LBT Innovations (ASX:LBT) – intelligent automation for the labCraig Foley
LBT Innovations Limited (ASX:LBT) Managing Director and CEO Brent Barnes talks about progress with the company's microbiology culture plate reading device APAS Independence, which uses artificial intelligence to read and interpret plates, additional analysis module development, sales pipeline and strategy.
Ortenzia Borre: Hello, I'm Ortenzia Borre for the Finance News Network and joining me from LBT Innovations is managing director and CEO Brent Barnes. Brent, welcome back.
Brent Barnes: Thank you.
Ortenzia Borre: Now LBT Innovations has automated the process of reading and interpreting culture plates in labs, speeding up the process by a factor of three over manual reading. Can you tell us more?
Brent Barnes: Yeah, sure. Our core technology is an AI-based or more specifically a machine learning algorithm that we've trained to automate the identification of various colony growths that exist on the agar plate and what that really means for busy laboratories all around the world, probably more than doing it three times faster, is that we're able to make a clinical diagnosis and we're able to remove those plates with no significant growth out of the workflow automatically, which means that the busy scientists and microbiologists don't need to look at those negative plates. When you look at the workflow and how many negative plates in there, it ranges from anywhere between 70% to 90% of plates and so that's a really meaningful addition for them to be able to provide efficiencies into their lab.
Ortenzia Borre: Thanks, Brent. Now to a question investors are asking every company, what impact is COVID-19 having?
Brent Barnes: Look, it's really relevant for us. When you think of who the people are doing all of the COVID-19 testing, it's our customers. So it's these busy pathology labs who are doing the testing, and we see a real dichotomy with respect to the pressure points for them. While they're inundated by COVID-19 testing, their routine testing is actually dropping significantly during this time because of the elective surgeries being put on hold. What's really important, though, in talking with our customers is that they expect really a tsunami of tests to come their way as things get back to normal. That's really where the conversation around automation, products like our APAS Independence, really make sense for them. So those discussions are happening at the moment.
Ortenzia Borre: Now to your sales and strategy, can you tell us more starting with sales?
Brent Barnes: Yeah, it's been a real focus for ours over the last 12 to 18 months to really get some global growth with respect to the regions that we're focused on, and so that's Australia, Germany, the UK, and the US and we're really pleased to announce late last year our first sale into Germany to Labor Wisplinghoff, the single largest lab in all of Germany. And of course we've already had a sale here in Australia to St Vincent's Hospital in Melbourne and so our sales efforts, while it's a slow sale cycle, we're starting to really get some traction in the key markets that we've been operating.
Ortenzia Borre: And could you tell us about the value proposition for labs?
Brent Barnes: Yeah. We spoke before about the triaging and removal of these plates with no significant growth out of the workflow, and principally that's what our instrument and technology does for them. When we look at this segmentation of the labs and our custom base, just in those four markets, we see a market opportunity of around 2,000 labs in those four countries, so an addressable market opportunity, and we're able to do that segmentation based on them generating a payback of within that two to three year time horizon.
Ortenzia Borre: And what can you tell us about new modules and applications?
Brent Barnes: Yeah. In the end of March, we announced our 510(k) admission to the US FDA for what's called our MRSA analysis module. A MRSA is the identification of staph, and it's a routine surface swab test that happens in all hospitals and labs all around the world. So this is on the back of our de novo application, obviously that we have FDA clearance with already. So we submitted that in March. We've had some dialogue now with the FDA and that's been a positive experience. Based on the kind of 90-day window that they kind of dictated as part of that process, we expect to have a clearance in the early part of the second half of this year
Ortenzia Borre: Now to financials. Could you provide a snapshot?
Brent Barnes: Yeah, so our quarterly was announced about four weeks ago or thereabout. So we finished the March quarter with $6.8 million into the bank. We recently also announced some funding from the South Australian government of one and a half million dollars. We've renegotiated the terms of that and we expect to be able to draw down on that within the near term, kind of going to the R and D tax towards the end of the year, we expect about a million dollars as another inflow coming into the company.
So overall we're not in a horrible position when it comes to cash, we burn about one and a half million dollars a quarter, that's historically been our burn rate. When we look at a go-forward basis, we're looking to implement some cost reduction programs, so the board's taken a 20% cut. There's some natural spend that we're just not going to be able to do. And we're looking really carefully around that to extend our runway, so that will come down a little bit on a go-forward basis.
Ortenzia Borre: And to the last question, Brent, is there anything else you'd like to add?
Brent Barnes: Look, it's a really attractive value proposition at the moment. The last 18 months has been building out that network across the four countries, so we've done that. We've really got through the regulatory clearances, and so what really we're looking forward to now is the FDA clearance I mentioned before but more importantly from a sales and distribution perspective is we expect in the near term to announce a distribution strategy and that is a really important catalyst for us to get some really positive brand equity with this potential distributor. It's going to be a complimentary product within their existing portfolio. So that will really change the dynamic of how we're able to generate some scale from a sales and marketing perspective on a regional basis.
Ortenzia Borre: Brent Barnes, thanks for the update.
Brent Barnes: Thank you.
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