing I wanted to understand was, is there seasonality at play? At this early stage it's believable. In which case H2 should organically kick up a bit all things being equal, which Luke seemed confident of.

The light shading is Invivo UK, post acquisition.

Invivo Healthcare

Towards the end of 2023, Microba bought a 2007-established UK business, Invivo, for $12m plus $8m in earnouts. The acquisition was funded by a $20m Microba capital raise and dilution equivalent to about 25% of pre-existing shares.

Invivo had H1FY24 revenue of $4.45m and was self-funded and cash-flow positive. For comparison, Microba had Australian revenue of $3.6m for H1FY24 (and was not cash-flow positive).

In H1FY25 the combined entity had $8m in revenue. So, no net growth yet. Underneath, it appears that Aust has grown while UK revenue shrunk a bit. There appears to be an explanation in the Microba strategy.

Reasons for the acquisition

According to Perplexity:

• Strengthening Therapeutic Development: Invivo's expertise and proprietary technologies are expected to complement Microba's existing programs, particularly in inflammatory bowel disease (IBD) and immuno-oncology.
• Additional R&D resources
• Market Positioning.

I also thought it was about selling MetaXplore and MetaPanel into the UK. 

The existing business

After forming in 2007, Invivo self-funded their growth and have an established brand of ExologiX supplements and tests that are more broad-ranged than Microba’s, and reflect a slightly different culture. They are a B-Corp, and some of the products, the packaging and even the staff appear to be coming from the naturopath end. They might have been more local-market focused than Microba, who want to go global and like the word ‘precision’.

Invivo maintain their own branding and continue to sell their supplements, which is a larger part of their business than testing and grew 9% in the last quarter on PCP.

However, since being taken over by Microba their testing sales have gone down roughly 10%.

Repositioning for growth

Luke (Microba CEO) says that Microba has a strategy to let go of less productive UK clinician avenues while also carefully introducing the Microba testing products. They have just doubled the sales team and presumably there might be some culture shift being asked of Invivo.

Luke said that they have done some 'early-access' testing of Microba products that went well and are now confident to launch more broadly.

So Microba-brand growth in the UK will be something to watch.

I thought I'd add some points about the Microba story after watching a Sharewise interview with Luke the CEO. It covered largely the same territory as Andrew's far more engaging Strawman interview that @Scoonie has posted notes on.

The interviewer was not inspiring, but Luke powered through and some of his points grabbed me, especially after rewatching the Strawman one.

Microba are at the forefront of microbiome genetic testing and derived therapeutics trials.

A golden goose

Microba's goal is to prove itself to be a 'golden goose', and then, once proven, sell or partner for the eggs or even the goose. They have no intention of being a late-stage drug developer, they will look to partner once they have 'de-risked' any drug candidate ideally after stage 2 trials.

So, they have both a growing testing business, and the potential for golden egg therapies derived from the genetics databank that their testing allows them to develop.

Microba's drug development pathway may be clearer

According to Luke, Microba has in it's favour:

• Their own genetic databank developed through their testing business
• The lead on microbiome genetic testing and drug candidate discovery, and academic respect in the field
• Well established partnerships with, and key shareholders in, Sonic Healthcare (to help them roll out testing) and Ginko Bioworks (helped them discover the most promising drug candidates from their databank)
• Therapeutic candidates derived from healthy humans

On the last point, Luke noted that their drug candidate microba are derived from the microbiome of healthy humans (and observed to be less-established in people with some chronic illnesses). Because of this, he suggests they are less risky than novel exogenous drug candidates, and it would be easier to recruit trial volunteers for.

Of course, that doesn't mean that they will succeed in creating a therapy, it just means that their trials may be easier to set up.

What to watch for

Continuing organic growth of the testing business. Testing revenue increased by 50% organically last YOY, and they also acquired a UK business for a total of 125% revenue increase. They plan to win small markets, like 'Sydney', and then replicate a winning strategy in each small market. So they need to see repeat ordering and evidence of clinician buy-in and organic growth within markets as well as market expansion.

An acceptable balance sheet. They do not intend to force an early breakeven. They want to keep growing to maintain their market lead, and also invest in therapy development and trials.

Phase 2 trial announcements.

They have a solid team, great partners and a clear plan but a way to go before they prove they have a golden goose.