Harbert Discovery Fund: Thoughts on iCAD’s tomosynthesis Computer-Aided Detection solution & eBx Skin
Excerpts from the letters
The Company has promising technology in its Cancer Therapy segment with the Xoft system. Indeed, the strong positive clinical data released at the American Society for Radiation Oncology (ASTRO) meeting in 2016 reinforced the clinical efficacy and systemic cost advantages of this emerging cancer therapy platform. As indicated on the last earnings call, the potential for 70-150 eBx Skin customers in the Therapy segment by the end of 2017 is also very promising in the near-term. Longer-term, we are pleased to hear of the potential applications of the Xoft System in prostate cancer and other indications, representing additional significant market opportunities.
Equally important, the tomosynthesis Computer-Aided Detection solution and workflow tool (“3D CAD”) is already showing strong promise in Europe where it is commercially available. We remain very encouraged by the strong reader study data submitted to the FDA earlier in the year, and we are hopeful that the product will ultimately be approved by the FDA. The installed business awaiting this 3D CAD product, as well as the potential for the next generation product, presents a compelling opportunity to be a technology leader and first-mover in breast tomosynthesis and cancer detection.
Importantly, looking into next year, HDF feels that should iCAD not receive FDA approval for its 3D CAD product or demonstrate revenue growth potential by 2Q17, then the Board should hire an investment bank and immediately explore a range of strategic alternatives, including the sale of each segment independently. It is highly likely, given the standalone EBITDA characteristics of both business segments, that there would be motivated and interested buyers. Consider that a sum-of -the-parts analysis suggests the Cancer Detection business alone could be worth more than the enterprise value of the Company today, and that does not even account for the revenue potential of the 3D CAD product. If you are interested to read insights like this, we are happy to offer you a free trial.