Artificial intelligence (AI) is rapidly changing almost every single industry, and radiology is where some of the most exciting advancements are happening.

Unsurprisingly, this is catching investors’ attention. US$5 billion in capital has been raised by companies using AI to improve medical imaging over the past few years, with vastly increased valuations being achieved because of the significant positive impact these technologies can have on people and the healthcare system.

Nicolab is an AI-driven medical technology company that is revolutionising the way in which stroke is diagnosed in emergency care, where every minute matters. The company has received FDA clearance for StrokeViewer® HALO and is already rolling out its software solution globally.

Addressing the global challenge of delays in emergency treatment of stroke

1 in 5 people suffer a stroke in their lifetime, with 15 million strokes occurring annually worldwide. In total, there are $600 billion in direct healthcare costs after stroke and $879 billion in lost labour income. If diagnosis and treatment could happen just minutes earlier, many more lives could be saved – and burdened healthcare systems could thrive. The 800,000 strokes a year in the United States cost the country more than US$56 billion a year.

Nicolab’s flagship product, StrokeViewer®, has a full suite of AI algorithms, all of which are CE and TGA approved. These algorithms are able to accurately engage in haemorrhage detection, ASPECTS scoring, LVO (large vessel occlusion) detection and localisation, collaterals scoring, automated perfusion and quality checks.

The tasks that StrokeViewer® performs are normally carried out by radiologists, neurologists and emergency physicians, but can be done faster and more accurately by Nicolab’s AI algorithms, before being verified/checked by the relevant doctors.

Diagnosing and treating both ischemic (clot) and hemorrhagic (burst blood vessel) stroke is a nuanced task that has to be rapidly completed across a chain of processes that involves various different clinicians. This is almost always done in a high pressure, time critical emergency environment where mistakes can be made that cost lives. 40% of patients arrive at hospital too late for treatment, and 60% arrive out of hours where stroke specialists may not physically be in the hospital (PMID: 32943483). Based on studies in the US between 2003 and 2014, for every minute treatment is delayed, 22 days of healthy life is lost and $2,236 of societal and healthcare costs are incurred.

Source: Nicolab 2024 IM 1) Fasen BACM et al, Nueroradiology, 2022 2) Kunz et al, Neurology, 2020

Improving peoples life and saving costs for the healthcare system

With StrokeViewer®, patients are misdiagnosed 50% less often at initial examination, 2.4x more likely to be treated with emergency clot retrieval, and 9.4x more likely to have a successful emergency clot retrieval procedure (PMID: 35137270). This leads to 1.8x greater likelihood of the patient going on to live an independent life after stroke, not needing life-long expensive home care. Furthermore, patients are not subjected to unnecessary extra scans, with StrokeViewer® resulting in 34% less re-scanning, saving time and avoiding duplicate and costly CTs or MRIs.

For the patients, 27.3% experience less neurological deficit, while 72.8% experience lower levels of long-term disability. Based on independent studies in the Netherlands, there is also an average monetary benefit of $102,227 per patient, who overall spend far less time in hospital.

Source: Nicolab 2024 IM

Nicolab’s proven product now being rolled out globally

Nicolab is the market leader in the Netherlands with approx. 40% market share in hospitals with stroke services. Nicolab started selling StrokeViewer® in the Netherlands in 2020, and despite numerous covid disruptions, have expanded to over 200 hospitals in less than 4 years. A significant portion of this time was spent targeting single hospitals before the shift in strategy to target hospital networks.

They have also successfully signed commercial contracts in the US, Europe and ANZ, including the United States Department of Veteran Affairs Hospital Network (58 hospitals) and Global Neurosciences Institute (2 hospitals).

Nicolab has outstanding sensitivity for occlusion detection, with sensitivity of 99% including ICA-T and M1 occlusions in the anterior circulation – which is the highest sensitivity of LVO detection on the market. They are competing in the global interventional neuroradiology and image exchange markets, which are forecast to be worth $4.5 billion and $7.1 billion by 2025, respectively.

Nicolab is competing with a small group of companies offering similar solutions in the forecasted $4.5billion global market for interventional neuroradiology, however it has yet to lose a competitive tender process on the back of several competitive advantages. Theirs is the only FDA-cleared mobile diagnostic viewer that is fully certified for diagnostics use, offering the highest sensitivity/specificity data for its use in the market. Being 100% software based, the Nicolab app allows for easy, flexible, client-centric implementation and maintenance where competitors rely on out-of-the-box hardware.

Boost from partnership with medtech giant Philips

Nicolab also has a game-changing partner with Philips, a leading worldwide healthcare company, with a 20% market share in the diagnostic imaging field. Philips are market leader for Image Guided Therapy (IGT) globally and have an overall sales revenue of $15.3 billion for their Diagnosis and Treatment segment.

As part of this partnership, Philips has signed a Share Subscription Agreement with Nicolab, to invest a total of $6.5 million. To date, $4.5m has been invested, with the final tranche of funds expected in Q2 2024.

In October, Nicolab had joint success with Philips on their bid for Singapore Health, with StrokeViewer® being a key element to the value proposition for the customer. The SingHealth win is important not only for Philips in unseating their competitor from this installed base, but also with StrokeViewer® being a key component on why the clinicians chose our joint submission. The inclusion of StrokeViewer® in the offer convinced the customer to change vendors. This is a true win-win  scenario for both Philips and Nicolab. Overall, customers seem to be very satisfied, as evidenced by their 95% retention rate.

Nicolab and Philips are undertaking product co-development around Clot Characteristics, which will enhance Philips’ strategic position in the market. The newly developed integrated product will be offered with every new Philips Neuro Angiosuite, opening up new hospital networks with potential to increase revenue significantly for Nicolab. Additionally, there is the opportunity to upsell StrokeViewer® and other new products once in the hospital. The Clot Characteristics Technology will also be integrated into Philip’s Azurion platform.

Source: Nicolab 2024 IM

2024 the year of scale up powered by institutional investment

For the highly experienced Nicolab board, 2024 is the year of capitalising on their past years’ investments in assets and partnerships which is why they promoted healthcare veteran Michael Macilquham to CEO, bringing in highly relevant experience from healthcare giant Siemens.

The company is forecasting ARR  of $9.7m for the end of 2024, rising to over $60m, with an EBITDA forecast of over $20m in 2027. However, the partnership with Philips has the possibility  to boost 2027 revenue numbers to over $100m (EBITDA >$70m), making for significant upside.

Nicolab is backed by leading institutional growth capital investors including Fifth Estate, Ellerston Capital, Regal, Perennial Partners and Washington H. Soul Pattinson, and this capital raise allows the Reach network to invest in a preference share structure which enables entry at the same or better terms as these institutional investors. Management are seeing a range of exit options available to them including IPO or a trade sale to one of the medtech giants looking to bolt-on Nicolab’s highly relevant capability that can be used for various other settings.

In order to drive efficiency in the healthcare system, while still striving for ever growing levels of accuracy in the face of declining amounts of physicians, medical practitioners must be armed with tools that they can rely on. AI in radiology is the most patented specialty in medicine, with the ability to detect pathologies faster and more accurately the ultimate key to driving positive impact in healthcare.

You should read the Offer Documents in full before making any decision on this wholesale investment. Any advice is general only and does not consider your objectives, financial situation or needs, and you should consider whether it’s appropriate for you. Past performance is not an indicator of future performance.