Microba Life Sciences Limited (MAP) Earnings Call Transcript & Summary

I'm very pleased to share an update on our progress for the quarter and the financial year ended 30 June, 2026. As always, throughout the session, if you have any questions, please just use the question submission feature there, and I'll address as many as I can live, and then I'll get to the others that I can't get to in the session after on the Investor Hub platform. This has been a really defining year for Microba. We've removed a range of legacy products and services to set the business up with the core products designed for scale. We've delivered consistent strong core testing volume and revenue growth. We've completed a multiyear major product and infrastructure build phase for the business and raised capital to complete the path to cash flow breakeven for the whole company. Moving past disclaimers. Let's start with the financial highlights for the quarter and the financial year. The first headline for the quarter, which is a significant one, Q4 was another record quarter with core testing volume up 54% year-on-year. That now takes us to a quarterly annualized run rate of over 25,000 tests. Q4 is always our biggest growth quarter, and this year was no exception. So a strong finish, and that carries real momentum into FY '27. The second key headline, stepping back to the full financial year, the growth story is clear. FY '26 core testing volume up 78% year-on-year and FY '26 core testing revenue up 92% year-on-year. This is the compounding result of consistent disciplined execution with volume and revenue growth both growing strongly as we move up the adoption curve with clinicians across Australia and the United Kingdom. And finally, it's important to focus beneath the top line revenue number. So remove the strategic discontinuation of those legacy products and services and see the shape of the growth business that we've built set to break out in FY '27. So our continuing products, our core test, key partners, in vivo supplements grew 53% year-on-year and our strategically discontinued products, those legacy tests, legacy partners and distributed supplements down 72% year-on-year as planned. As of the end of FY '26, this positions us as a clean, focused business, delivering strong growth, driving to cash flow breakeven. So now let's get into the business highlights from the quarter. As I've shared over recent quarters, in Australia, adoption has now moved beyond innovators and into the early adopters. And that's increasingly characterized by these enterprise contracts with health care clinics. These accounts once signed and activated represent meaningful reoccurring volume. And since we've commenced targeting these key accounts in November 2025, we've now signed 43 accounts, which have sold 500 -- 5,606 tests, which is up 87% quarter-on-quarter. And there's a lot more growth to unlock here. We now have over 175 key account targets in the Australian pipeline with an estimated ordering potential from those accounts of over 80,000 tests per year. So we've already signed and are growing a base of enterprise accounts that underwrites a substantial share of growth ahead for FY '27. And then we have a pipeline of new accounts that we're signing every month, every quarter, which is continuing to layer more growth on top. Layered on top of that again is another major growth catalyst, which is GI Navigator. So we remain on track to launch GI Navigator, which is a category new -- category defining, sorry, I should say, new testing product in September 2026. This product is the culmination of years of leadership at the forefront of this major new diagnostic category and represents a meaningful leap in the clinical application of what we call complete microbiome and gut testing. This product is specifically designed to address our core target patient population, which is the 40% of people living with an unresolved gastrointestinal disorder. And with this new test, I'd say that we have achieved what no one else globally has been able to achieve, which is to make this complex specialty testing something that is able to be rapidly understood by any health care professional in 2 minutes before a consultation with their patient. This is a premium new product in the category, and it will command premium pricing. Critically, it's designed to open up our serviceable addressable market to more medical doctors to keep moving up the adoption curve with health care professionals. GI Navigator is actually already live with a closed group early access cohort of opinion-leading practitioners across both Australia and the United Kingdom. And we've already seen the first 35 sales achieved, and we've had very positive feedback flowing through. So now let's break down the key diagnostic results for the quarter and the financial year. Australia delivered another record quarter. Q4 Microbiome Explorer test sales of 5,311, which was up 54% versus PCP. That's now an annualized run rate of over 21,000 tests. And importantly, ordering clinicians grew 22% year-on-year, whilst orders per clinician also grew 36% (sic) [ 34% ] and that reflects our focus on signing and maturing these large key enterprise accounts. And in the U.K., we continue to make progress in our market development. So Q4 Microbiome Explorer test sales of 825, which was up 92% versus PCP. That's now an annualized run rate of 3,300 tests. Ordering clinicians grew 230% year-on-year with orders per clinician up 37% as we progress in developing the U.K. clinician market. Switching to our U.K. Nutritional Supplements business. We continue to accelerate the transition to focus on our higher-margin in vivo branded products away from third-party distributed DFH or designs for health products. Aligned to this, the invivo supplement revenue was $0.75 million in Q4, which was up 11% quarter-on-quarter and up 11% on PCP. In FY '26, our leading supplement, which is our PHGG prebiotic fiber, more than doubled its unit sales to 43,000 units, which was up 114% year-on-year. And aligned to that, our subscription offering, which was new in this financial year, which launched later in 2025, grew 230% over the 6 months completing 30 June and now has more than 1,000 subscribers, and we're continuing to see that subscriber base grow. So good progress here, and we're excited about the growth ahead for this part of the business into FY '27. Now for an update on our Therapeutic assets. From our data and years of R&D, we've developed a rich pipeline of live biotherapeutic assets with a Phase II-ready lead asset in MAP-315 targeting ulcerative colitis and a healthy preclinical pipeline behind that spanning autoimmune disease and immuno-oncology. As a reminder, we are in a partnering phase here for our Therapeutic business and assets. So no R&D investment being made. We have developed the assets, and there is a capital-light path from here to potential outsized returns. The reason this is so exciting now is the sector validation. So for years, we've been engaging with big pharma, and they are very interested about the science and the application of microbiome therapeutics. But they've been waiting for the definitive efficacy data proving that these live biotherapeutics work, particularly in chronic diseases. And since November, we've seen a run of positive sector readouts across graft-versus-host disease, allergic disease, IBS, inflammatory bowel disease and now most recently, even in oncology. So the modality has now been validated. Pharma have that data that they were looking and waiting for. And we are off the back of that active in a partnering process with a Boston-based adviser for our field-leading assets and officially commenced a formal campaign in July off of the back of initial sounding meetings at BIO in San Diego. A transaction here would be expected to have a material impact on the valuation of Microba, and we are most certainly pushing hard to achieve that. So to close out, what's our core focus and what are the upcoming catalysts. First, breakeven. Our clear focus is delivering full group cash flow breakeven on a run rate basis next calendar year by streamlining and reducing our cost base, leveraging years of product and infrastructure investment and continuing our consistent growth trajectory. In Diagnostics, we're focused on continuing to grow test sales and clinical adoption across both Australia and the United Kingdom, signing and maturing key accounts, plus the launch of GI Navigator to open up that next part of the adoption curve. And in Therapeutics, as I said before, we are active in a partnering process off the back of recent positive sector readouts with a formal campaign, which just commenced in July with our Boston-based advisers. Now to deliver the company to cash flow breakeven, we completed a capital raise in June and opened up a share purchase plan for all Microba shareholders. The placement was completed for $5 million. And to enable access to the opportunity, we opened up a $1 million share purchase plan for all Microba shareholders. What this means for shareholders is that they can invest on the same terms as the institutional investors that invested into the placement, which is at the $0.05 per share price with a 1:1 free attaching option for every share exercisable at $0.0625 with a 3-year expiry, which is a valuable opportunity for shareholders to bolster their position ahead of us delivering the set of major milestones over the coming period from launching the new category-defining product, GI Navigator to delivering cash flow breakeven and potential therapeutic transactions from our active partnering process. So under the SPP, eligible shareholders can apply for new Microba shares at $0.05 per share. That's the same price the institutional investors paid in the placement. And like the placement, every new share comes with one free attaching option. So for each share you subscribe for, you also receive one option on a 1:1 basis. Now those options are unlisted, and they have an exercise price of $0.0625, and they can be executed at any time up to 3 years from the date they are issued. In other words, they give you the right, but not the obligation to acquire further shares at that fixed price during that 3-year period of critical value creation for the company. There's no brokerage fees on the SPP. You can apply for any amount up to a maximum of $30,000. And so on the right-hand side of the slide here, you can see what that actually looks like in practice. So how do you take part? First, eligibility. So the SPP is open to shareholders who were on the Microba shareholder register in Australia and New Zealand on the record date, which was Thursday, the 11th of June. In terms of how much, as I mentioned, up to $30,000 per shareholder at that $0.05 per share with no brokerage. Applying it straightforward, the SPP offer booklet and prospectus has been sent to all eligible shareholders. And you can also access everything on our website and on the ASX platform. There are multiple ways that you can pay. The key thing is on the right-hand side of the slide, which is that the offer is open now, but closes next Wednesday, the 22nd of July. So if you have any questions, speak to your financial adviser about any of that. So that closes the quarterly update and the reminder on the SPP details. But I'm now going to move to some of the submitted questions, and I can see a number of them here. And again, any that I don't get to, I will respond to on Investor Hub afterwards.

So I'm going to go to the first one here, which is now you've signed 43 key accounts maturing into an ordering potential of over 24,000 tests per year. But there are 175 accounts in the pipeline with over 80,000 tests of pipeline potential. So how should we think about the growth ahead for these enterprise accounts? And how does that relate to achieving breakeven? So to recap on the numbers, yes, since November, we've signed 43 of the 175 carefully curated and qualified target list that the sales team have identified in Australia. And those first 43 accounts have already sold over 5,600 tests as at the end of Q4, which was up 87% quarter-on-quarter. So we're seeing those -- the growth from those initial accounts and the maturing of them very quickly. Those 43 accounts alone represent that annual test potential of over 24,000 tests, so they're maturing into that. So maturing that existing signed base alone underwrites a substantial share of the growth laid out to deliver that breakeven target. So that's answering the question. But how should we think about it more broadly? Well, there's more than 130 targets remaining in the pipeline, and we're signing and activating more every month. So for example, in June, we signed 4 additional new accounts, which was 10% growth in the number of key enterprise accounts signed month-on-month. So we'll continue to grow that. The second question here, you recently completed the capital raise and have an open SPP. Can you remind us what that capital raise was for and where that leaves the company? Now I may have answered this through the couple of slides that I just put in, but just to quickly refresh, the raise had a singular purpose, which is to deliver the company -- the whole company to cash flow breakeven. It was led by our substantial shareholders investing above pro rata, including Sonic Healthcare with a $5 million placement and a $1 million share purchase plan for all shareholders on the same terms. So continuing our growth, combined with streamlined AI-efficient operations, leveraging all of our core product and infrastructure, this takes us -- that takes us to run rate cash flow breakeven in 2027. So the core product and infrastructure build is done. Now we can harvest the fruits of those investments after many years. The next one here. With those cost reductions and growth both required together, how do we get comfort that the cost out won't damage the growth engine? So this has been designed very carefully. So the cost savings come from outside the core growth engine. So there is no change to sales team efficiency or capacity. The marketing efficiencies come from what we have already done over the last year in a unified global brand, automated life cycle marketing, self-serve sign-up procedures and AI-supported targeting that lower the cost of acquisition. The largest reduction is related to the roll-off of the major product build phase for the business, which is about to complete with the launch of GI Navigator, plus AI-supported software development efficiency on top of that. We also have some AI automation across customer support, finance, legal and HR, all structurally lowering our cost to serve as we scale. We also have some margin expansion work, which you'll start to see coming through. So some lowering of cost of goods, opening up of margins that is starting to yield. In short, the growth engine is protected. The savings come from functions that have completed the major product and infrastructure build phase that set us up for scale and to open up our operating leverage. The next one here is around our Therapeutics. I'm just going to jump back to that slide. So the microbiome therapeutics sector keeps delivering positive readouts. How should we think about this in terms of the value of Microba's lead MAP-315 asset? Yes, this is directly relevant. So this is all huge for MAP-315 and what we've been waiting for. So pharma have been convinced on the potential of the microbiome, but have been waiting for the proof that these live microbiome therapeutics can be manufactured and can show to be effective in treating chronic diseases. And the run of readouts since November has clearly answered that. But several of the readouts are directly relevant to inflammatory bowel disease and ulcerative colitis, exactly what MAP-315 targets, which immediately makes MAP-315 more valuable and derisked. So MAP-315 is a clinically derisked near Phase II-ready asset with a $10 billion-plus market with a large underserved patient population. We have a number of real advantages here as well. A single-strain product means simpler manufacturing, a cleaner regulatory path and clearer mechanism of action and with no antibiotic pretreatment and a biomarker for precision trials. All of those are really attractive to pharma and investors. Off of the back of these readouts, we've just then committed to commence a formal partnering campaign with our Boston-based advisers, [ Kybora ]. And there's a real capital-light path here to potentially outsized returns for our assets. So there are a couple more questions, but I'll answer them on Investor Hub directly in the interest of time. So I will close by saying, as I always do, I'm incredibly excited about the opportunity impact and growth ahead for Microba. That remains unchanged. We are at a real inflection point of operational focus, major product advancement, advancement up the adoption curve, major evidence generation and AI efficiency and value gains. We have a world-class team, best-in-class technology for category-defining products. For patients, we are already changing lives, and there are millions of people that need our help. So it really is an incredible time to be a Microba shareholder as we realize the fruits of years of investment at the forefront of this sector, achieve cash flow breakeven, deliver a category-defining product, opening up mainstream medical doctors, and seek to partner our therapeutic assets now the modality has been validated. So thank you all for tuning in for the update. And a big thank you from me and the team to all of our shareholders for your ongoing support. Thanks, everyone.