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Feature article November 30, 2021:
DIAGNOS'
AI-Driven Retinal Analysis Technology is in the Process of
Transforming Industries
Technology that detects & classifies serious medical conditions in
patients with diabetes or cardiovascular issues from an image of the
back of the eye;
diabetic retinopathy, hypertension retinopathy, stroke, AMD,
glaucoma, & more.
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DIAGNOS Inc.
(TSX-V:
ADK) (OTCQB: DGNOF) (Frankfurt: 4D4) |
Share data, Capitalization, & Corporate info
Shares Outstanding:
~69.12 million
Recently Traded:
~CDN$0.44/share (TSX-V:
ADK)
52 Week High/Low:
$0.77 / 0.34
Current Market Capitalization:
~$30 million CDN
Corporate Website:
www.DIAGNOS.ca |
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Valuation Commentary: DIAGNOS Inc. (TSX-V: ADK) (OTCQB: DGNOF)
(Frankfurt: 4D4) is a Canadian-based medical software technology
company that pioneered 'Computer Assisted Retinal
Analysis' (CARA),
which automatically analyses the retina (located at the back of the
eye) using machine learning / artificial intelligence (AI)
technology to identify damage caused by diabetes and cardiovascular
issues. For the last 7 years DIAGNOS has commercially advanced its
first large-scale application of the technology, primarily aimed at
preventing diabetic retinopathy. Entering 2022 marks a pivotal time
for DIAGNOS as the technology has recently seen several large
players in the eyecare sector and medical field commit to
large-scale roll-outs, this is putting pressure on others in the
sector to consider a similar move and not be left behind. DIAGNOS' technology essentially transforms
eyecare centers into Point of Care and
wellness diagnostic centers as the CARA platform also is expected to
commercially launch several other large-scale applications,
including an application for hypertensive retinopathy (launch
imminent) and one for stroke prediction (to
begin
clinical trials
on December 6, 2021 in USA). Complicated medical conditions resulting from diabetes,
high blood pressure, and potential stroke can be detected by DIAGNOS'
algorithms able to interpret detailed imagery of the retina.
Since New Look (with 407 locations in Canada) signed on for CARA
platform roll-out DIAGNOS' phone has been ringing from around the
globe, essentially other industry participants do not want to miss
out on a technology whose time has come. Look for an increase in new
business announcements to come from the DIAGNOS over the coming
months and years. In fact, Essilor Luxottica (Euronext Paris
Stock exchange:
EL), the largest eyecare
company in the world, with EUR$16+ Billion in revenue/annum and ~15,000 locations,
signed a MOU with DIAGNOS in August-2021 and is in active
negotiations on terms -- this alone has massive latent catalyst
potential for upside share price revaluation of ADK.V as details
emerge. Specifically DIAGNOS and Essilor are currently negotiating 3
things; 1) contract for the existing platform, 2) Essilor wants
DIAGNOS to do a specific development for their line of fundus
camera, and 3) Essilor wants access to future applications
DIAGNOS will roll out. The fact the largest eyecare company in the
world chose DIAGNOS' technology speaks volumes as to where this is
headed.
With all the activity DIAGNOS has on the go
it appears a low-risk high-reward proposition: ADK.V only has
69.12 million shares outstanding, there are very little warrants
left, and insiders & family office own ~40% of the outstanding
shares. DIAGNOS has no debt, money in the bank, an untapped C$2
million government credit line if needed, has a high-margin SaaS
model (it only costs ~4 cents to process an image that it charges
between ~C$5 - $10), is expected to be cash flow positive (based on
solid contracts) in the coming fiscal year, has numerous new
business prospects in discussion now, and is expected to see rapid
revenue growth. Astute investors connecting the dots about what
is unfolding are apt to do well by establishing a long position in
ADK.V now.
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DIAGNOS Inc. received its
first institutional coverage from the
independent investment bank / advisory / equity
research firm Echelon Capital Markets, its
current rating is 'Top Pick', 'Speculative BUY'
with a near-term (12 month) target price per
common share of DIAGNOS of $1.55 Canadian
(or in US dollars: USD$1.23 or in Euros: 1.09)
--
click here to view full copy of their latest
report. The original initiating report was
exceptionally thorough (~40 pages), the analyst
contacted multiple industry participants, and
recently (November-2021) sat down for an
interview [running time 32 min. Youtube] on
his reasoning for making it a top pick entering
2022. Note, the analyst share price target is
based on the DIAGNOS CARA Platform that is
currently in use and does not include progress
on the Stroke Predictor application that is the
subject of clinical trial news needless to say
a much higher share price target is justified if
success in the Stroke Predictor clinical trial
is demonstrated. |
Click to view Analyst update report [PDF]
C$1.55/sh. price target |
Figure 1. (above) On the
left is seen a typical fundus camera image being taken
on a patient. On the right is seen a retinal image enhanced with DIAGNOS software, prepped
for A.I. auto-detection of pathology & lesion classification.
All images world-wide are sent via secure feed to its
high security facility in Montreal for processing and
quick turn-around. If it detects a risk, the supervised
machine learning algorithm separates diabetic
retinopathy into 5 clinical diagnoses, the report refers
the patient to a retinal specialist doctor, who
prescribes the appropriate medication or treatment. DIAGNOS has a SaaS model, it does not
sell the software, it protects its proprietary code and
database, the software resides in its servers, and
everywhere the CARA platform solution is set up it
functions as a service.
Revenue Generating
Medical Applications - Product Pipeline
Figure 2. (Above) Product
pipeline
CARA Platforms 1st large application --
Screening diabetic population to avoid blindness from DIABETIC
RETINOPATHY: Status - deployed and in production. The test is
via a flash from a standard off-the-shelf fundus camera (a
specialized optical microscope with an attached camera), it is quick
(only takes seconds), painless, noninvasive, and low cost. The
retinal image is securely sent electronically for instant analysis
by DIAGNOS' proprietary AI engine algorithms and sizeable database.
CARA is Certified in ISO certification, and has multiple regulatory
approvals. The CARA platform is advantageous over humans in terms of
high-accuracy and consistency (unlike a human, software does not get
tired). The technology was pioneered by DIAGNOS Inc. over the last
decade, CARA technology is proven and its first large application
targeting diabetics is in commercial production use now in 16 countries
around the globe. The proprietary AI algo-driven database of DIAGNOS
is made up of over 400,000 high-quality case study datasets, making
its success unparalleled. Numerous people across the globe owe
their eyesight today from having received a heads-up from DIAGNOS'
CARA.
DIAGNOS greatly assists in managing the care of
at-risk populations. Retinal imaging diagnostic technology is
gaining popularity; doctors and specialists strongly endorse the
technology as large numbers of people can be seen that otherwise
would not be seen. Governments like it as proactively
stopping/minimizing debilitating health issues immensely saves
money, and pharma (manufacturers and retailers) like it as they sell
advanced medication for conditions identified. DIAGNOS has
first-mover advantage in its niche and has no serious competition at
the moment, there are a handful of private firms connected to
academic organizations dabbling in medical retinal analysis tech,
and of those only two known private commercial operations are worth noting;
however one has essentially shifted away to
dermatology since Covid, and the other quite frankly
charges too much (i.e. C$25/image compared to C$5 - $10 DIAGNOS
charges) and is differently
focused.
The share price of ADK.V is apt to rise as
the reality of the magnitude developing for DIAGNOS' technology
becomes more apparent to the market...
Noteworthy contracts currently in roll-out
and related revenue potential:
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New Look
(Canada) 407 store (currently as of Nov-2021
10 stores have installs, and all 407 should
be installed by end of 2022), DIAGNOS is
rolling out to perform 10 tests/day/ store
@CDN$5 revenue/test = CDN$6.5 Million/yr.
MAGRABI (a group of private hospitals
in Saudi Arabia) 32 hospitals (the second
CARA install has just occurred, more to come
soon), 50 tests/day/site @CDN$5 /test =
CDN$2.56 Million/yr.
20/20Now (USA) 65 optometry sites,
(installs are starting back up now after
experiencing Covid delay), 10 tests/day/site
@USD$3/test = USD$624,000/yr.
Chaparral Medical Group (USA) 22
sites, has
been a client for several years at one
location and is expanding rollout now (installs on the remainder is back on now
after experiencing Covid delay), 25
tests/day/site @USD$3/test = USD$528,000/yr.
Opticalia (Latin America) is a
franchisee group of optometry stores with
920 franchises, have now installed CARA at 7
locations and aiming to do all 920, 10
tests/day/site, @Euro3/test = 8.8
Million/yr.
Optica Central (Costa Rica) 65
optometry stores, 10 tests/day/site,
@USD$3.50/test = USD$593,600/yr.
Established revenue
sources looking to up their game: Novartis, Quebec Government (RFP 1M
patients), Bangladesh Government, Grupo
Devlyn with 900+ stores = ?TBD?/yr. ...
REVENUES ARE
PROJECTED TO EXCEL: Based
on established business, plus the pace of
the current new roll-outs (above), we
calculate DIAGNOS Inc. should report
somewhere between CDN$10M and $20M in
revenue in its next fiscal year, comfortably
be cash flow positive, and easily grow in
revenues every year thereafter based on
diabetic retinopathy application alone. |
Noteworthy new business prospects - this
is a short-list of the most advanced in discussion that DIAGNOS
feels closest to closing on:
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Essilor
International-
MoU
15,000 stores worldwide --
see related August 16, 2021 news release
(negotiations underway now).
LMC Endocrinology- 18 diabetic clinics
across Canada.
Quest Diagnostics US- One of the
largest groups in US with over 300 clinics.
Saudi Government- Through ELM
consulting that belongs to the King;500
clinics, 7 M diabetics (fact:
~35% of Saudi Arabia's population has
diabetes).
UAE Government- 2M diabetics, Pilot
scheduled this year subject to pandemic.
Panama Government- Pilot was done
March 2020 to cover 1.4M diabetics.
Kaiser Permanente US- 2.5M diabetics
Mexico Government-7M diabetics, Pilot
was done in 2019-2020 over 100,000 patients,
just waiting for Covid to calm down before
restarting.
Kaiser Permanente US-
One of the largest HMO with 2,4000,000
diabetics, post Covid.
Florida Government US- 5.8 M
diabetics.
FYIdoctors Canada-
256 stores, mainly in Western Canada.
Salud Digna Mexico- 1M diabetics.
Note: There are many
more prospects than itemized above, the
number of enquiries of late has dramatically
increased -- there is now a shift within the
eyecare industry whereby major players see
the benefit of becoming more like "Point of
Care" and "wellness
centers", there is also increased interest
from labs, and clinics. Additionally,
besides patient wellbeing, the medical
clinics and optometrists appear more keen to
push a DIAGNOS test as they mark-up the
cost, plus the client is essentially
locked-in to returning for an annual test or
follow-up to the same location to compare
results for change in condition. |
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CARA Platforms 2nd
large application -- Screening for HYPERTENSIVE RETINOPATHY:
Status - in preliminary commercialization. If
patients are suffering from hypertension or taking blood pressure
medication, using the same retinal image from its CARA platform
DIAGNOS can proactively see damage being done to the retina -- a
hypertensive patient can develop hypertensive retinopathy, which can
lead to vision loss. DIAGNOS can measure retinal vascular tortuosity;
your blood vessels are supposed to be nice and straight, as soon as
your blood pressure goes higher it puts a lot of pressure on the
arteries and veins -- the smaller the blood vessels the quicker the
change, so that is why the eyes are best.
Figure 3. (above) CARA (Computer Assisted
Retinal Analysis) Artery Vein (AV) Ratio analysis in action and retinal images --
DIAGNOS' cardiovascular retinal imaging looks at micro circulation,
the small little vessels. There is a direct relationship between
cardiovascular issues and the retina. DIAGNOS' algos focus on the
artery-to-vein ratio (AVR), classifying the patterns of blood
vessels, and how swollen (or
not) they are.
DIAGNOS'
new cardiovascular applications
will be marketed as an add-on to its now proven
and accepted CARA. No retinal imaging competitor can offer
anything in the cardiovascular realm, DIAGNOS is uniquely positioned in the
market, the level of interest in its hypertension application as an add-on to
what DIAGNOS is already offering is enormous.
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CARA Platforms 3rd
large application -- Screening for PROBABILITY OF STROKE: Status
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To begin clinical trials with CommonSpirit Health Research Institute
starting December 6, 2021. Having a stroke can lead to life-debilitating
paralysis. DIAGNOS is starting a clinical trial in the second
largest hospital group in the US (CommonSpirits; which has ~137
hospitals and >1,000 clinics, in 21 states) to prove DIAGNOS can
predict if an individual will have a stroke using the same fundus
camera image of the back of the eye. DIAGNOS is doing a clinical
trial study in collaboration with them as they see the CARA platform
as an important tool to reduce costs long-term and provide rapid
feedback on the effectiveness of individual patients medication. If
the planned trials for the Stroke Predictor demonstrates
the level of accuracy that DIAGNOS has encountered in its
development stages, Market Equities Research Group has stated Pharma
professionals have told its analyst "...look for shares of ADK.V to
trade well above $5/share and the Company to eventually become the subject of
buyout. The 'Stroke Predictor' application can state the probability
of someone having a stroke in the next two years and it will also tell
you why. Success in early detection of cardio vascular issues in
such a non-invasive manner for the patient could quickly result in
the DIAGNOS CARA platform being a go-to service in a massive market place that
currently spends >US$500 Billion a year in drugs and services for
cardiovascular and stroke issues. DIAGNOS' technology can also
quickly reveal if a patient's medication is working by showing
changes in condition (progression or regression). Pharma and the medical community will pay up for this
technology and DIAGNOS Inc. will no longer resemble what it is
today."
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"By 2035, cardiovascular
diseases will be the most costly and prevalent
killer (if left unchecked), and will place a
crushing economic and health burden on the
nation's financial and health care systems."
-- Source: Study
conducted by RTI International for the American
Heart Association |
"By 2030, the total global
cost of CVD is set to rise from approx. US$863
billion in 2010, to a staggering US$1,044
billion."
-- Source: World
Heart Federation |
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Recent Company news of significance
November 23, 2021 "DIAGNOS
will start a clinical trial study in the USA commencing December 6th,
2021 for early detection and prevention of Stroke using CARA-STROKE".
October 28, 2021 "DIAGNOS
Delivers World Class Results in the MICCAI2021 Contest: GAMMA".
September 16, 2021 "DIAGNOS
Announces a Multi-Year Contract with Juarez Health & Medical Tourism
Cluster".
September 14, 2021 "DIAGNOS
Announces a 3-Year Contract with Cielo Vista Eye Clinic in Mexico".
September 10, 2021 "DIAGNOS
Announces Voting Results of Annual Meeting of Shareholders".
September 2, 2021 "DIAGNOS
Announces a Three-Year Contract Renewal with Optina Diagnostics
Providing a Telemedicine Platform to Support their Early Detection of
Alzheimer's Disease Test".
August 16, 2021 "DIAGNOS
signs Memorandum of Understanding with Essilor International".
July 28, 2021 "DIAGNOS
Announces a Pilot with Opticalia in Spain".
July 22, 2021 "DIAGNOS
Announces the Official Opening of the AI Assisted Screening Clinic at
Magrabi Hospital with the Presence of the Undersecretary of the Ministry
of Health of Saudi Arabia".
July 20, 2021 "DIAGNOS
initiates a clinical trial study in the USA for early detection and
prevention of Stroke using its new application CARA-STROKE".
June 15, 2021 "DIAGNOS
Announces a Pilot with Hospital Oftalmolσgico Buena Vista Sinaloa".
June 9, 2021 "IRIS
Teams up with DIAGNOS Inc (DGNOF) in a Multi-Year Agreement to Implement
Artificial Intelligence Technology with Support From the INVEST-AI
Program".
April 6, 2021 "DIAGNOS
(OTCMKTS:DGNOF) Enters into Exclusive Distribution Agreement to Access
Massive Global Healthcare Market in DACH Countries and Central Europe of
Over 140 Million People".
March 9, 2021 "DIAGNOS,
following a successful Proof-of-Concept (POC) pilot study, is finalising
its new application CARA-STROKE to address Stroke prevention and
management, a market estimated at $36 Billion".
March 4, 2021 "DIAGNOS
and the third largest optical retailer in Costa Rica Piloting CARA and
its Telemedicine technology".
February 26, 2021 "DIAGNOS
Announces Exercise of Stock Warrants and Provides a Cash Update".
February 24, 2021 "DIAGNOS
Announces its Exclusive Strategic Partnership Agreement with Labtician
Ophthalmics, a Leader in Canadian and International Eyecare Markets to
Address Growing Needs in the Monitoring of Diabetic and Hypertensive
Patients".
February 2, 2021 "DIAGNOS
Announces Further Deployment of its AI based CARA Technology in Saudi
Arabia".
January 28, 2021 "DIAGNOS
announces the re-opening of its medical testing in Panama".
January 21, 2021 "DIAGNOS
Successfully Completes ISO 13485 / MDSAP Audit".
January 19, 2021 "DIAGNOS
announces a 3-year partnership agreement with the University of Montreal
Hospital Centre (CHUM) on the use of Artificial Intelligence".
January 14, 2021 "DIAGNOS
Announces Partnership in Saudi Arabia with Magrabi Hospitals and Centers
to Screen Diabetic Patients".
...Click
here to view more news releases from source
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A closer look at DIAGNOS' traditional
business (targeting vision loss in diabetics) and how the company
sees it growing
Diabetic retinopathy is silently blinding
millions of people a year, the market size was valued at USD $8B in
2018 and is expected to witness 6.9% compounded annual growth rate
from 2019 to 2025.
Figure 4. (above) - Client Test Referral
Pathway --
Because the images can
be sent over the internet, the doctor can be in a different physical
location confirming the diagnosis.
DIAGNOS' algorithms are capable of
Automatic classification by level of severity of DR & DME:
- State of the art Deep Learning technology.
- Best in class: sensitivity 94% and specificity
88%.
- Results in less then 2 seconds.
Automatic detection of anomalies in retinal photographs.
Validation of lesion with simplified grading sheet (AAO).
Figure 5 (above)
Automated triage can help reduce healthcare labor requirements
while increasing patient access to quality care and reducing
healthcare expenditure.
The diseases targeted by the algorithm include the leading causes of
blindness among adults, such as diabetic retinopathy and
aged-muscular degeneration. There is an estimated ~500 million people
with diabetes worldwide, of
that number 0.1% of people with diabetes will lose their vision
completely per year if not screened, that translates to 500,000
people per year that will go blind from a curable disease if they
are not screened. These diseases are treatable with
existing medicine but only if caught in the early stage. However,
people at risk are not getting their eyes checked regularly, and
therefore going blind unnecessarily, for the following reasons:
A). There is a shortage of retina specialist doctors. There
are less than 2000 retina specialists in the US versus nearly 50 million
diabetics. Clinical guidelines suggest that every diabetic be
screened for diabetic retinopathy once a year, obviously impractical
for such a large number to be screened under traditional methods by
so few specialists. In less developed countries the ratio of
specialists to diabetic population is even worse compared to the US
and Canada. By
using an algorithm to screen patients, DIAGNOS ensures that only
those at risk see a doctor, which relieves congestion in the
healthcare system, while improving access to healthcare.
B). Seeing a doctor is expensive. Retina specialists can
charge $300+ per visit, but DIAGNOS' software driven procedure
charges out at a comparatively nominal cost per visit, in some cases this fee can be paid by
a sponsor (such as the pharmaceutical company) rather than the
patient.
C). Seeing a doctor is inconvenient. Retina specialists tend
to be located in urban areas, and therefore may be inaccessible for
rural populations. However, DIAGNOS' system could be installed in
Primary Care Facilities, or stores
providing low-cost healthcare services, further improving access to
basic healthcare.
Figure 6. (above) - Comparison of normal
vision vs. what someone with DR might see.
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Below is expanded
insight on DIAGNOS Inc. and its technology.
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