CLEVER CULTURE SYSTEMS LTD (CC5) - Revolutionizing Microbiology Laboratories: CEO Brent Barnes on AI-Driven Innovations, Strategic Rebranding, and Global Market Impact

What if you could revolutionize the entire microbiology laboratory industry with the power of AI? Join us as Brent Barnes, CEO and Managing Director of Clever Culture Systems Limited, shares the journey behind their groundbreaking product, APAS Independence. Once known as LBT Innovations, Brent discusses the strategic rebranding to streamline communication with investors and customers alike. Gain insights into how their cutting-edge machine vision technology is setting a new standard in the pharmaceutical manufacturing sector, with significant clients like AstraZeneca and Bristol-Myers Squibb already on board. Learn about their path toward potential cash flow positivity by the financial year 2025 and how they’re leading the charge with the only FDA-cleared AI technology for automated plate reading.

Listen in as Brent explains the transformative advantages of APAS Independence, from improved traceability and quality to increased speed in environmental monitoring. Discover what it means to see AstraZeneca, a global pharmaceutical giant, standardize on this innovative technology across its major manufacturing sites. With repeat orders reflecting strong market acceptance, Clever Culture Systems is poised for global impact. Brent’s insights offer a comprehensive look into how intelligent automation in microbiology is not just enhancing traditional methods but reshaping the future of laboratory workflows.

Transcript

Andrew Musgrave Host

00:05

Welcome back to ASX Briefs, and joining me today is Brent Barnes, the CEO and Managing Director of Clever Culture Systems Limited, a leader in intelligent automation for microbiology laboratories. Recently rebranded from LBT Innovations, the company is making significant strides in the application of artificial intelligence to revolutionize the analysis of microbiology culture plates through its flagship product, the APAS independence. With exciting recent developments, including multiple instrument sales to AstraZeneca and Bristol my squib, the company is poised for significant growth and on a path to be potentially cash flow positive in financial year 25. Brent, thanks for joining me today and welcome to the ASX Briefs podcast. 

Brent Barnes Guest

00:50

Thank you. 

Andrew Musgrave Host

00:51

Now Brent for investors that may be unfamiliar with Clever Culture Systems, can you start by just giving us a brief overview of the company? 

Brent Barnes Guest

00:58

Sure, Andrew. So, look from a tech perspective, we've developed what we call a machine vision technology that automates the imaging and the image analysis of culture plates within kind of microbiology applications. And if you think about who our customers are, they're pharmaceutical manufacturing companies, so kind of think high volume biologic drug manufacturing or sterile injectables as an example. We've got kind of millions of these culture plates that are used annually to manage and to monitor the cleanliness of clean rooms, which is kind of where these drugs are manufactured. 

Andrew Musgrave Host

01:33

Okay, and you've recently rebranded from LBT Innovations to Clever Culture Systems, which marks a new chapter for the company. So, what inspired this change and how does this align with your strategic vision moving forward? 

Brent Barnes Guest

01:45

It’s not an actual change in name for names sake if you like. Our customers have actually known us as Clever Culture Systems since we have been around and advertising our product into the market. So really, it's kind of more about aligning communications both of our customers, who already know us as Clever Culture Systems, but really probably bringing our investors and shareholders across to that new naming convention and naming platform. So really, it's about simplifying our messaging and making it probably more effective and streamlining things across the investor community as well as our customers who, like I said, already know us under that brand. 

Andrew Musgrave Host

02:22

Now, the APAS independence has seen strong adoption since its launch in March, so can you share insights into the unique value it brings to the pharmaceutical manufacturing sector and how it enhances traditional microbiology methods? 

Brent Barnes Guest

02:36

So, in every drug manufacturing facility all over the world, right, it's mandated that you need to use this culture plate to monitor the cleanliness of the clean room and there's a whole bunch of controls that ensure the clean room is clean and sterile. But the plates are important to monitor and to trend the hygiene of that clean room over time and there's various kind of control limits that are acceptable for use. And so, when we think about the value proposition, when I go to customers and talk about, well, what does our technology kind of help with their environmental monitoring workflow, it's really about automating an existing process that's currently very manual, and it's the very three simple things I always say. What our APAS system will do is that will increase the traceability of these environmental monitoring results, it'll improve the quality, and it'll do it about three times faster than your current standard workflow. 

Andrew Musgrave Host

03:33

And congratulations on the repeat multiple instrument order of APAS Independence to AstraZeneca. So how significant is this milestone for your entry into the pharmaceutical market and what opportunities does it unlock for the company? 

Brent Barnes Guest

03:47

Yeah, AstraZeneca are pretty well a household name. They're the top 10 largest pharmaceutical companies, at least by revenue globally, so it's significant in terms of their scale. We had our first order with AstraZeneca in August and that was for five instruments, and we've now installed all of those five instruments and a couple of months later, with this recent announcement, they've ordered another four. So, it's a total of nine instruments and I think what it means from an industry perspective is it says to other drug manufacturing companies that you've got one of the market leaders making a very clear statement that they have said publicly that they're looking to standardize on our technology as a platform, at least across their largest manufacturing sites globally. So that whole value proposition that I mentioned before around improves traceability, quality and efficiency of this critical result is something that's resonated very well with AstraZeneca as really what's been our cornerstone customer. 

Andrew Musgrave Host

04:45

And, looking at the regulatory landscape, being the only FDA cleared AI technology for automated plate reading is a significant achievement. So how has this regulation clearance impacted your competitive positioning in the market, particularly in the US? 

Brent Barnes Guest

05:00

Yeah, it's important for us because one of the challenging things with AI and while it's a commodity technology, one of the challenging things is to prove that it actually works, and there's many AI applications. But when we're talking about AI and we're talking about critical results, the performance has to be validated, and that validation is done by things like clinical trials and extensive studies, and so we've gone through what has been years, actually, of validation activities that demonstrate statistically that our AI platform is what we call non-inferior, or at least equivalent we would probably say better than the current standard process that occurs in all of these microbiology labs globally. So, it's a really important competitive differentiator for us and, as you said, being the only US FDA cleared technology of this kind is a tremendous feat for this company. 

Andrew Musgrave Host

05:56

Now, if we look at the role of AI and machine learning, the company's technology leverages AI and machine learning for plate assessment. So, can you elaborate on how these technologies differentiate APAS independence and how they address the industry's challenges? 

Brent Barnes Guest

06:10

It's really funny. When we launched this product several years ago, we were kind of met with some scepticism around AI and could it actually automate this culture plate reading part of the workflow and now, with ChatGPT and everyone's doing AI, it's a commodity technology and everyone thinks it's so easy and I think for many applications it is easy right. But it comes back to my point before when we're talking about critical results that really are a gatekeeper for releasing safe and effective drugs into the market, there's little room for error. Things that are manual processes are definitely opportunities for AI to be developed, and I think when we kind of talk about APAS independence and we think about AI as a platform, we've been developing this for about 10 years now. It's proprietary to us. It's not an off-the-shelf Google.AI type of application. So there's years of process methodology that's gone into where we are today and that's really what kind of differentiates us in the market for this application. 

Andrew Musgrave Host

07:12

Now, lastly, as we look towards the close of 2024 and into financial year 2025, what are the key milestones or strategic initiatives investors should anticipate, and are there any new market segments or geographic expansions on the horizon? 

Brent Barnes Guest

07:27

Yeah, look, we launched this product in March of this year. We've sold 12 instruments so far year to date and we're one of the few biotech companies I guess that you could say that are saying that we're on a path towards cash flow break-even, which we expect is on that kind of roadmap for fiscal year 25. And so, in terms of those catalysts and what to look forward to, it's really doing more of what we've been doing over this last 12 months, but it's probably accelerating. Where we think our commercialisation efforts will go, it's this land and expand strategy where we're focusing on the top 20 largest pharmaceutical companies by revenue. Each of those have the opportunity to be like an AstraZeneca, where they have got multiple instruments to be able to be sold, and that's where we're really laser focused in our commercialisation efforts. So, it's transitioning this company from being one where we've relied on the capital markets to keep the lights on to now moving into a pivotal year where we've transitioned the company into where we expect to move into a cash flow positive situation. 

Andrew Musgrave Host

08:29

Okay, Brent. Well, it's been great chat today to get plenty of updates on the company and how it's performing, and we look forward to further updates in the upcoming months. 

Brent Barnes Guest

08:37

Thank you, Andrew. 

Andrew Musgrave Host

08:39

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.