LBT Innovations Limited (ASX:LBT) Managing Director & CEO, Brent Barnes discusses LBT's automated plate reading device for use in laboratories and how it solves a number of key problems, regulatory clearance in the US and the size of the market opportunity.
Anna Napoli: Welcome to the Finance News Network. I'm Anna Napoli. And joining me now, from LBT Innovations (ASX:LBT), is Managing Director and CEO Brent Barnes. Brent, welcome to FNN.
Brent Barnes: Thanks, Anna.
Anna Napoli: First up, can you start with an introduction to the company?
Brent Barnes: Sure. So LBT Innovations (ASX:LBT), is publicly listed on the Australian Stock Exchange. We're a medical technology company that's focused on delivering an artificial intelligence platform within the clinical microbiology space. So, we've got an early commercialisation product that we're selling into busy laboratories around the world, which automates manual processes in a lab.
Anna Napoli: And Brent, before we talk about your key product, you mentioned laboratories. What's the current state of labs?
Brent Barnes: Yeah. So labs I think are, more from a resource perspective, is a challenge globally. And what we're seeing is that microbiologist is a highly skilled scientific resource that do a lot of the manual work and scientific applications within labs. And so some of the data points, for example, is in the US at any one time, 6 per cent of microbiology jobs are vacant. So it's not just the developing countries that have this shortage of resources. It's very much the developed markets, such as the US, Australia, Germany, and the UK that we're seeing as a trend. So we're not getting enough microbiologists through the educational system and into these labs, which creates a labor shortage, and really, from a technology perspective, is right for automation.
Anna Napoli: Now turning to your automated plate-reading device, can you tell us more, starting with the key features?
Brent Barnes: Sure. So the automated plate assessment system, we call it APAS, is a technology which takes a photo of the Petri dish, and we've trained the machine learning algorithm to interpret real-time what's on the image. The benefit for our customers is that rather than a microbiologist needing to do this manual screen, we have an instrument now which reviews all of the plates and removes those negative plates out of the workflow. 85 to 90 per cent of all the plates going through this manual process are negative. So it's great for the patient, but a very manual, routine application that we're able to now triage those negatives out and really just leave those positives for the microbiologists to do work up on.
Anna Napoli: So where is the device in terms of regulatory approvals?
Brent Barnes: So today we announced an important milestone for the company. We received FDA clearance on our APAS Independence instrument, and this was a really key milestone because what it does is it unlocks the largest single market globally being the United States. It's a Class 2 medical device for the US, and there is no other direct competitor from a technology sense. So from a regulatory perspective, we're now through that barrier. Opens up the US market for us.
For Australia and Europe, it's a Class 1 medical device, a self-certification process. We've sold our first instrument already here on Australia, and we've started the commercialisation process already within Europe.
Anna Napoli: That's a great result. So what's the plan in terms of rollout in the US?
Brent Barnes: Ahead of getting this regulatory clearance, we actually did some outbound lead generation activities starting a few months ago, and the idea there is there's 5000 odd target labs that exist in the US, and we think about 1500 of those could benefit from our technology. So our challenge is trying to find all of those organisations and getting to the right person. And so this lead generation program has identified for us a number of category a, b, and c targets. And so we're actively calling those. There's some key conferences coming up over the coming months, and we expect to make some strategic placements for the purpose of evaluation to procure over the coming six months.
Anna Napoli: Can you give us a sense of where you are in terms of sales and marketing for the device?
Brent Barnes: Yeah. So in Australia, I mentioned, we've sold our first instrument, which is great. Australia is an important market, but a very small one. Really the bigger play is getting into the larger global markets. And so our focus in this first year of launch is focusing on Australia, but now we've unlocked the US, Germany, and the UK. From a European context, we've added a dedicated salesperson who's based in Germany. We had a really great conference in Amsterdam last month, and we've got some key opinion leader reference sites that we've got in both the US, Europe, and Australia who are advocating for our technology. So as a small company, we're being nimble, and in the end, we will look to appoint distributors who will really scale up our sales and marketing effort as we get that initial traction in the market.
Anna Napoli: Brent, turning to strategy and finances now, what kind of competition are you looking at for this device?
Brent Barnes: When we looked at this market opportunity nearly 10 years ago now, we saw that our competitors offered automation in plate movement. So this is mechanically moving plates through a workflow. And that obviously provides some automation, but it really is focused on those large labs. And the cost of these into an instrument are around two and a half million US and above. So very large scale. We saw an opportunity for a modular approach. So rather than move plates from one point to the other, we look at automating the very highly skilled or complex task of plate reading. And so we've got a modular approach, and from a competitive perspective, there's no direct competitor which is able to automate plate reading.
Anna Napoli: It sounds like you're in a great position at the moment. Are you funded to make the rollout?
Brent Barnes: So we've got $4.2 million in the bank. We also announced a draw-down facility from the South Australian government of $1 million. We do expect to have $1 million of R&D every year, which is a bit less than previous years, but also demonstrates a bit of reduced spending from a development perspective. So our view from a company perspective is at the moment, we're well funded into 2020.
Anna Napoli: Last question, Brent. Where would you like to see the share price over the next 12 months?
Brent Barnes: We're up at 200 per cent at the moment, so that's really positive. And I guess from a company perspective, I don't like talking about share price necessarily, other than the fact that we do believe our business and strategic plans are really exciting. And, look, the market will determine ultimately what the company is valued at. But we're really excited about the regulatory barriers that we've been able to remove with the announcement we made today, getting into the US market. And from a European perspective, we've got a dedicated salesperson, and we see a much larger opportunity.
Anna Napoli: Brent Barnes, congratulations on that amazing share price, and thank you for the update.
Brent Barnes: Thank you.