LBT Innovations Limited (ASX:LBT) Managing Director and CEO Brent Barnes provides an update on the company's microbiology culture plate reading device APAS Independence, its appointment of Beckman Coulter for distribution and sales in Europe and plans to appoint a US distributor later this year.Thanks for the introduction. And thanks for joining. I hope those of you who are joining are joining from a safe location, considering what's going on at the moment with all the lockdowns across the country. LBT Innovations, we're a listed company, we're in the space of clinical microbiology and our product is an AI platform that looks to automate culture plate reading.
Normal disclaimers apply similar to the other presentations that you would have seen today.
So what is this clinical microbiology space? Well, one, it's a large market about $4 billion global market opportunity. And when we're talking about clinical microbiology, we're talking about infectious diseases. So, most people have heard of a urinary tract infection, or there's over 150 million of those that go through this workflow over a year. So we're kind of in that space.
Covid at the forefront of everyone's mind at the moment. We're not a Covid technology, but what we are seeing is the distraction that the likes of Covid and these outbreaks have on our customer base and the absolute need for technology such as ours to automate and drive efficiencies through labs all around the world.
And the specific area of microbiology that we've focused on is the culture plate workflow. So the Petri dish, and you can see a picture on the screen. It's a scientist sitting at a work bench with a Petri dish. And in that UTI example, what happens is the urine is put onto the Petri dish, it's incubated. And following incubation, you have someone sitting at a work bench manually doing that read.
Everywhere around the world, there's no other alternative. It is a manual reading of a culture plate. And the challenge that we've got is that there's not enough microbiologists that are coming through the university systems. And we see that in all of the countries that we've currently launched in. In the US, there's a data point there. I think it's about seven percent now, but at any one time in the US, 67% of microbiology jobs are vacant. And so it's an area where you higher volume, very specialised resource, and it's ripe for automation.
And that's what we have developed. We've developed an instrument. We call it the APAS Independence. APAS is the automated plate assessment system. We've been working on it for a long period of time, about 10 years, and it automates that reading part of the workflow. So I mentioned before, everywhere around the world, in every single lab, culture plates to read manually. Our instrument does it automatically. The way we've been able to do it automatically is that we've trained an algorithm. We've used a machine learning application, we've trained thousands and thousands of plates through our headquarters in Adelaide and through collaboration partners. And we've extensively demonstrated that the technology is not only equivalent, but slightly better and more accurate through clinical trials, 10,000 patient multicenter clinical trials have been conducted and completed successfully demonstrating that this technology absolutely works.
It's that body of evidence that is so important when we're working in the regulated environment, our product is a class two medical device in the USFDA. We had to lead the way with a De Novo application. That just simply means there was no predicate. The predicate is a manual culture plate read. So we are the only product, we are the only indication that enables automated culture plate reading. And I think unlike many other kinds of AI technologies that identify points of interest, where we're slightly different, and I think it's really important is that we're making primary diagnosis. So we're able to identify and remove plates out of the workflow by saying that this hasn't got growth, or hasn't got significant growth. And that is triaged out of the workflow, just leaving those positive plates for the microbiologists to then review and do some ID IST work.
And, where we are on this journey is getting through the technology piece. We've got the instrument, we've got some sales. And so, it's a largely de-risked value proposition. That's the consideration at the moment.
And we've launched in a number of countries globally. We've sold six instruments so far, and they're represented in the various geographies there. Most recently, or last year, we appointed a channel partner in Beckman Coulter. And I'll talk about that a little bit later on.
But as part of getting this global infrastructure in place, we've already conducted a lot of that heavy lifting, meaning, we're appointing key opinion leaders, we're getting them using the instrument and importantly, getting them to publish data around their experience using the instrument, the efficiencies that it's gained, and demonstrating that the product works as we say it does.
And as part of this technology adoption that we've focused on the innovators, and these are our key opinion leaders, and they're really, really important for us. The pitchers, they're the teams in Cologne in Germany and Minneapolis with Hennepin Health, and they have been really critical in writing papers for us, having these papers in some cases, peer reviewed, but certainly most recently at ECCMID, a large microbiology conference, just last month, we had the largest body of evidence, five papers that were presented during that conference that really demonstrated that the technology works. It works efficiently, and it works repeatably.
Part of the recent highlights around getting the channel in order was the appointment at Beckman Coulter, like I mentioned, just before. So Beckman Coulter's at Denaher company they've been selling into labs for over 40 years. They're a household name. Really, really important to have someone who your labs and your customers trust and they are familiar to them. And so the Beckman Coulter arrangements or partnership arrangement where they're looking after our sales and marketing efforts in specific countries in Europe. So in France, Germany, and the UK.
We're really pleased to sell two instruments to the health services laboratory, the Halo Group, it's a state-of-the-art facility in London. They bought two instruments. They're part of the Sonic group of labs. And I think one of the really important things we're proud of as part of that sale was how we were able to do that given the current Covid restrictions that exist and the fact we can't travel.
And so the way that we're able to do that is we shipped an instrument over to them. We appointed and trained a service organisation, and that route would it go through conduct all of their validation work and then to test the instrument and then ultimately make a decision to buy the instrument. But we did all of that remotely. And what we see now is that really a blueprint for how we've been able to disrupt the service delivery model.
And in fact, it's been a blueprint that we've repeated in other geographies. We've repeated that type of being in France. We've repeated that in Germany and also in the US. So it's something that we've now established as bench strength. And in fact, if you like, is a bit of a highlight coming out of Covid because otherwise we would've sent resources, a couple of people out, they would have been on the road for a couple of weeks and would have had the costs involved with all of that. So really disrupting the way that we can do things on a go-forward basis.
The market opportunity or the addressable market for us is a large one from a global perspective. So we've segmented the addressable market in this kind of small, medium, and large labs. We think that the payback target of around three to four years, depending on who the customer is, is that sweet spot. There's about 13,000 labs that are in that particular market opportunity. But if you look at and break it down to the markets that we're currently operating in, so that's Australia, US, the UK, France, and Germany, it's about 2100, 2200 labs is the addressable market. And that picture on the right just gives an idea of what that translates to from a valuation perspective once we start generating material scale in our sales efforts.
The technology pipeline is also really important to us. And so while we've got the physical instrument, so that's the APAS Independence, we've got these modules. So I've mentioned urine and the UTI as an example of that. So we've got a urine module, we've got an NMR, same module for the identification of staff. We've got a VRE model.
This particular diagram on the top right, super exciting. And so this is an anti-microbial resistant web report. And what it's looking at is the disc diffusion or the zones of inhibition, and these measurements are currently all done by calibers and by again, the trained scientist. So what we've been able to do with APAS is train the algorithm to automatically perform those measurements and the little antibiotic discs. And what all of that is actually doing is looking to look at the resistance of the drug to the bacteria or to the specimen and the cost that's super important because that forms the basis of a drug recommendation to treat the specific infection. So kind of that personalised medicine or personalised care. So that's really important.
And so we'll lead the way, again, in being able to bring that to market, we did receive or we're the beneficiaries of a BDP funding grant, and that was to accelerate that development of the product and bringing that to the market. And we expect to have early beta versions of that towards the very end of this calendar year.
We've got a very early version already to our key opinion leader in Germany, but probably a more robust version towards the end of the year. The other exciting feature is the bottom left-hand image, and this relates to early culture plate reading. And so I mentioned a few times that everywhere around the world, a scientist reads these plates manually. Well, now we start to digitise plates and obviously digitize or automate plate reading.
Well, what we can do there is see things that humans perhaps have more difficulty seeing. And this particular image is an example of a VRE, Vancomycin-resistant Enterococci plate. And there's a very subtle colony growth that's identified there, and APAS is able to repeatably identify colony growth at 12 hours by comparison to the 18 hours that predicated on the instructions for use.
So if we're able to half the amount of incubation time through the automation, a culture plate reading, that's a massive disruption to this industry. And so, we've done that proof of principle work that was presented recently, they committed as well, but that's really where a fair bit of blue sky from a technology pipeline perspective will really add to the disruption of our instrument to this culture plate workflow.
Looking at our corporate overview, we did raise money last year, $8 million as part of a private placement. And it means that we have a very healthy cash balance at the moment. We're burning about $1.5 million per quarter. At that current rate with our market cap, about $35 million at the moment.
Kind of wrapping things up in the last couple of minutes, I'm really excited about the diagnostic space, particularly within the microbiology group. And I think the advent of Covid will go a long way to drive the adoption of automation or the necessity of looking at automation in labs. We need to free up those resources by the way that are in short supply. In terms of where we're looking, in terms of the outlook and some key trigger events that we're really looking forward to, I've said publicly already that this third quarter. So we've got another five weeks left of the quarter. We do expect to have a positive outcome or a positive decision with the USFDA. They're reviewing our application and have been for some time, and understandably prioritising Covid at the moment. But look, we hope to provide an update by way of a positive result by the end of the quarter.
And I think one of the things most investors, including us from a company perspective, given we'd be working on it for a bit over a year is around this US channel partner. So firming up, who's going to look after our product in the single largest market globally. And so I mentioned Beckman Coulter, our partner that we have in Europe, and that's really positive while we need to do the same thing in the US.
And we've done some of the heavy lifting, like I mentioned. We've got key opinion leaders in the US, we've got great publications out from institutions like Johns Hopkins that again, demonstrate that the technology absolutely works. This is for an MRSA study. And so by appointing the distributor, it lays that important building block for us to start scaling our sales efforts.
And it's been a challenge of getting in front of customers with Covid over the last 12 to 15 months, and we see parts of that being easier, although the recent kind of outbreak in the US is making things a bit more troublesome in the near term, but we're going to get over the other side of that. And I think we're at a perfect time where labs over the next 12 to 15 months will look at automation like the APAS Independence and feel a real need to drive efficiencies and to free up their resources in their busy laboratories that are busier than ever at the moment.
But look, that's the 15 minute highlights. Any further questions, please don't hesitate to email us at the info line and we'll do our best efforts to get back to you. Thank you.
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