Tag Archives: Nanox

CT Equipment

Signify Premium Insight: Nanox Investing; Another Extreme Sport

Nanox, the upstart medical imaging vendor which promised to revolutionise access to medical imaging thanks to its unique cold cathode X-ray source has finally overcome the most significant barrier that has so far stymied the vendors’ growth.

The vendor originally expected to receive regulatory approval from the US-FDA for its multi-source 3D X-ray device in 2021. This timeframe was repeatedly pushed back, which, along with other unusual factors, led to some questioning the vendor’s prospects. The most scathing of which compared the vendor to disgraced fraudulent blood testing firm, Theranos.

Nanox, although later than planned, has prevailed through these difficult times and has now secured full FDA approval for its ARC scanner. The award, which clears the device for commercial sale caused the vendor’s shares to jump after proving that there is some substance to the company’s claims. Approval is only one part of the puzzle, however; the question becomes will anyone buy it?


Signify Premium Insight: The Possible and the Practical: Lumitron’s HyperVIEW

An Australian imaging start-up, which claims to have created a system offering 1,000 times the resolution of a traditional X-ray, is looking to bring its ambitions to life with the help of new funding.

Lumitron, whose imaging system, the HyperVIEW, uses a high energy laser light source to produce medical images, hopes to tap investors for US$20m, ahead of a possible Nasdaq listing in 18 months.

As with any so-called revolutionary technology, a healthy dose of scepticism surrounding an innovator’s claims is required. Even so, even when a technology performs as promised, there are other barriers, often unforeseen, that can mar an innovation’s progress on its route to adoption.

Signify Premium Insight: Varex Banking on the Micro-X-Factor

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Last month, Varex and Micro-X announced that they had signed a long-term strategic collaboration agreement, centred around Micro-X’s multi-beam X-ray tubes.

For a non-refundable fee of $7.5m, the deal will grant Varex an exclusive license to use Micro-X’s NEX Technology for cold-cathode multi-beam X-ray tubes, along with an equity subscription to achieve a 9.9 percent holding in Micro-X.

As one of the world’s largest producers of X-ray tubes and flat panel detectors, Varex’s interest will also help commercialise multi-beam emitter technology, and help Micro-X better monetise its core technology.

The Signify View

Many technological innovations are developed by smaller specialist vendors, with very particular expertise and experience serving niche markets. These smaller vendors, however, frequently lack the size to scale their innovations and turn them into a commercial success. In these cases, forging ties with larger companies, through, for example, partnerships, licensing agreements or even acquisitions can help turn a smaller specialist vendor’s innovations into a broader commercial success.

Micro-X will hold such hopes in its agreement with Varex. Micro-X has worked to develop its NEX cold cathode multi-beam X-ray tubes, but by licensing its use to Varex, the vendor’s X-ray tubes could be sold to a far greater customer base in far greater numbers than would be possible otherwise. Varex is, after all, among the market leaders in the X-ray tube and flat panel detector markets, claiming 19 percent market share in the latter.

Despite its strength in these markets, however, the company does face challenges. It does, like many of its peers, face being undercut by cheaper Chinese vendors, which have, over recent years, driven down the prices of flat panel detectors and caused large FPD manufacturers like Varex to review their supply chains and manufacturing facilities as a result. More sophisticated technology, such as Micro-X’s multibeam emitter technology is less likely to face such affordable competition given the technical hurdles it presents, and therefore represents a sensible area in which Varex can diversify.

Optimisation Opportunity

The deal also makes sense for other reasons. By offering both the multi-beam emitter and the flat panel detectors, Varex can optimise the package as a complete system, rather than X-ray system manufacturers having to undertake such optimisation. This will give Varex an advantage, allowing it to leverage its strong sales of flat panel detectors to strengthen its position in the X-ray tube market, while also enhancing its technical prowess, making it a stronger competitor in more advanced imaging use cases.

Such a plan would not be new for Varex, which adopted a similar strategy in 2019, when it acquired photon counting specialist Direct Conversion. While the move was focused on the detector rather than emitter component of an X-ray imaging system, the principle was the same. It allowed Varex to access sophisticated, specialist technology developed by Direct Conversion, and utilising its global reach, its strong sales network, its reputation and its connections to many of the world’s leading medical imaging X-ray manufactures, offer its customers an improved X-ray detector.

The rationale with Varex’s agreement with Micro-X is very similar. However, the execution is somewhat different, with Varex opting to enter into a licensing agreement with an equity subscription, rather than an outright acquisition as it did with Direct Conversion. Such a decision may present some obstacles, with the vendor foregoing the ability to have complete control over the X-ray tube producer. However, given that the agreement between Varex and Micro-X is exclusive, the difficulty this causes will be minimal. What’s more, such an agreement will also be advantageous for Micro-X, which as well as offering systems for the medical imaging market, also offers X-ray tubes for specialist industrial and security uses.

Beam Convergence

Aside from the direct impacts on Varex and Micro-X themselves, the move furthers developing trends in the medical imaging market including the convergence of X-ray and CT imaging. The use of multi-beam X-ray emitter technology, particularly if used in conjunction with photon counting detectors, could offer higher resolution and better tissue characterisation. What’s more, such advantages could be gained while systems also become smaller, lighter and more portable than traditional X-ray devices, allowing X-ray and tomography to be taken out of the more traditional settings.

Largely these advantages stem from the fundamental differences in Micro-X’s NEX nanotube X-ray emission technology. This innovation uses a cold cathode electron source rather than the traditional heated filament. Such an approach makes the electron source smaller, lighter and more robust, allowing it to be utilised in more sophisticated ways in medical imaging systems.

At present, there are very view vendors commercially offering cold-cathode nanotube X-ray source technology, giving Micro-x and now Varex an advantage when it comes to commercialising their product. Perhaps the most high-profile competitor is Nanox, which places a cold-cathode carbon nanotube X-ray source at the centre of its Arc scanning system. Nanox has, however struggled to get its commercial, multi-source X-ray source approved by the FDA, rendering it, as yet an untenable option for many providers.

This does nothing to improve the Israeli vendor’s reputation, which was severely tarnished by a number of short-sellers, and a general lack of clarity around its product when it first listed publicly in 2020. Micro-X and Varex, on the other hand are both well-established vendors, with well-proven products, and hard-earned reputations from satisfying significant customer bases for many years. This should give systems developed using Micro-X’s X-ray source a significant advantage over lesser established vendors such as Nanox, although if Micro-X systems demonstrate sizable improvements, other vendors, including Nanox, which are developing comparable systems, could also find their credibility improved.

Brand Loyalty

This is particularly true given that Varex provides solutions to some of the biggest names in medical imaging, including Canon Medical, GE HealthCare, Elekta, United Imaging and Varian among others. This commercial reach will expedite the uptake of Micro-X’s technology and continue the advancement of X-ray technology. Varex’s scale will allow the X-ray sources to be produced more affordably, while the technology offered will allow both Varex and the customers it serves to differentiate themselves from the milieu of other, potentially cheaper vendors, which lack the top-end capability.

Ultimately, as with almost any technological advancement, adoption is gradual, with customers taking their time to appreciate, and more importantly, invest in a product’s touted benefits. The same is likely to be true of Micro-X’s NEX technology. However, alongside photon counting CT and dual-energy CT, the adoption of cold cathode emission technology by a market leader in the X-ray space means another opportunity has come to the fore, ready to be leveraged by modality manufacturers looking to distinguish themselves from the competition.

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Signify Premium Insight: The Questions that Nanox Would Rather Not Answer

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.

Nanox Imaging, the young vendor which hopes to bring 3D medical imaging to a bigger audience with a new, more affordable modality has recently released its first quarter 2022 results.

The figures were a mixed bag. Revenues of $1.8m marked a considerable improvement on no revenue for the comparable quarter in 2021, and a fair improvement on the $1.3m taken in the prior quarter. Of this revenue $1.7m came from teleradiology services stemming from Nanox’s 2021 acquisition of USARAD, while another $0.1m came from AI solutions brought in by the vendor’s acquisition of Zebra Medical Vision last summer. As such the vendor generated no revenue from its flagship Medical Imaging-as-a-service product.

Although revenues grew, so did losses, with Nanox reporting a net loss for the period of $21.7m, $9m greater than for the same period last year. The Israeli vendor pins this loss on expenses related to the consolidation of its acquisitions.

The Signify View

It is easy, and very often unfair, to take an innocuous moment and bestow it with undue significance, but on occasion, for those scrutinising a company’s strategy, those moments are hard to resist. So it was during the analyst call for Nanox’s first quarter results. As the Q&A portion of the call began, the first question pertained to the expected timeframe for the regulatory approval of the vendor’s key, multisource scanner. The device around which the company’s entire business is hung.

“For some reason I can’t hear you” came the response from Nanox CEO Erez Meltzer.

The question was asked again.

“I can’t hear for some reason” Meltzer repeated, “There’s a lot of noise in the background.”

“Can you repeat the question?”

Eventually, the message got through, and Meltzer offered a response, albeit one that failed to elaborate on details given elsewhere. It would, however, have perhaps been easier for Nanox had these technical difficulties not been resolved.

The Nanox Keystone

The Israeli vendor’s strategy is, after all pinned to the success of its Nanox.ARC multisource tomosynthesis system. This scanner, which is reliant on the vendors’ proprietary cold-cathode X-ray source, sits at the heart of an ecosystem that brings together scanners, AI tools, cloud-based imaging software and teleradiology services into a single, affordable, ongoing service. Approval for this tomosynthesis system, has however not been forthcoming. Originally, Nanox planned to deploy scanners in the first half of 2021, this date got pushed back and last spring was revised to a “late 2021” launch. Now, having submitted 510(k) documents to the FDA in June 2021, responded to a request in August, withdrawn the submission in January 2022, applied via a different pathway in January 2022 giving details of a refined version of the scanner, the vendor is in dialogue with the FDA and expecting to submit supplementary information and an entirely new 510(K) application in the future. Notably, no time frame, other than noting the FDA’s 510(K) process usually takes three to 12 months, has yet been given for these stages.

But without approval, other than revenues which are, quite frankly, insignificant for a vendor that raised more than $160m in its IPO, the company cannot hope to stem its losses and begin generating more palatable returns. With approval, however, the vendor can look to quickly scale, utilising its new chip fabrication plant in South Korea to produce ARC scanners in significant numbers. These can be deployed for minimal upfront cost for the customer, with Nanox instead deriving revenues from their use of its teleradiology services, AI tools, and software packages, as well as paying a fee for each use of the scanner. This is when Nanox hopes to be able to begin justifying the excitement and investment it has enjoyed.

Agree to Disagree

There is, on the face of it, considerable appetite for this approach. Nanox has already entered into 11 agreements to deploy 6,500 systems in 17 countries, which, according to the vendor’s Form 20-F will bring in a minimum of $187.5m annually. There are some caveats to this rosy response, however.

Many of these agreements were made in 2020. At this time there was a lack of clarity surrounding the expectations for Nanox’s ARC scanners, with since-removed images claiming capability equal to tomography rather than tomosynthesis systems.

Image comparing Nanox’s system to a traditional scanner, taken from www.nanox.vision, archived on 02/07/2019

The customers’ expectations about the Nanox.ARC may have been quite different to the actual systems that Nanox is (assuming FDA approval) ultimately able to deliver. Another pressing concern for Nanox is that in some cases the initial terms of these early agreements are quickly approaching. With the earliest coming in February 2023. Given Nanox’s difficulties in bringing the products to market, and the now clearer understanding of what the ARC scanners are actually capable of, it is possible that many of these early customers will choose not to continue with their initial orders, an eventuality given more credence by the fact that the vendor only signed two new agreements in 2021, with none more recent than October last year.  It is also interesting to note that, despite Nanox’s self-prescribed mission of bringing medical imaging to parts of the world where such capability is scarce, many of these deals are with distributors and resellers in developed markets. Not only does this raise questions about claims from Nanox and others who plan to ‘democratise medical imaging’, illustrating that perhaps the cost of the hardware itself is only one reason for the lack of adoption, with lack of infrastructure, lack of healthcare professionals and lack of onward treatment facility all also hindering the uptake of medical imaging. The lack of orders also raises questions about Nanox’s stated aim of expanding the total market rather than competing with the existent incumbents. The vendor’s 11 initial agreements suggest that this opportunity for market expansion might have been overestimated.

A final facet to these agreements is Nanox’s acknowledgment that, according to the recently submitted Form 20-F, these customers should provide Nanox with a letter of credit or financial guarantee, however, as Nanox notes: “There can be no guarantee that our counterparties will be able to obtain such letter of credit or financial guarantees”. A note which raises questions about the ability of these entities to ultimately pay those minimum fees on which Nanox is counting.

Straws on a Camel’s Back

In isolation, none of these challenges are too much to overcome, but combined and compounded leave Nanox looking like a vendor with a forward looking concept, which aims to usefully connect separate pieces of the medical imaging puzzle in a helpful and ultimately noble way. Assuming the technology is legitimate, and the most scathing early criticisms prove to be unfounded, there are still so many disparate strands, with numerous barriers in each, that must be woven together before Nanox’s vision can be realised. As these numerous individual tasks are countenanced, not only will money begin to run out, but other factors such as the languishing share price and the declining employee numbers will start to eat away at morale and diminish any hope, making success seem even further out of reach.

One comment in a press release from the vendor noted that 15 years and more than $1bn has been invested in developing the cold-cathode X-ray source technology that underpins Nanox’s scanners and is so pivotal to the company’s future success. Impressive figures no doubt, but also numbers which highlight how underwhelming the company’s Q1 figures really are. As Nanox stated in its 20-F filing, “We anticipate that our future cash requirements will continue to be significant” and “we expect that we will need to obtain additional financing to implement our business plan”. At the end of 2021 the company had marketable securities, cash and cash equivalents of $156.6 million, and given the upward trend in losses and the further delays to the launch of Nanox.ARC, the company may need additional funding before the year’s out. Yes, there may be a bright future for the would-be-disruptor’s vision, but investors have only so much patience and requests for more time and money will be met with increasing disdain if Nanox cannot show any progress quickly.

Instead, it is looking more likely that, while FDA approval will eventually be forthcoming, profitably connecting its hardware with the revenue-generating service side of the business looks too much of a mountain to climb. The vendor still has a chance to silence its critics, but time is running out. Every results announcement without a huge increase in revenue, and every month that passes without good news about FDA approval, is another step closer to the vendor selling up and letting investors take the hit.

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Signify Premium Insight: Hyperfine’s Ambition is Rewarded on Index

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.

In late December, portable MRI developer Hyperfine announced that it had completed its merger with HealthCor Catalio Acquisition Corp., a Special Purpose Acquisition Company. The move, first announced in July, means that Hyperfine is now listed publicly on the NASDAQ stock exchange.

The listing will net the imaging start-up around $160m in gross cash proceeds from the combination, allowing Hyperfine to focus on achieving the ambitious commercial targets the vendor has set for its Swoop portable MRI system, as well as the wider company’s continued growth. Hyperfine is one of a number of innovative start-ups that has come out of the 4Catalyzer incubator, which also names Butterfly Network on its roster. Hyperfine will, in some ways, look to imitate its older sibling, with which it shares a common founder, Dr Jonathan Rothberg, and take on a market leadership position.

The Signify View

The recent trials and travails of young, challenger modality vendors have, over recent months, emphasised how truly difficult success is to find. Even some vendors that have performed relatively strongly have not yet lived up to their original expectation. The aforementioned Butterfly Network for example has used a new technology to reinvigorate a category, and in doing so has displaced almost all incumbents to claim one of the top spots in the handheld ultrasound market. This is especially impressive given that the company’s device has only been on sale since 2018. However, its shares are trading at around $7.50, representing quite a fall from their 2021 peak of almost $30, while its Q3 earnings results presentation in November saw revenue guidance significantly lowered; down to $60-62m compared to the $76-80m given in Q1.

What’s more, these difficulties pale into insignificance when compared to the plights of other challenger modality vendors. Nanox, another vendor promising to revolutionise medical imaging with a cutting-edge technology, currently sees its shares trading at just $13, down from a high of more than $94. Worse, it is facing a class action lawsuit alleging that it misled investors, while also facing increased pressure over the delays to regulatory approval preventing the sale of its core product.

A successful entry into the medical imaging market is no mean feat.

 A Brighter Beginning

Despite these unwelcoming circumstances, this is what Hyperfine seeks to do with its Swoop point of care MRI scanner, and mercifully for the Connecticut-based vendor, there are some positive signs.

For example, not only is the Swoop FDA cleared, but the product is also entering into a completely new market. Touted as the world’s only truly portable MRI system, the device will be free from direct competition. Other modality vendors do offer increasingly accessible MRI systems, at a lower cost than traditional models and with lower infrastructure requirements, but if providers need a system that can be wheeled to a patient’s bedside and plugged into a standard outlet, there is no other option. Even if other vendors sought to enter the market, whether established modality vendors or other smaller challenger vendors, Hyperfine would still have the first mover advantage and be able to establish itself before having to face rivals.

Another of Hyperfine’s strengths is that, even though it is looking to establish a new category of MRI, it is doing do by addressing very definite clinical problems. One of the vendor’s key clinical targets is stroke care. This is a growing market, where products which can accelerate the diagnosis and delivery of care are highly prized; one need only look at the values of some AI stroke care specialists for evidence of that. This is among the high-value use cases which a portable MRI can excel in, with providers able to quickly diagnose haemorrhages at the bedside in emergency rooms, or even within ambulances before a patient arrives at  hospital. Instead of competing with existent products from large modality vendors, Hyperfine is offering a new device with new capability to providers, to address a significant health burden.

Adding weight to these claims are several pieces of research and positive comments, with studies published in the Journal of the American Medical Association Neurology and Nature, giving the device credibility that can be lacking when a new device enters the market. This appears to be resonating with at least some providers, with Hyperfine noting that, as of the end of 2021, it has sold and installed 27 Swoop systems.

 No Easy Path to Success

While Hyperfine, on the face of it, appears to launch onto the NASDAQ from this sound position, there are still several significant challenges that the vendor will have to overcome. In its investor presentation from July, when the firm first announced its SPAC deal, Hyperfine identifies more than 100,000 potential installation targets. To take advantage of this opportunity, however, each one of these targets must be convinced to allocate the $261,000 three-year contract cost into a new device category from an untested vendor instead of investing in proven systems from long-term partners with established service and support credentials. This will require significant market education and investment into sales channels, activities which could quickly eat into the $160m it netted from the listing.

Hyperfine, like many of its young peers, is offering the devices on a subscription basis, at a cost of $7,500 a month. This might make the devices more attainable to some customers, such as hospitals in developing markets, for example, but for most providers in developed markets, the most lucrative customers, this is unlikely to have a big impact.

Even providers with the money and the desire to purchase the systems may still ultimately choose not to. In many countries around the world there is an acute shortage of radiologists. The benefits of having a Swoop system will be negligible if hospitals are limited by their ability to read images, rather than acquire them. Again, Hyperfine is looking to address this. The unlimited training offered with subscriptions could help. More significant could be the adoption of AI-based image analysis tools, but as detailed in Signify’s AI in Medical Imaging report, adoption of such tools is low, and any new product from Hyperfine would require significant investment in datasets for training and in validation.

A High Bar

Even with solutions to these problems, the vendor could still underperform relative to its own ambition. Including units given under grants, Hyperfine has shipped 45 systems so far. To meet its target for 2025 it will need to sell a further 2,803. This, the company estimates, would contribute to a total revenue of more than $300m. While such figures are not impossible, the resource required for this volume’s sales, support, awareness, service and education makes them look very ambitious.

Ambition of this sort, however, is a requisite for such vendors. Hyperfine has successfully been ticking off milestones and its public offering is another mark on that list. It has promising technology, a well thought out (if, once again, ambitious) roadmap, and is targeting an in demand clinical segment.

Ultimately though, Hyperfine will be able to exert no control over its biggest long-term obstacle: entrenched modality vendors. If Hyperfine can develop the portable MRI market as it promises it could find it has some powerful rivals.

Siemens, Philips, GE among others have, in recent years heavily focused on service deals and upsell opportunities, of which there is limited potential in this comparatively affordable MRI category. Further, these larger vendors have also made margin expansion a priority, this would be hard to deliver in a lower-priced category, which could require significant investment to corner, and a focus on volume. However, these detracting factors are, to an extent, self-imposed and potentially short term.

If these larger vendors smell opportunity, and they are willing and able to produce comparable systems to Hyperfine, then the young challenger will have a real test of its mettle. Until then, the outlook is bright. Even if its goals prove to be a little too ambitious, its financial targets a little too lofty, Hyperfine could well be the challenger modality that shrugs off the status quo, and makes strides where others have stumbled.


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