<Anchor> It’s time for “IPO Preboard.”
With Lunit, an AI healthcare company, listing on the KOSDAQ on the 21st, interest in companies in the sector is rising.
Let’s get the details from reporter Yang Jae-jun.
After Lunit’s listing, there are reports that companies in the sector are moving toward IPOs and fundraising. What’s the situation?
<Reporter> It’s true that as Lunit pushed for a listing this month, things were somewhat sluggish—from the pricing of the offering to the demand forecast.
However, on its first day of listing on the 21st, the stock price surged well above the offer price of KRW 30,000 and closed at the daily upper limit, helping offset weak subscription results.
On the KOSDAQ, AI healthcare companies listed include not only Lunit, but also VUNO, JLK, and Deepnoid.
Coreline Soft plans to reapply for a technology assessment next month and proceed with an IPO.
Arth Medical successfully raised KRW 25.3 billion in a Series B round on the 27th from Q Capital Partners and others. Meanwhile, AIDOT plans to finalize its Series B investment soon.
Let’s hear from Jeong Jae-hoon, CEO of AIDOT.
[Interview: Jeong Jae-hoon / CEO, AIDOT: Our Series A was completed with Korea Investment & Securities and Fine Value Asset Management. We are currently in the process of a Series B, and the agreement is nearly finalized, so we expect Series B funding to take place soon. Rather than pursuing a technology-special listing, we are targeting a general listing in Q3—around July to August 2024—based on the overseas revenue and domestic and overseas revenue we are already generating. You can view all of this as having been well discussed with our lead manager, Korea Investment & Securities.]
<Anchor> We’ve heard about AI healthcare companies’ KOSDAQ listing plans following Lunit. We’re also hearing that global expansion has been moving quickly lately?
<Reporter> Lunit has partnered with major global medical device companies such as GE Healthcare, Philips, and Fujifilm, supplying products to more than 600 medical institutions worldwide.
Also this month, it signed supply agreements with Cathay Life Insurance, Taiwan’s largest insurer, and Bumrungrad International Hospital in Thailand for solutions including chest X-ray image analysis (INSIGHT CXR) and mammography image analysis (INSIGHT MMG).
Let’s hear from Seo Beom-seok, CEO of Lunit, about overseas expansion.
[Interview: Seo Beom-seok / CEO, Lunit: We received our first domestic approval in 2019, and since then we have continued expanding regulatory approvals—European CE, U.S.
FDA, Japan, and more—expanding our regions along the way. Because we collaborate with medical equipment companies that already have channels, and they embed our products into their platforms and sell them, as approvals come through, the regions where our partners can expand sales continue to increase.]
AIDOT signed a business partnership agreement in May with Uzbekistan’s GSG Group to supply its AI cervical cancer screening product, the Cerviray system.
Before that, in April, it completed official regulatory registration for Cerviray with Indonesia’s MOH (Ministry of Health) and agreed to supply the product through a major local pharmaceutical company, Pyridam Farma.
Let’s hear from Jeong Jae-hoon, CEO of AIDOT.
[Interview: Jeong Jae-hoon / CEO, AIDOT: We designed Cerviray as a service leveraging AI for countries with insufficient medical infrastructure, so deployment is being actively pursued not only in Uzbekistan but also in Kazakhstan and elsewhere in Central Asia, as well as in India, Thailand, the Philippines, and other Southeast Asian countries. In particular, in Uzbekistan, we have already received officially recognized performance results for our AI medical service through the government’s National Cancer Center.]
In addition, VUNO obtained medical device certification last month in Saudi Arabia for its chest X-ray interpretation support solution.
JLK also signed an exclusive sales agreement in June with DoctorNet, a Japanese teleradiology company, for a lung disease solution.
<Anchor> With global expansion accelerating, growth among AI healthcare companies is expected to continue. What are the outlooks for these companies’ performance this year?
<Reporter> As overseas expansion gains momentum, Lunit recorded KRW 6.6 billion in revenue last year, and this year’s revenue is expected to reach the low KRW 20 billions.
However, it may be difficult to post an operating profit this year due to factors such as increased R&D costs.
Lunit plans to expand collaboration with global big pharma not only through medical institutions but also using biomarkers and related approaches.
Let’s hear from Seo Beom-seok, CEO of Lunit.
[Interview: Seo Beom-seok / CEO, Lunit: We started creating biomarkers related to immuno-oncology drugs in 2017. It has been largely completed since about two years ago, and we have been applying it to clinical trials. It is being demonstrated that through Lunit SCOPE, we can accurately identify patients who respond well. That’s why collaboration with pharmaceutical companies is progressing smoothly. If it’s proven through clinical trial settings, it inevitably has to move toward regulatory approval.]
As you saw earlier, AIDOT plans to achieve an operating profit this year and demonstrate full-scale growth based on overseas revenue and overall domestic and overseas revenue.
AI healthcare companies plan to launch additional new products this year, advance their solutions and platforms, and further solidify global partnerships.
To accelerate overseas expansion, these companies plan to participate in the largest radiology event, the 2022 Radiological Society of North America (RSNA) meeting in Chicago, U.S., starting November 30.
<Anchor> While AI healthcare companies are active overseas, there are also many calls for policy improvement because it’s hard to apply National Health Insurance coverage domestically. What’s your take?
<Reporter> After the first approval in Korea for an AI-based diagnostic support software medical device in May 2018, a total of 80 products have since been approved by the MFDS (Ministry of Food and Drug Safety).
However, only one product is currently covered under National Health Insurance reimbursement: VUNO’s 3D MRI imaging and interpretation solution.
While the MFDS supports medical device development and approval, decisions on health insurance listing are made by HIRA under the Ministry of Health and Welfare.
AI medical devices must receive new health technology assessment certification to be listed under the item codes used by HIRA to set reimbursement fees, and this is difficult in practice.
The biggest issue is effectiveness—whether it benefits patients. The position is that additional value will be recognized when patient benefit or cost reduction effects are demonstrated.
The Ministry of Health and Welfare said yesterday (the 27th) that, at the 4th Emergency Economy and Livelihood Meeting presided over by President Yoon Suk Yeol, the government announced plans to form a Digital Software Specialized Evaluation Committee involving both government and the private sector to support market entry for innovative medical devices.
The key is to address companies’ difficulties in securing clinical data: by first introducing products in clinical settings through a combination of non-reimbursed services borne in part by patients and selective reimbursement (50%, 80%), and then deciding whether to grant full National Health Insurance coverage after reassessment.
Domestic AI healthcare companies, whose technological capabilities are being recognized in global markets, hope health authorities will provide active policy support.
Published: July 29, 2022 / Korea Economic TV / Senior Reporter Yang Jae-jun
