Ocular IPO blinks

Investors buy into debut AI healthtech listing


Airdoc’s AI focus is on eyes

China has a shortage of doctors and, as a natural consequence, a lack of medical specialists too. This means patients are often misdiagnosed or undiagnosed – at rates of more than 60% for some medical conditions and illnesses.

One government-supported response is the use of more artificial intelligence (AI) to interpret medical imaging – a service that is supposed to help overstretched practitioners tap into a deeper wealth of knowledge.

Against that backdrop it is perhaps surprising that Beijing Airdoc Technology – the first of China’s medically focused AI firms to list on the stock market – fared rather unfavourably on its first day of trading on November 5 in Hong Kong, raising less than half of the predicted HK$3.89 billion ($499 million).

The stock was priced at HK$75.1 before falling to HK$61.80 two trading days later. Since then it has climbed back to HK$64 – not enough, perhaps, to quell questions about the upcoming IPOs of other medical AI firms such as Beijing-based Shukun Technology.

One criticism of Airdoc – which specialises in retinal scans – is that it fared poorly on its market debut by failing to communicate a clear advantage over competitors in commercialising its products, has suggested.

Airdoc offers 10 SaMDs or ‘software as medical devices’. One of them – the Airdoc-AIFUNDUS 0.1 – has already been approved by China’s Medical Products Association to support diagnoses of diabetic retinopathy – a complication of diabetes that can cause blindness if not treated early.

What Airdoc claims in its favour is a database of 370 million retinal scans from which its software can learn to improve its diagnostic capabilities. The company also hopes to secure approvals for two further versions of the AIFUNDUS software that assist in the diagnosis of hypertensive retinopathy, pathological myopia and retinal detachment – diseases that could affect more than a 100 million Chinese in the next decade as the population ages.

Other players in this field include Imsight, Infervision and Deepwise – all of which have benefited from the medical sector’s readiness to make its datasets available to the AI firms, allowing for an acceleration in machine-learning processes.

China has recently introduced laws to strengthen the protections of private information for consumers but Beijing regards the nation’s medical databanks as strategic resources that belong to the state, Nature Magazine quoted Rebecca Arcesati, a technology policy analyst at the Mercator Institute for China Studies in Berlin, as saying. “The [new] law is unlikely to limit the widespread forced collection of biometric data and genetic information from the population, especially from vulnerable minorities,” she predicted.

SaMD software is useful because it helps to review medical images in a fraction of the time required by humans. In some cases, the procedures require that higher-tech images are uploaded at source – an MRI of a patient’s brain, for example. But in many others the images can be gathered and processed much more easily with smartphone cameras or relatively simple devices tagged onto laptops.

Beijing sees the application of the new technology as part of a development plan that aims to make China the leading power in AI by 2030. Smart healthcare is one of five applications prioritised in the blueprint, alongside smart manufacturing, smart cities, smart agriculture and smart national defence. The “Internet + Healthcare” Initiative also aims to drive the digital transformation of China’s healthcare systems at a faster pace (see WiC563 for more on the new regulations impacting ‘online doctors’ and the limitations on when AI can be deployed to treat patients, however).

Funding for the field has been increasing, with the National Natural Science Foundation putting $19.6 billion into AI research between 2016 and 2020. Conversely, several of the Chinese medical AI companies that applied for IPOs in Hong Kong this year have subsequently let their applications lapse. If the next AI newcomer trades down as dramatically as Airdoc, asset managers might start to look at the sector as overhyped too.

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