LBT Innovations Limited (ASX:LBT) Managing Director and CEO, Brent Barnes, talks FY19 results and outlook, including adoption of the company's culture plate reading device APAS Independence, the sales process and regulatory approval.
Anna Napoli: Welcome to the Finance News Network. I'm Anna Napoli. And joining me now from LBT Innovation (ASX:LBT) s is CEO Brent Barnes. Brent, welcome back.
Brent Barnes: Thanks.
Anna Napoli: LBT provides automation to medical and university labs. Can you tell us more?
Brent Barnes: So back in 2010 we identified a really manual process in this thing called culture plate reading, and the whole culture plate workflow, which is very manual in all these university hospitals and labs all around the world. And so what we thought it would be great is to automate that reading part of the workflow. And so that's what we did. So back in 2010 we started developing an algorithm which interprets, pixel by pixel, colony growth on an agar plate. And subsequently we've done a whole bunch of clinical trials and developed a commercial instrument and various regulatory approvals in order to get our product to market.
Anna Napoli: And how much faster is your product at reading the Petri dishes?
Brent Barnes: About three times faster. So the instrument's loaded up and about 200 plates an hour move through the instrument, which about three times faster. Automatically interfaces to the laboratory information management system. So really frees up that microbiologist's time.
Anna Napoli: And in terms of your FY19 results, what were some of your highlights?
Brent Barnes: Probably I think the key highlight was the St Vincent's Hospital in Melbourne first sales. So they were the ones who did some of the early validation work for us and subsequently purchased the instrument. I think kind of secondary to that was establishing a global footprint of key opinion leader reference sites. So we shipped an instrument to Cologne, Germany, in a very large laboratory there, and also into the US market in December of last year. And those reference sites are really important because as you get into these new markets, you want to have a local customer who is advocating for your technology.
Anna Napoli: Brent, we spoke previously about the current state of labs. What's the purchasing process for this machine and how long does it take?
Brent Barnes: The lab cycle in terms of the whole procurement process is one that I'd say on the early side is about 12 months. So that's kind of the benchmark. And it can be longer than that. What we're finding is that all of these labs have a strategic plan, procurement plans in place, and they're assessing all kinds of technology. And so our goal is to get on their roadmap with respect to a technology platform and that's being part of that. And then secondary and very importantly of course is getting that budget allocated. And so part of the early stages that we're going through right now is doing some pre-qualification work and working with very focused laboratories who have an ability to purchase within the coming 12 months, who are interested in the technology, and really keen to start the evaluation process. So we can look to close out that sales cycle within that kind of 12-month time frame.
Anna Napoli: And in terms of your lead product, the APAS Independence, can you give us an update on where that's at in terms of regulatory approvals and functionality?
Brent Barnes: Sure. So last time we spoke was opportune time. So we'd just got FDA clearance and that was back in May of this year. That was really important. That unlocks the single largest market for us globally. So we're able to now sell the instrument and we've been kind of busy doing that after that announcement. The second market obviously is Europe. And the European countries require what's called a CE mark. And we've gone a bit backwards, if you like. Normally you do a CE marking first and then you have the FDA. So we've already got the FDA and we expect to have CE marking at the end of this month, at the end of September, which is really exciting for us.
Anna Napoli: Turning to your finances and strategy, can you talk us through both?
Brent Barnes: So we really welcomed new institutional shareholders to that $5 million raise. And that was really important, because what it does it sets the company up to really focus on execution over the coming period of time, and gives us enough cash runway well into 2021.
Anna Napoli: Final question. And now, Brent, what makes LBT a compelling investment for investors?
Brent Barnes: We're at a point where we've really de-risked a lot of those typical barriers that investors see with medical technology companies. And the first I think starts with that regulatory approval and the uncertainty associated with that. And so really this year we've been able to unlock the US market with the FDA clearance in May. Later this month we'll unlock Europe from a CE marking perspective. And while the sales cycle is about a 12-month one, what we've done is that we've done some of the early work to really create a focused sales and marketing campaign, to identify those laboratories who have an interest and an ability to procure in the coming period of months. So 12 to 18 months time horizon.
Compounded by that is the announcement we made recently with respect to shipping an instrument to a US based potential distribution partner. So we're working in a very collaborative way with them, and while we expect that to be a 2020 announcement, the rate at which we're working with them has been really positive, and we would expect that to hopefully be in the first half of next year in terms of 2020.
Anna Napoli: Brent Barnes, thanks for the update.
Brent Barnes: Thank you.