Microba’s Transition to Capital-Light Model Brings Revenue Mix Challenges Amid Rapid Growth

Strong Diagnostic Sales Momentum

Microba Life Sciences (ASX: MAP) has delivered a compelling Q3 FY25 update, showcasing significant growth in its microbiome diagnostic testing business. The company’s flagship MetaXplore test recorded a 201% increase in sales in Australia compared to the prior corresponding period (PCP), with 3,225 tests sold and a record month in March. This growth is underpinned by a 130% increase in ordering clinicians, reflecting strong clinical adoption.

Complementing this, the MetaPanel test, launched in March 2024, saw an even more dramatic 1,827% uplift in sales year-on-year, supported by landmark clinical study results in Inflammatory Bowel Disease (IBD) and a strategic agreement with a major private gastroenterology clinic servicing approximately 10,000 patients annually. These developments position MetaPanel as a key revenue driver in Australia.

UK Market Expansion and Product Migration

In the United Kingdom, MetaXplore sales surged by 1,018% quarter-on-quarter, with 246 tests sold in Q3 FY25 and nearly doubling month-on-month growth from February to March. MetaXplore now accounts for 39% of total gastrointestinal (GI) test sales in the UK, signaling a successful migration from legacy testing products. Microba expects to complete this transition by the end of calendar year 2025, aiming for full market access by June 2025.

Meanwhile, supplement sales in the UK remain robust, with a slight revenue increase despite a modest decline in unit sales, supported by pricing adjustments and a strategic focus on diagnostics growth.

Strategic Shift to Capital-Light Model and Therapeutics Pipeline

Microba is transitioning from a research and development-heavy phase to a capital-light, sales and partnering-focused business model. This pivot is evident in the divestment of certain research services and the migration of older testing products to the newer MetaXplore platform.

On the therapeutics front, Microba is advancing a pipeline of live biotherapeutic products (LBPs) and next-generation probiotics targeting chronic diseases such as IBD, autoimmune disorders, and oncology. The company is actively pursuing partnerships, non-dilutive funding, and out-licensing opportunities to accelerate commercialisation. Notably, Microba has engaged with major industry players, including a research collaboration with International Flavors & Fragrances (IFF), the world’s largest probiotic company.

Financial Outlook and Market Positioning

Despite a transitional dip in Q3 revenue due to product mix changes, Microba’s core personal testing and supplements business grew 3% versus PCP. The company reaffirmed its FY25 revenue guidance of A$15.25 million to A$16.25 million, representing a 26% to 34% increase year-on-year. Microba maintains a healthy cash balance of A$12.4 million and a market capitalisation near A$100 million.

Looking ahead, Microba is preparing for entry into the US market, targeting a focused launch in one state and metro area. The US represents over half of the global addressable market for microbiome diagnostics, estimated at $25 billion. The company plans to leverage its Australian central laboratory and build a small sales and operational team, with reimbursement pathways under development to accelerate adoption.

Clinical Impact and Industry Leadership

Microba’s diagnostic tests are gaining traction for their ability to identify gastrointestinal pathogens missed by routine testing, potentially transforming treatment protocols for complex conditions like IBD. Clinical endorsements from leading gastroenterologists underscore the tests’ potential to improve patient outcomes and reduce unnecessary therapies or surgeries.

With a robust AI-driven R&D platform and a growing pipeline of microbiome-based therapeutics, Microba is positioning itself at the forefront of a healthcare disruption opportunity estimated at over $1.4 trillion globally. Its strategic partnerships and clinical validation efforts further cement its leadership in microbiome diagnostics and therapeutics.