Medlab Going On Gut Feel

By James Dunn | More Articles by James Dunn

One of the genuine revolutions in medical science in recent years has been the change of thinking about the bacteria that infest the human gastrointestinal tract.

Medical science has made huge strides this century in its understanding of the microbiome – the mass of microbes that live in the gastrointestinal tract – and how it affects human health. The gut contains up to a thousand different bacteria species, which together weigh more than three kilograms. This mass contains trillions of cells, more than the number of cells that make up our own bodies.

Until recently modern medicine considered the gastrointestinal tract as little more than a collection site of toxic waste compounds. But the Human Microbiome Project, initiated in 2008 by the US National Institutes of Health (NIH), to broaden medical understanding of the role of bacteria living in and on humans, has changed this view.

Some of these bacteria certainly trigger disease – but some are good guys, protecting against diseases. Scientists now know that the microbiome has a huge effect on (if not controls) the immune system. (The gut houses two-thirds of the body’s immune cells.) A microbiome with the wrong sorts of microbes, or the wrong ratio of good and bad – a situation known as dysbiosis – could unbalance the immune system, causing immune cells to assault not only bacteria, but the body itself.

Our microbiome – which is different in every individual – also appears to have an effect on the brain, and mental health.

The problem is that the human microbiome has changed significantly over the past century, and changed particularly quickly in the last 50 years, as caesarean births, exposure to antibiotics and our general obsession with cleanliness alter it.

The discovery of the link between the health of our gut bacteria and a wide range of diseases and conditions has resulted in the development of probiotics, which are live organisms – such as bacteria, yeasts and fungi – that can improve the balance of the microbiome and thus gut health. The growing field of nutritional pharmaceutical products, or “nutraceuticals,” has developed, to deliver probiotics to the gut.

Australian biotechnology company Medlab Clinical Limited (MDC) specialises in this field. It has launched 20 nutraceutical products that are currently being sold in Australia and the United States, and has developed an innovative delivery mechanism for medicines by improving absorption in the gut. Medlab is targeting a global market for probiotics that is estimated at US$30 billion ($40 billion) at the moment, and is expected to grow to US$45 billion by 2018.

Medlab was formed by Sean Hall after he sold his family’s companies Bioceuticals and Hall Drug Technologies to vitamin giant Blackmores in 2012. Hall’s father Michael Hall was one of the founders of supplement and health food company Bioglan and later Pretorious Vitamins.

The company floated in July 2015 after raising $6 million at 20 cents a share. After surging to 46.6 cents in June this year, the stock has come back to 39 cents, capitalising Medlab at $65 million.

The company’s research and development program works on the development of bacteria-based medicines in five specific areas:

• Anti-ageing
• Chronic kidney disease
• Depression
• Obesity; and
• Pain management.

Medlab has developed a range of patented medicines and delivery systems, including bacteria that have direct efficacy when they are delivered to the right region of the gut, bacteria that produce compounds with specific medicinal properties, bacteria to improve glucose management and reduce cardiovascular risk factors, bacteria and their metabolites to treat chronic kidney disease, and a natural compound combined with bacteria to provide a ground-breaking medical therapeutic for treatment-resistant depression.

Medlab currently has five products being sold through qualified healthcare practitioners in Australia, and six sold in the USA; in the 2015-16 financial year it made its first sales in New Zealand, the UK, and commenced exports to China and Hong Kong.

The 20 products available in the market are based around the company’s suite of patented products:

• MultiBiotic – a multi-species probiotic that helps to support the natural balance of bacteria in the gastrointestinal tract;
• EnBiotic – a high strength enzyme and probiotic formulation to assist with digestive function and nutrient absorption;
• NRGBiotic – a multi-species probiotic formula medicine targeting better coordination of the gut-brain axis in the body;
• NanoCelle D3 (sold in the US as Misol D3) – assists in the management of medically diagnosed vitamin D deficiency;
• NanoCelle B12 (sold in the US as Misol B12) – assists in the management of dietary vitamin B12 deficiency seen in vegetarians, vegans, the elderly, and people with altered intestinal digestive and absorptive capabilities; and
• NR-Gize – (US only) a powdered, healthy energy drink.

The company’s patented NanoCelle technology is a nanotechnology delivery system that delivers the active nutraceutical or pharmaceutical compound by a nasal or buccal (the inner cheek) spray, to give fast and effective absorption with higher bio-availability.

The company is also developing:

• CKDP.1OO – for slowing/halting chronic kidney disease progression;
• OBEP.1OO – for improvement of glucose management and cardiovascular risk in pre-diabetes and Type 2 diabetes patients;
• CANP.1OO – for chemotherapy-related side effects and chronic pain sufferers;
• DEPP.100-104 – for depression treatment; and
• AAP.1OO – for rescuing degenerative muscle fibres.

This month, Medlab announced that it would move into Phase 2A human trials with its anti-depression therapy after positive results from its Phase I trials. In these trials, about 30 patients who had been using anti-depressants for more than two-and-a-half years, with no clinical improvement over that time, were administered Medlab’s NRGBiotic to assess whether it could improve depression symptoms and clinical outcomes.

The first trial (of eight weeks) showed significant improvement in about 80 per cent of the trial cohort, with the second trial of the same period showing further improvement in more than 90 per cent of the trial cohort. On the basis of these significant results, Medlab is proceeding immediately to Phase 2a human clinical studies.

In initiating the Phase I trial, Medlab and the trial leader (clinical psychologist Dr. Matthew Bambling) hypothesised that treatment-resistant depression may be due to a combination of altered neurophysiological and poor gut health issues. Because NRGBiotic targets the gut–brain axis, the researchers expected that this intervention would provide a benefit to the patients diagnosed with treatment-resistant depression.

Medlab is gratified that the trial discovered some positive effects in relation to depression, when existing medicines have been ineffective. The Australian Bureau of Statistics estimates that 45 per cent of Australians aged 16-85 years have met the criteria for a diagnosis of a mental disorder at some point in their lives, and that the annual cost of mental illness in Australia is about $20 billion.

The company also has its NanoCelle technology poised for human trials in a cannabis oral spray for pain management therapy, at a leading Sydney-based oncology research hospital (it is awaiting final ethics approval and government approvals). The pain management therapy combines two cannabis compounds, CBD (cannabidiol) and THC (tetrahydrocannabinol).

NanoCelle will also shortly enter separate human safety trials looking at delivering atorvastatin (also known as Lipitor) and insulin. NanoCelle, which has been extended to 19 other generic pharmaceutical compounds, is a highly promising platform for Medlab.

The company also reported in its FY16 results that preliminary data from laboratory studies in the company’s chronic kidney disease project shows that Medlab compounds and bacteria rescue kidney cells from chemotherapy drug (cisplatin) induced-toxicity. As well, laboratory studies with Medlab bacteria demonstrate significant reduction (86 per cent) in the accumulation of fat by fat tissue cells (adipocytes) in liver tissue; while preliminary data from Phase 2a (human) obesity/pre-diabetes study employing Medlab bacteria showed significant improvement in reducing lipid (fat) accumulation in liver tissue, and restored “vigour” to patients.

Medlab is cashed-up, having recently raised $5.36 million through a 1-for-9 rights issue at 30 cents a share. The cash will mainly be used to accelerate the cannabis-based pain management therapy trials. Revenue more than doubled in FY16 to $2.6 million, although the company is still in loss.

To achieve the faster than originally planned success in its R&D, Medilab concentrated its senior management efforts in the R&D area. However, this decision affected the planned development of the nutraceutical sales, and as a result, the successful R&D program was now running at about 12-18 months ahead of where the company expected it to be – while nutraceutical sales were lagging about 6-12 months behind expectations.

Medlab is doing some great work in the field of understanding the microbiome, and more importantly, targeting ways to address diseases through it. The company’s work with medical cannabis is also ground-breaking. Medlab Clinical has certainly given shareholders an interesting journey so far – expect that to continue as it rolls out fresh bacteria-based medicines, and develops its nanotech delivery platform.

James Dunn

About James Dunn

James Dunn was founding editor of Shares magazine and has also written for Business Review Weekly, Personal Investor, The Age and Management Today. He was subsequently personal investment editor at The Australian and editor of financial website,

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