Health & Biotech
Special Report: It takes courage for a business to pivot – especially a publicly listed one answerable to shareholders – but biotech Clever Culture Systems has done just that, and the gamble seems to be paying off.
Formerly LBT Innovations, Adelaide-based Clever Culture Systems (ASX:CC5) is now targeting big pharma with its APAS (automated plate assessment system) Independence instruments (culture plate readers).
Clever Culture’s technology remains the only US FDA-cleared AI technology for automated culture plate reading and is now being sold to microbiology laboratories in the pharmaceutical manufacturing sector for the reading of environmental monitoring culture plates.
The company’s APAS Independence instruments use imaging technology and artificial intelligence to automatically analyse agar plates, detect microbial contamination and classify growth as significant or non-significant.
CEO and managing director Brent Barnes told Stockhead Clever Culture, established in 2004 and listing on the ASX in 2006, was finally finding its niche and, in turn, stability.
“Truthfully, we’ve had a false start where we spent 10 years and around $50 million developing this technology which is automated agar culture plate readers to launch into the clinical microbiology market,” he said.
“This means selling into clinical diagnostic labs in a hospital setting or private laboratory like Sonic.”
Clever Culture achieved regulatory clearances and even had the support of multinational Thermo Fisher Scientific as its global distributor.
“We did launch during Covid-19, which didn’t help, but what we found was the value proposition our technology had for our customers didn’t meet what we thought it would,” Barnes said.
“Ultimately, our technology worked as we said it would but as harsh as this sounds it is a nice technology to have and not a must-have technology.”
With the company’s share price in the doldrums – it was once as high as 60 cents per share – Barnes realised Clever Culture had to make some big changes to remain viable.
“I thought we’d sell a few instruments every year but that’s not enough to cover costs and return shareholder value,” Barnes said.
After considering where else automated culture plate reading technology could be applied, the company settled on pharmaceutical microbiology testing as its target market.
“We doubled down on pharmaceutical manufacturing and then made a pivot,” Barnes said.
He said pharmaceutical drugs were manufactured in clean rooms, which were aseptically clean environments meaning there’s techniques and practices to prevent contamination by microorganisms.
Barnes said a settle plate or a petri dish containing a growth medium (usually agar) were placed throughout clean rooms to monitor airborne microbial contamination.
“They sit there for around four hours with the atmosphere settling onto the plate and then after that time a lid is put onto that plate and it’s taken out of the clean room and put into an incubator for five days,” he said.
Barnes explained that during this period, any microorganisms settling on the plate interact with the agar, promoting the growth of bacteria, mould or fungi.
If substantial growth is detected, it signals contamination, preventing the drug batch from being released to market.
“The occurrence of growth in these clean rooms is very low likelihood because of controls in place,” Barnes said.
“But where there is growth or a contamination event it is critical that those results are identified. “
With their technology replacing manual reading of agar plates, Clever Culture has a strong value proposition for its customers.
“With our APAS technology we provide better traceability of results because they’re digitally transferred automatically to a laboratory information management system… we improve the quality of results because we have a permanent image and record,” he explained.
“Thirdly, we do it more efficiently so it’s about three times faster than the current process.”
Clever Culture believes it was fortunate to gain the support of global pharmaceutical giant AstraZeneca.
“We were a bit lucky in that AstraZeneca had looked at other automation technologies to solve the exact same problem, which is automated culture plate reading,” Barnes said.
“They wanted to partner with us to develop the technology.”
The company inked a contract with AstraZeneca in January 2023, which Barnes said effectively meant Clever Culture went back into an R&D phase.
In March 2024, the company delivered the technology to AstraZeneca, which had paid more than $1m in R&D funding during that process. Clever Culture also conducted a $4.5m capital raise in October 2023 to fund the pivot.
“The board and management became significant shareholders in the company, backing this new outlook and the commercial pivot started,” Barnes said.
AstraZeneca has now purchased nine APAS Independence instruments and 12 more have since been sold to big pharma.
Clever Culture reported a maiden half-year profit after income tax of $1.1m in H1 FY25 from a $1.8m loss on the previous corresponding period.
“We have said to the market we now expect to be cashflow positive on a go-forward basis,” Barnes said.
He said the Clever Culture’s strong sales pipeline with big pharma underpins its path to a sustainable positive cashflow outlook.
Each instrument generates ~$1m in revenue including hardware, maintenance and support costs
“We have a derisked product and are now into commercialisation mode in a new market, which has been a really great success,” Barnes said.
Clever Culture’s go-to-market strategy focuses on a “land and expand” approach rather than building a large, costly global sales team.
“We have two salespeople, one in Europe and one in the US,” Barnes said.
He explained that major pharmaceutical manufacturers operate global centres of excellence for microbiology.
Barnes said once a company validates its technology through rigorous testing and determines it fit for purpose at their global centre of excellence for microbiology, they may initiate a standardisation process.
“AstraZeneca’s centre of excellence is in Manchester, where we’ve been collaborating throughout their validation process,” he said.
“Now that they’ve completed their assessment, they’ve begun placing multiple orders and standardising APAS Independence instruments across their larger sites.”
He said the company was now engaged with 14 of the top 20 biggest pharmaceutical companies by revenue.
“There’s also contract drug-manufacturing organisations that will manufacture drugs on behalf of big pharma companies, so they also form part of our global opportunity,” he said.
This article was developed in collaboration with Clever Culture Systems, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
Health & Biotech
Health & Biotech
Health & Biotech
