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Signify Premium Insight: The Concerted Effort that TeraRecon Must Make

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis 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 ResearchTo view other recent Premium Insights that are part of the service please click here.

Last month saw Boston-based vendor ConcertAI secure $150m in series C funding, adding to the $150m series B round in 2020 and boosting the company’s valuation to $1.9bn. The AI start-up, which specialises in offering real-world data to life sciences firms to manage regulatory clearances and develop clinical trials, and supporting healthcare providers to improve patient experience, will use the money to scale its software solutions.

The funding puts ConcertAI in a strong position. But will AV and medical imaging AI firm TeraRecon, which was integrated into ConcertAI in November 2021, also see any benefit?

The Signify View

TeraRecon first became linked to ConcertAI after being acquired by corporate parent SymphonyAI in March 2020. This portfolio of companies seeking to develop new generation AI solutions across a variety of sectors, from retail to financial services, brought TeraRecon on board and placed it alongside stablemate ConcertAI. At the time the deal seemed to offer clear synergistic opportunities for both parties such combining population data from ConcertAI with imaging biomarker technology and expertise to improve patient stratification for oncology clinical trials. Alternatively, providers could utilise imaging data from TeraRecon alongside EHRs and real-world data from ConcertAI to develop more integrated care management solutions.

Since then, however, TeraRecon has been relatively muted. Instead of revealing new, integrated products, public releases and announcements have slowed and several key c-suite personnel have left. This seems something of a regression from several years ago when TeraRecon was among the earliest of AI vendors to promote the AI-marketplace-platform model, securing patents and forging ahead with a novel approach to radiology AI’s last-mile challenges. Moreover, the senior leadership at TeraRecon were at the forefront of every industry debate and event discussing the role of AI in medical imaging.  Concurrently, the vendor was among the strongest independent AV vendors, securing good market share and beginning to make connections between AV and AI.

The firm hasn’t given up much ground from this position in AV, a market that moves slowly after all, but neither has it moved forward whilst other vendors have made headway, somewhat negating its early ascent. One initiative, for example, was to integrate AI tools from its platform with its own AV capabilities, packaging the combinations into specialist “premium” suites that were more attractive than individual tools. While TeraRecon’s progress slowed on this front, imaging IT vendors, AV vendors and modality vendors have incorporated competitive AI offerings, increasingly eroding the specialism that allowed TeraRecon to shine.

Move to the Money

Against this backdrop of increased competition and lengthy implementation cycles for clinical AI, integrating TeraRecon into ConcertAI is a sound move that offers a more direct route to financial success. Making significant returns in clinical AI is a difficult and drawn-out affair. The technology’s profitability is stymied by several barriers including a lack of reimbursement and a lack of financial impact studies, as well as the fundamental question of who will foot the bill. In preclinical and life sciences, on the other hand, the route to returns is much clearer, with pharmaceutical firms willing to invest in specific drug discovery projects, effectively using ConcertAI or alternatives as an external research team with project or milestone-based fee structures. This approach enables ConcertAI to gain commercial traction whilst waiting for the clinical market to mature. In the near term this could leave TeraRecon as a diagnostic imaging specialist whose expertise is applied to the preclinical space, with areas such as companion diagnostics a potential strength. For ConcertAI, having such expertise in imaging analysis in-house, and promising to utilise imaging data alongside other clinical data, could be a major selling point, improving the vendor’s odds of courting big-pharma and top academic provider interest.

Despite that, in the grand scheme of ConcertAI’s opportunities, TeraRecon’s existing AV business does not appear to be a  priority. ConcertAI has recently announced strategic agreements with the likes of Pfizer and Bristol Myers Squibb, so the returns of its funding round will be spent on the development of capability and service that can support such multi-billion-dollar companies. TeraRecon is not a central part of that strategy. It will, for the most part, be able to maintain the share it has carved out for itself within the AV IT market mid-term, and its technology will lend an edge to ConcertAI in preclinical, but it is unlikely to be able to chart its own course, and invest in its own growth in AV, as it would have been able to prior to its acquisition.

A Deal to be Done?

Given this impasse at which TeraRecon sits, it could be seen as an attractive acquisition target by vendors looking to round out their imaging IT portfolio. While ConcertAI will value TeraRecon’s AI capabilities and the vendor’s AV expertise, aside from being a dependable, albeit comparatively small source of revenue, it will be a lower priority to the vendor. As such ConcertAI could look to pare of TeraRecon’s AI abilities to bolster its preclinical and life sciences package, and then sell off the remaining AV business.

There are several vendors that would both benefit from such an acquisition and have deep enough pockets to make it a reality. Two of the most obvious names are Intelerad and IBM Watson Health. Since private equity investor HG Capital acquired a majority stake in Intelerad in early 2020, the imaging IT vendor has been on an acquisition spree, picking up Ambra, Digisonics and LumedX among others.

The vendor has also shown that it is beginning to link together the capabilities of these formerly disparate businesses into one cohesive whole (see In Step with the HIMSS Set, Intelerad Marches Forward). However, this enterprise imaging platform to-be, as yet lacks an AV solution, an omission that could be readily addressed by the acquisition of TeraRecon. What’s more such a deal would also net the vendor TeraRecon’s 10% share of the North American AV IT market in 2021, handily propelling Intelerad’s total imaging IT market share from 3.5% to 5% in North America.  The story is similar for IBM Watson Health. Freed from the wider tech business Watson Health’s new owners, Francisco Partners, could handily add TeraRecon’s AV capability and market share, to advance Watson Health’s along its enterprise imaging journey.

The Here and Now

For ConcertAI, the funding is another sign of confidence in strategic focus on real world evidence for life sciences. With a valuation of $1.9bn, it is clear great things are expected of the start-up. These, in the near term at least, are unlikely to come from TeraRecon and its strengths in image analysis or AV capability.

There is an advantage to using image analysis in its preclinical and drug discovery remit. Longer term there are lucrative possibilities such as the identification and cataloguing of imaging biomarkers, enabling diseases to be increasingly diagnosed from imaging alone, reducing the need for biopsies and other interventional diagnostic procedures. Such tools could be commercially successful, but would first require significant investment in research and development and would still take several years for any sizable returns.

Instead, it seems that TeraRecon, and the capabilities it brings, may not be the best complement to ConcertAI’s trajectory, while the company’s recent quietude and personnel changes also suggest change could be afoot.

Ultimately, regardless of its origins, this change could be welcome, with the clinical markets in which TeraRecon blossomed, increasingly under pressure; AV tools are being incorporated into broader imaging IT platform vendors to enhance diagnostic capability, interest is growing in edge AI and modality vendors are looking to bring such technology to their hardware, and there is growing appetite for the care pathway approach. Competition from leading imaging giants such as Siemens Healthineers, Philips and GE Healthcare is only going to intensify as AV is encompassed into broader diagnostic care packages of modality, edge AI, diagnostic viewer and service line offerings, while emerging AI platforms such as Blackford Analysis, Aidoc and others attempt to carve out their own piece of the imaging analysis market.

ConcertAI’s funding round will not solve these problems for TeraRecon. However, as ConcertAI grows its path will increasingly diverge from TeraRecon’s AV heartland, forcing the latter to act. Whether that is as part of a different parent, or in new partnerships with others, change is essential. For TeraRecon, stasis is unsustainable.


About Signify Premium Insights

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 ResearchTo view other recent Premium Insights that are part of the service please click here