Atomo Diagnostics (ASX: AT1) has secured an exclusive global licensing agreement with the Burnet Diagnostics Initiative for a Pascal Liver Function test, extending until December 2044. The agreement grants Atomo worldwide rights to commercialise a rapid liver function test that measures alanine aminotransferase (ALT), a key indicator of liver inflammation and damage.
The licensing deal builds on Atomo’s existing partnership with Burnet Institute, which previously yielded an Active Syphilis test under a federal government CRC-P grant. Product development is substantially complete, with diagnostic performance already established through clinical work. A multinational pharmaceutical company is currently evaluating the test for real-time monitoring of drug-induced liver injury (DILI) in a US drug trial, providing commercial validation ahead of regulatory submissions.
Under the agreement, Atomo commits to an immediate licensing payment of $150,000, with additional regulatory milestone payments totalling $650,000 upon securing approvals from the US FDA, European IVDR, and Australian TGA. Royalty payments will commence post-regulatory approval, structured as a percentage of net revenues with reduced rates for low-middle income countries.
“We have developed an excellent working relationship with Burnet through our existing partnership on Active Syphilis and are delighted to expand this strategic engagement to now include an exciting novel Liver test with broad clinical utility across a range of common acute and chronic liver conditions,” said John Kelly, Managing Director at Atomo Diagnostics (ASX: AT1).
What is Atomo’s New Liver Function Test Licence Agreement?
The licensed technology enables rapid detection of liver injury through measurement of ALT, an enzyme that elevates when liver cells are damaged or inflamed. Delivered on Atomo’s proven Pascal cassette platform, the test provides immediate results at point-of-care and in home settings, contrasting with traditional laboratory-based testing that requires days for results.
The Pascal platform has demonstrated commercial viability through an existing supply relationship. In Q3 FY24, Atomo delivered 20,000 Pascal cassettes to Burnet for supply to a multinational pharmaceutical company conducting a US drug trial. This order established proof-of-concept for the test’s application in DILI monitoring, where rapid ALT elevations require urgent clinical response.
The test’s technical advantages include:
- Immediate detection capability versus lab-based alternatives
- Point-of-care accessibility for clinical settings
- Home testing functionality for patient self-monitoring
- Integration with the proven Pascal cassette platform
The agreement enables early identification of liver inflammation of any cause, positioning the test for deployment across multiple clinical applications beyond its initial DILI monitoring focus.
Understanding Liver Function Testing for Investors
ALT is a liver enzyme that leaks into the bloodstream when liver cells are damaged. Elevated ALT levels indicate active liver injury, making the biomarker essential for monitoring both acute events and chronic liver conditions. Traditional laboratory testing requires blood sample collection, processing, and analysis, often taking 24-48 hours for results.
Rapid detection matters because liver injury can progress quickly, particularly in drug-induced cases where continued medication exposure may worsen damage. Clinical applications span acute monitoring scenarios (new medication initiation, drug trial safety surveillance) and chronic disease management (viral hepatitis tracking, fatty liver disease progression). These use cases create recurring testing demand across large patient populations, supporting sustained commercial opportunity.
The Pascal platform’s ability to deliver lab-equivalent results at point-of-care addresses a clinical gap where treatment decisions depend on immediate ALT measurement rather than delayed laboratory feedback.
How Does the Pascal Liver Test Detect Drug-Induced Liver Injury?
The DILI Monitoring Opportunity
Drug-induced liver injury represents the initial commercial focus for the Pascal Liver Function test. DILI occurs when medications cause hepatotoxicity, requiring rapid identification to prevent serious liver damage or failure. Real-time ALT monitoring enables clinicians to detect elevations immediately, allowing for treatment modification before injury progresses.
The multinational pharmaceutical company currently evaluating the test in a US drug trial demonstrates market validation for this application. Pharmaceutical companies face regulatory requirements to monitor safety signals during clinical development, whilst post-market surveillance obligations extend throughout a drug’s commercial lifecycle. The 20,000 Pascal cassettes previously supplied to Burnet for trial support confirm active demand within the pharmaceutical sector.
Point-of-care testing eliminates the lag between blood draw and result availability, enabling same-visit clinical decisions about treatment continuation or modification.
Broader Clinical Applications Beyond Drug Trials
Whilst DILI monitoring provides the commercial entry point, Atomo Diagnostics (ASX: AT1) and Burnet have identified priority applications across chronic liver conditions requiring routine surveillance:
- Viral Hepatitis B and C monitoring during antiviral therapy
- Non-alcoholic fatty liver disease screening in at-risk populations
- Alcoholic liver disease management and abstinence monitoring
- Drug therapy surveillance across multiple medication classes with hepatotoxic potential
These applications represent recurring testing scenarios rather than one-off events. Chronic hepatitis patients require regular ALT monitoring to assess treatment response and disease progression. Fatty liver disease screening programmes involve large population cohorts. The breadth of potential applications reduces dependence on a single clinical indication, diversifying revenue streams across multiple patient populations and healthcare settings.
What Are the Commercial Applications of Atomo’s ALT Test?
Global Market Potential and Revenue Structure
The exclusive worldwide licence positions Atomo to commercialise an easy-to-use rapid test for patients commencing drug treatments with known liver injury risk. With product development substantively complete and diagnostic performance established, the commercial pathway centres on regulatory approvals rather than technical validation.
The financial structure aligns Atomo’s capital deployment to regulatory de-risking events. The immediate licensing fee of $150,000 secures exclusive rights, whilst the $650,000 in regulatory milestone payments are success-based, payable only upon achieving FDA, IVDR, and TGA approvals. Royalty payments commence post-approval, structured as a percentage of net revenues with differentiated rates for low-middle income countries where pricing constraints apply.
| Milestone Type | Trigger Event | Payment Amount | Strategic Significance |
|---|---|---|---|
| Immediate Licence Fee | Agreement Execution | $150,000 | Secures exclusive worldwide rights |
| US FDA Approval | Regulatory clearance | Part of $650,000 total | Unlocks largest diagnostics market |
| EU IVDR Approval | Regulatory clearance | Part of $650,000 total | Enables European market access |
| TGA Approval (Australia) | Regulatory clearance | Part of $650,000 total | Home market validation |
| Ongoing Royalties | Commercial sales | % of net revenues | Revenue-aligned partnership structure |
The agreement contains no material conditions that need to be fulfilled before the agreement comes into full effect. Royalty rates remain commercial-in-confidence but are confirmed as consistent with diagnostics industry standards for agreements of this nature.
Investment Thesis: Why This Licence Matters
The Pascal Liver Function test represents a late-stage commercial opportunity rather than speculative early-stage development. Several factors reduce execution risk and compress the timeline to revenue generation:
- Product development is substantively complete, minimising technical uncertainty
- Diagnostic performance has been established through clinical work undertaken to date
- Active pharmaceutical company evaluation provides commercial validation and potential early revenue
- Proven partnership framework with Burnet Institute (Active Syphilis test precedent)
- Exclusive global rights secured across all territories through 2044
The pharmaceutical company evaluation is particularly material. Large multinational corporations conduct extensive due diligence before incorporating diagnostic tools into clinical trials. The existing 20,000 cassette order demonstrates that this evaluation has progressed beyond initial assessment to active deployment, validating both technical performance and commercial utility.
The licensing structure mirrors Atomo’s successful Active Syphilis partnership with Burnet, suggesting repeatable processes for technology transfer, regulatory strategy, and commercial execution. This precedent reduces partnership risk and provides a template for future collaborations.
Future Plans and Regulatory Pathway
Regulatory Approval Strategy
The pathway to commercialisation centres on securing approvals in three key markets: the United States (FDA), Europe (IVDR), and Australia (TGA). Regulatory milestone payments totalling $650,000 create clear financial incentives aligned with approval achievements, with each clearance unlocking access to distinct geographic markets and patient populations.
The extensive development and clinical work undertaken to date reduces anticipated timelines to regulatory submissions. Unlike early-stage diagnostics requiring substantial validation studies, the Pascal liver test benefits from established diagnostic performance and clinical utility data. The Pascal platform itself has proven regulatory pathways through previous product approvals, potentially streamlining review processes.
FDA approval unlocks the largest diagnostics market globally, whilst IVDR certification enables distribution across European Union member states. TGA approval provides home market access and serves as regulatory validation for other markets requiring comparable evidence standards.
Partnership Momentum with Burnet
The liver function test represents the second major licensing agreement between Atomo Diagnostics (ASX: AT1) and Burnet Institute. The Active Syphilis partnership, supported by a federal government CRC-P grant, established the collaborative framework and validated both parties’ capabilities in technology transfer and commercial development.
Burnet Institute’s credibility as a medical research organisation adds validation to the licensed technology. The organisation’s focus on market-ready products addressing real-world clinical needs aligns with commercial viability requirements, reducing the risk of licensing technologies lacking clear application pathways.
“The Burnet Diagnostics Initiative is focused on developing market-ready products that address real-world clinical needs and improve outcomes for patients. An easy-to-use point-of-care ALT test has the potential to benefit multiple patient populations across a range of conditions by enabling earlier detection, faster clinical decision-making, and more timely access to appropriate care. We are delighted to partner with Atomo to bring this important innovation to market as quickly as possible and expand its impact globally,” said Jen Barnes, Director of Commercialisation at Burnet Institute.
The expanding partnership creates pipeline optionality for additional diagnostic technologies. Burnet’s research portfolio spans multiple disease areas and diagnostic modalities, positioning Atomo to potentially license future innovations as they reach commercial readiness. The existing relationship reduces transaction costs and negotiation timelines for subsequent deals, creating a strategic advantage in accessing novel diagnostic technologies.
Don’t Miss the Next Biotech Breakthrough
Atomo Diagnostics’ licensing deal with the Burnet Institute demonstrates the type of clinical validation and commercial traction that separates viable biotech plays from speculative ventures. For investors tracking the ASX biotech sector, identifying these inflection points early remains critical to portfolio performance.
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