ASX small-cap stock Biome Australia Ltd (ASX: BIO) has drawn attention from analysts at Bell Potter after a big announcement.
The company develops and commercialises clinically backed innovative live biotherapeutics (probiotics), marketing 18 products under the 'Activated Probiotics' brand.
Activated Probiotics is a range of live biotherapeutic products aimed to help prevent and support the management of various health concerns.
Yesterday, the company announced the launch of its first human clinical trial.
Image source: Getty Images
What is the trial?
The company is embarking on its first human clinical trial for its proprietary probiotic strain, Lactobacillus plantarum BMB18 (BMB18).
According to Biome Australia, the human clinical trial will investigate the efficacy of BMB18 in patients experiencing digestive symptoms (e.g. bloating, discomfort) and/or occasional sleep or mood disturbances, and examine its impact on digestive function, mood, sleep and quality of life.
According to the company, the strain demonstrated an ability to effectively modulate immune responses and inflammation. It also can reduce oxidative stress, and maintain intestinal barrier integrity.
The trial follows positive outcomes with in vitro studies conducted by a BIO research partner, where the strain was shown to effectively modulate immune responses and inflammation, reduce oxidative stress, and maintain intestinal barrier integrity.
The trial is expected to commence in February 2026, lasting 12 months, with the trial conducted by La Trobe University.
Speaking on the trial, Biome Managing Director and Founder Blair Norfolk said:
The registration of our first human clinical trial on L.P. BMB18 represents years of dedicated research and development work by the Biome team. The strong positive outcomes from our in vitro studies provided the foundation for this next critical phase of clinical validation.
Why is this significant for Biome?
Following the announcement, Bell Potter released a new report on the ASX small-cap stock.
It said Biome Australia is aiming to further differentiate itself in the gut health market through product innovation across its existing products and enabling new product launches.
According to the report, by owning its own strain, this ASX small-cap can enhance product yield and as strains form a substantial part of a products formulation, lower its costs of goods sold, thereby improving its gross margins.
This drives improvement in BIO's intrinsic value and qualitative elements.
Bell Potter said this also provides future licensing opportunities to other operators.
Significant upside
In yesterday's report, Bell Potter maintained its buy recommendation on this ASX small-cap stock.
It also maintained its price target of $1.00.
From yesterday's closing price of $0.395, this indicates an upside of more than 150%.
BIO's operating leverage is starting to come through, and we would expect to see EBITDA improve further through FY26. Building its own IP should enhance gross margins over time. Maintaining quality in its growth performance should eventually see BIO recognised by the market resulting in a re-rate.
