Can IQ-AI – formerly Flying Brands – deliver on ambitious plans for medical software market?
Medical services and software holding company IQ-AI, which was known as Flying Brands until earlier this week, has struggled to rise above 2.5p since falling from more than 3.5p in July amid a £500,000 placing. Here, we take a look at whether its luck could soon change in the wake of numerous positive developments at its two operating companies- StoneChecker Software and Imaging Biometrics.
StoneChecker Software is a health technology business that focuses on developing and commercialising products to help with the treatment of kidney stones. Despite more than 300m people suffering from kidney stones around the world, the firm says little funding is currently being put towards researching and developing solutions.
In response to this gap in the market, it has launched a semi-automated imaging tool called StoneChecker that provides physicians with information about a patient’s kidney stone such as its size and heterogeneity. StoneChecker has been available for research use since 2017 and is expected to become commercially available this year.
StoneChecker Software also plans to release a product this year called StonePrevent. This will be a bespoke urine screening programme that aims to identify or exclude specific underlying causes of kidney stones. It plans to roll-out a postal service with centralised laboratory facilities that can provide this screening to healthcare services and directly to patients.
Meanwhile, Imaging Biometrics develops ready-to-use visualisation and analytical software applications for the healthcare industry, with a particular focus on the emerging medical imaging field. Its portfolio consists of FDA-cleared and-CE approved products like IB Neuro and IB Diffusion that are being used by physicians to treat brain tumours, strokes, and other soft tissue cancers and pathologies.
Specific to brain tumours, the firm offers a platform for grading, guiding biopsies, distinguishing actual tumour progression from pseudoprogression, and assessing treatment response and volumetric changes.
In August, IQ-AI announced that it had appointed David Smith as chief operating officer and chief executive officer of both Stone Checker Software and Imaging Biometrics. Smith has worked for life sciences businesses in Europe and the US for 30 years, including stints in senior positions at Biocompatibles, Carl Zeiss, and Tenaxis Medical.
StoneChecker Software has been making significant steps forward since December, when it obtained a so-called ‘CE mark’, meaning it satisfies the quality, safety and performance standards for medical devices in the EU.
In IQ-AI’s half-year report, CEO Trevor Brown said this development has allowed to it to beging undertake clinical and commercial discussions on the product. Brown said the overwhelming theme of clinical talks has been the ‘widely-recognised importance of having a reproducible measuring device for accurately describing and comparing kidney stones’.
Meanwhile, he added that commercial discussions have been on-going, with successful developments in each continent. These developments notably included an exclusive marketing and distribution agreement for the commercialisation of StoneChecker in South Korea, where it is now undergoing local clinical evaluation. In the H1 report, Brown also said commercial progress had been made in several European countries, including the UK, adding that he now expects retail sales in Q4 this year.
This year has also seen the business continue to work with the US Food and Drug Administration (FDA) to secure certification and marketing clearance for StoneChecker in North America. In IQ-AI’s results, Brown has said progress has been made here, and the FDA is expected to make a clearance decision before end-year.
Notably, in July, IQ-AI also raised £500,000, placing shares at 2.5p each, to help StoneChecker Software’s development. The business said it will put the money towards obtaining FDA clearance, designing and manufacturing a commercial version of StoneChecker’s cloud-based interface, and generating commercial sales in the UK. It added that it would also be used to launch both StoneChecker Software and Imaging Biometrics’ products commercially in the US, India, and China.
Since being acquired by IQ-AI in March, Imaging Biometrics has also announced a great deal of commercial progress. Shortly after purchase, the business announced a distribution partnership with AI exchange platform EnvoyAI, giving neuro-radiologists, neuro-oncologists, and neuro-surgeons access to its imaging software. It also secured similar alliances with medical imaging platforms Medimsight and QMENTA.
What’s more, the business’s software was chosen by an anti-cancer and oncology hospital in Greece and a US clinical trial business for the imaging of brain tumours and assessment of treatment responses.
Finally, at the end of last month, Imaging Biometrics announced that the University of Alabama had awarded it a development contract. In layman’s terms, this will see it develop a piece of software that can analyse images and predict the chance of cirrhosis decompensation and death. At the time, Smith said he believed the agreement could generate significant revenues for the company.
Worth a look?
The acquisition of Imaging Biometrics has seen IQ-AI begin generating revenues this year, turning over £126,000 in H1 2018. Encouragingly, CEO Brown has said he expects this to continue over the next 12 months, with Imaging Biometrics’ progression looking set to continue and StoneChecker due to begin making money before year-end. What’s more, the business said the placing has given it enough money to operate for at least 12 months.
Aside from increasing revenues, numerous potential value catalysts that lie on its horizon over this period and beyond. Namely, these include progress in South Korea, FDA approval for StoneChecker, and the planned launch of both StoneChecker and Imaging Biometrics in various regions around the world.
If the company can meet all of these goals successfully, then it could be well be on its way to substantially increasing the size of its operation-base, and shares are likely to follow. However, if something goes wrong – for example, FDA approval takes much longer than expected – then it could be damaging. One look at the performance of some of the major pharma stocks over recent years shows how serious regulatory delays can be for large firms, let alone those with limited revenues and cash.
IQ-AI’s share price has struggled to recover since July when it fell from 3.75p to 2.3p in a matter of days around its placing. As at writing, shares sit at 2.3p bid, and the firm has a £2.75m market cap. Whether or not it represents a buying opportunity at this level comes down to your confidence that it can meet its goals without any significant setbacks. If everything goes ahead as anticipated, then it will be exciting to see how much traction the company’s unique products can generate across the world.
David Smith CEO of AQ-AI formerly Flying Brands
The author does not hold shares but was remunerated