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Australian cardiac AI developer Artrya recently announced that it is set to list on the Australian Stock Exchange this month, at an enterprise value of more than AUD 105m (US$77m). The cardiac imaging specialist plans to raise AUD 40m in an initial public offering of 29.6m shares, at AUD 1.35 a share.

The money will add to the AUD 19m in start-up funding the vendor has so far received and will primarily be used to meet costs associated with product development, clinical R&D and regulatory clearance. The vendor’s core solution, Salix, has been admitted by Australia’s Therapeutic Goods Administration (TGA) as a Class 1 product, allowing it to be commercialised in that country, and Artrya has filed an application with the US-FDA. The float will, however, also fund global expansion, and allow other regulatory filings to be made in Canada, the EU (CE Mark) and the UK.

The Signify View

Heart disease is the world’s leading cause of death. As such, any tool which can aid in the relief of such a global health burden has significant market potential. Artrya is the latest company to utilise AI to capitalise on this potential and address a health problem that is responsible for, according to the World Health Organisation 32% of all deaths each year.

Aside from potentially saving millions of lives, software tools that can address heart disease can also bring about sizable economic benefits. Many patients only realise they have heart disease when they experience a heart attack or other significant cardiac event. Those patients, if they survive, often require expensive interventional procedures, extensive rehabilitation programmes, and costly courses of drugs. Solutions which help identify and manage at-risk patients sooner, enabling them to be treated with lifestyle changes and preventative medicine, could save billions of dollars and therefore be an attractive proposition for providers.

Artrya hopes to offer such benefits with its Salix suite of solutions which aims to improve the detection and treatment in two ways. Firstly, the developer aims to automate the analysis and diagnosis of heart CT scans, and secondly, in adopting more of a population health approach and improving the identification and management of patients at risk of coronary arterial disease. It does so by assessing certain types of arterial plaques (namely vulnerable plaque, not easily discernible on CT scans by the human eye), which are linked to heart disease. Like American heart health software developer Cleerly, which also focuses on the identification and classification of arterial plaques, this approach deviates from more typical assessments which focus on arterial calcification, a surrogate, rather than direct marker of heart disease.

Deep in Development

Despite the promise of this approach, however, Artrya’s suite is still very much in development. While the vendor’s Salix Coronary Anatomy (SCA) product, which detects the vulnerable plaque and other biomarkers, is in the process of securing regulatory clearance in the US and Europe, the other key component in the suite, Salix Coronary Flow (SCF), a ‘non-invasive whole-heart blood flow assessment’ is still in development. Meanwhile, development for several of the suite’s other constituent products has not yet even begun.

This begs the question of why the vendor has chosen to list now. Most AI vendors to date have tended to rely on private funding as they continued to work on their products, only going public when their offering is more mature. Cleerly, for example, raised significantly more in its recent Series B funding round, than Artrya will net from its listing. While the market potential for Cleerly, in the near term at least, is arguably higher given it has already secured FDA approval, the vendors are still at similar stages. Both vendors will, for instance, seek to use the benefits of their recent funding rounds for the commercialisation of their products. Cleerly however appears to be treading a path more similar to that of HeartFlow, the most well-funded of all medical imaging AI vendors. When HeartFlow listed in July 2021, it had already raised more than $550m in private funding, had already become well established in many hospitals, including beyond the US, was generating revenue, and even reimbursement (in the US, UK, and Japan) for its solution. Artrya’s approach of listing publicly before it has achieved any of this may grant the vendor a greater degree of exposure, at least in the short term, and help the vendor as it tries to promote itself. However, unlike Cleerly whose backers are perhaps more nurturing and invested in the longer term, Artrya will now have to deal with a multitude of shareholders, potentially pushing the vendor in different directions, and perhaps being rather less understanding in their quest for accelerated returns.

Growth to be had

Artrya’s decision could be influenced by several factors. As highlighted in Signify Research’s analysis of VC funding in 2020, it is becoming increasingly difficult for smaller, less established AI vendors to secure VC funding, especially as market leaders are emerging. This lack of forthcoming funding, as well as impending time pressures as vendors look to secure segments of the market for themselves, making it harder for other vendors to thrive, could also have driven Artrya to accelerate its plans. Floating in the future may not have been an option if the developer had waited until it had grown and found that it had missed its opportunity, with the market consolidating around competitor vendors. Given the market Artrya is targeting, the vendor does have potential to grow significantly. This is particularly true given the American College of Cardiology and American Heart Association’s recent changes to their guidelines that emphasise CT Angiography (CTA), an imaging exam necessary for the use of Artrya’s suite, as a first-line test for evaluating patients. Securing US-FDA clearance will enable it to gain traction on the back of these new guidelines. Further, the value of the vendor’s offering is also seen by the UK’s National Health Service, which has added it to the provider’s list of approved and prequalified suppliers. This could bolster the vendor’s fortunes in the near future, with Artrya anticipating UKCA regulatory approval, enabling the solution to be purchased in the UK, in mid-2022.

In addition to the commercial considerations there are also issues surrounding the integration of the solutions and how they are used in practice. One of the possibilities, for example, is improving the integration of the AI results into the provider’s workflow. At present, the process for the use of these tools is to conduct a scan, which is then analysed by the AI algorithm, and then the results are returned in a report. This could be improved if the results of the scan could be more efficiently brought into the workflow, even going as far as reporting results in real time. Such advances could bring disruption to the market, enabling Artrya, or whichever vendor was able to achieve such a feat to have a distinct technical advantage compared to competitors.

Early or Excellence?

Ultimately, Artrya’s decision to list could prove a smart move. If the vendor can capitalise on the cash injection to successfully win regulatory approval in the United States and Europe, commercialise its suite and win a few large deals it could become part of a rapidly growing segment. Artrya could establish itself as one of a handful of key, high-profile AI developers that specialise in heart health, and grow along with the market. Like others such as Cleerly and Zebra Medical Vision, for example, Artrya’s population health tools could also prove lucrative as opportunistic screening becomes a more important feature of the market. This is particularly true given Artrya’s identification of direct biomarkers, rather than surrogate biomarkers, which are used by some competitors, such as Zebra Medical Vison.

However, this upside carries considerable risk. Artrya will, every quarter, have to share its performance and share progress with investors. Unlike vendors that are able to develop in the dark until launching, as its closest competitor Cleerly was able to do, Artrya will have to perpetually convince investors of its value. This will at present and for the foreseeable future, prove a difficult task. Artrya is not generating revenue, and for all the opportunity before it, this potential is at present almost wholly unrealised. How swiftly and how significantly that changes will be a measure of how successful this unconventional play proves to be.

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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