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In recent weeks Australian AI developer Harrison.ai joined an exclusive club. After securing AUD129m ($94m) in Series B funding, the outfit has become one of the handful of well-funded medical imaging AI vendors that have raised more than $100m.
The funding, which brings Harrison.ai’s total raised in the last two years to over $120m, was led by returning investor Horizons Ventures and also saw participation from Blackbird Ventures and Skip Capital. These investment firms were also joined by Sonic Healthcare and I-MED Radiology network two Australian providers which have deployed Harrison’s AI offering, lending the round an unusual level of consumer, as well as financial, weight.
Beyond merely investing in the firm, these provider partners will also help Harrison.ai target new areas of healthcare, with the vendor announcing plans to target pathology, among others.
The Signify View
As medical imaging AI success stories go, HeartFlow’s is hard to beat. As discussed in a previous Premium Insight when the heart health developer listed, it set a new financial benchmark. When it first launched on the New York Stock Exchange, the vendor had a pro forma enterprise value of $2.4bn, becoming medical imaging AI’s first unicorn.
Another of medical imaging AI’s financial flyers is Infervision. This Chinese vendor was itself the subject of a Premium Insight when it received $139m in Series D funding in July, bringing its total funding to more than $210m (despite an undisclosed Series C funding round).
Look back a few years however and these vendors’ series B funding rounds pale in comparison to Harrison.ai’s with Infervision securing $47m in 2018, while HeartFlow’s series B was only $20.4m in 2011. Of course, changing markets and changing VC strategies mean that these figures aren’t directly comparable to the nigh-on $100m that Harrison.ai has just secured for itself, but it does indicate the kind of rarefied company that the vendor is joining. It also begs the question of how such a sum has been achieved.
Comprehensive Valuation
There are a number of factors that have gone into establishing its valuation, but at the core is Harrison.ai’s central product, its Annalise.ai diagnostic imaging AI. Key to this product is its comprehensive approach to diagnostic radiology. Most solutions automatically identify a number of findings on an X-ray, but still rely on a radiologist to identify those not covered. AI vendors are addressing these gaps using various methods including partnering with other developers to add additional capability or creating platforms and bundling individual algorithms into suites which address particular clinical requirements.
Annalise.ai instead aims to ‘solve’ a particular scan type (its focus so far has been chest x-ray) and automatically identify all possible findings on any given image. So far, its solution identifies over 125 findings. In doing so it aims to make the selection, deployment and use of AI easier for providers. Further value could also be added to the solution in future as additional workflow tools are included, such as structured reporting, for example.
This approach looks to be effective, with the vendor’s own validation studies, which were published in The Lancet Digital Health in July, showing that radiologists assisted by the tool performed better in the vast majority of cases than those that weren’t assisted. What’s more the model’s AUC was also found to be statistically superior to unassisted radiologists for almost all findings.
Beyond published research, however, real world indications also show the value of the tools, with several providers choosing to use the tools in their own hospitals, including Sonic Healthcare, and I-MED, which have gone on to invest in Harrison’s Series B funding round. The fact that customers have quickly become investors is quite the endorsement.
The company’s ambitions, however, do not stop at chest x-ray, and they are looking to develop comprehensive solutions to other high turn-over scan types. In the long run, the company wants to address most of the high turnover scan types via its potential portfolio of comprehensive AI solutions. Early on, this was viewed as a potentially risky approach, such is the breadth of competition that has homed in on higher-volume scan types like chest X-ray. However, the comprehensive findings approach in a singular offering has allowed Harrison to stand-out from the crowd of aspirant vendors, most of which are offering a singular or a limited number of findings.
Ambitions in Pathology
The performance of Harrison’s radiology AI offering is only half the story, however, with the vendor’s stated ambition in pathology also having an impact on its prospects.
AI applications in pathology do, after all, hold significant potential, but the conditions for this potential to be realised are not yet in place. The most significant challenge is the general under adoption of digital pathology. However, this is starting to change with several factors such as regulation changes in the US, and the turbulence created by Covid-19 highlighting the lack of digitisation in pathology and giving impetus for change.
As these and other catalysts continue to grow in significance, the adoption of digital pathology will increase. As evidenced at RSNA, this is also a trend among imaging IT vendors which will increasingly incorporate pathology into enterprise imaging platforms. Against this backdrop, pathology AI will be able to find a footing.
The quantitative nature of many tasks in pathology as well as the shortage of pathologists (which is even more acute than the shortage of radiologists) means it is an opportune discipline for AI to have a significant impact, especially as the breadth and complexity of pathology diagnostic findings is a multitude higher than in radiology. This could be particularly true for a vendor such as Harrison, which has been especially thorough with its approach to its comprehensive chest X-ray solution. Frankly, singular point applications will have limited traction in pathology.
Cohesive Competence
Harrison.ai is looking to take this cohesive approach further, expanding out of radiology and addressing another slice of the diagnostic workflow. Longer term this digital pathology tool, the chest X-ray tool and potential future tools could all be integrated, leaving solutions that are more complete in both individual areas, but also along the entire workflow. This cohesion could be particularly useful in areas like oncology, as the broader remit of such solutions would see the vendor providing a service rather than a technology solution. This would enable it to prompt purchasing decisions to be made at a more executive level (e.g., C-suite), tapping into a larger budget pool. However, multi-disciplinary convergence in diagnosis is only just gaining traction in care settings, so in the near and mid-term, Harrison should remain focused on serving each individual diagnostic sector to ensure continued success.
The fact that Harrison is also looking to develop its pathology tool alongside recent customer Sonic is also an advantage. Data is obviously one of necessities for vendors looking to develop AI solutions, but, for pathology in particular, this data is scarce. By partnering with Sonic, Harrison will have access to an abundance of clinical data for algorithm training and refinement, as well as a large user base on which to conduct pilot deployments and validation studies. These are all essential for the successful development of a digital pathology AI tool, and having a route to achieve these already in place will give Harrison an edge over some of its competitors.
Looking to develop a pathology solution was also shrewd from a commercial, as well as a clinical, perspective. While increasing numbers of medical imaging AI vendors are securing ever higher funding rounds, pathology vendors have recently tended to fare better as investors have noted that a surge to adoption is pending, with for example Paige securing $100m in a series C round in January, and PathAI netting $165m for series C in July. This disparity is in part a result of the applicability of some solutions to drug discovery, a market which harbours the greatest returns near-term, but also relates to the relative upside of tackling a pathology market that is still heavily analogue and therefore ripe for disruption.
Of Value and of Worth
In receiving $94m in series B funding, Harrison AI has joined a very exclusive group of medical imaging AI vendors funded over $100m. What’s more impressive is that it has achieved this at an earlier stage than any of its peers. The road ahead is long, and the money will be quickly allocated to address its often quite expensive priorities. Continued commercialisation of its chest X-ray solution will be the first order of business; securing US-FDA regulatory approval and selling into and supporting providers will also require significant funds. Looking further ahead, investing in product development for comprehensive solutions that address other high volume scan types will undoubtedly follow. In pathology, Sonic will provide a short-term commercialisation base, but in the more analogue pathology sector, the firm will also have to take on a degree of market education and evangelism, a process that can have a substantial cash-burn rate.
If these priorities can be achieved, and Harrison.ai can begin generating sizable revenues, then the trajectory for future funding rounds and potential listings could be unprecedented. Moreover, the vendor could have a profound influence on the direction of AI. Many of Harrison’s peers are trying to add value in different ways, such partnering to create suites and developing end-to-end solutions that address entire clinical workflows. Harrison.ai offers another way, creating truly comprehensive solutions for specific use cases and then expanding into other adjacent areas. If the vendor is able to achieve commercial success on a par with its funding success, the developer will no doubt sit alongside HeartFlow as a posterchild of the segment. This could be particularly true if the vendor decides to list in the future.
There are, of course, challenges ahead. A lack of standardisation in pathology could make things harder than the DICOM-based world of radiology, while looking to split focus, as well as investment, between different areas, particularly when the vendor is still so young, could prove to be detrimental to both. Doubly so as it begins to compete with more established competition on both fronts.
These are proportionately minor worries, however. Harrison.ai has progressed carefully and methodically and to the pain of its competitive peers, very quickly. Now, bolstered by extra cash, and guided clinically by its customer partners, the precocious vendor is ready to demonstrate that its worth extends far beyond its valuation.
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This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify Research. To view other recent Premium Insights that are part of the service please click here