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Down a quarter in value since its IPO last June, cancer-screening software provider Medicsight looks an interesting long-term punt after signing a breakthrough deal in February and with Japanese and US regulatory approval expected later in 2008.

Medicsight’s technology – originally developed to help the army spot enemy tanks – has been re-engineered to enable hospitals to better see signs of colon and lung cancer in CT (or CAT) scans and also cuts the time spent analysing results by at least two thirds. This allows hospitals to use their expensive CT scanners more efficiently and reduces human error, enabling a radiographer (a technician) to analyse scan results with the skill of a radiologist (a doctor).

The recent landmark deal with Toshiba's CT scanner division, which has signed up as a re-seller of the colon cancer software throughout Japan, provides a fantastic validation for the technology and a powerful route to market. Medicsight's CEO David Sumner hopes to follow up with similar deals in coming months, having done much behind-the-scenes work already.

Including Japan’s 5,000 CT scanners, the company estimates that there is at present an installed base of 31,000, each with at least five workstations, in its principle markets of North America, Europe, China, Korea and Australia, with license fees likely to be worth around US$10,000 each. Apart from deals with scanner manufacturers, the main route to market is via the providers of the software used by radiologists, with a number of principal players already signed up.

Sumner expects a high adoption rate as ‘radiologists are asking for intelligent software and our product is only a small part of their full capital spend’. House broker Collins Stewart forecasts a loss from £800,000 sales for 2007, rocketing to 5.7p earnings and £18m of sales in 2008. Medicsight could repay a speculation.

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Medicsight	AIM	£45.88m	29.50p	-0.50p
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