iCAD Stock

iCAD, Inc. (iCAD) operates as a global medical technology company.

The company is providing cancer detection and therapy solutions. Xoft, Inc., Xoft Solutions LLC and iCAD France LLC are wholly owned subsidiaries of the company.

Segments

The company reports in two operating segments: Cancer Detection (‘Detection’) and Cancer Therapy (‘Therapy’).

iCAD continues to evolve from a business focused on image analysis for the early detection of cancers to a broader participant in the cancer therapy market. The company’s strategy is to provide patients and clinicians with a broad portfolio of innovative clinical and workflow solutions and technologies that address the two primary stages of the cancer care cycle, namely detection and treatment. Its products can enhance early cancer detection and earlier targeted intervention, which could result in better health outcomes, overall savings to the healthcare system, and increased market demand and adoption of iCAD’s solutions.

Cancer Detection segment

The company launched Profound AI, a DBT cancer detection and workflow solution built on deep learning AI, in the European Union (the ‘EU’) and Canada in 2016 and, after receiving FDA premarket approval in the United States in 2019. ProFound AI version 3.0, which offers clinical and workflow improvements over prior versions, received FDA 510(k) clearance in March 2021 for commercial use in the United States for reading DBT exams generated using compatible DBT systems.

The company’s 2D FFDM breast density solution received FDA 510(k) clearance in December 2013. In December 2018, the company also developed a breast density assessment product for tomosynthesis that assesses breast density using 2D synthetic images that are generated from 3D tomosynthesis datasets.

In July 2020, the company received a CE mark in the European Economic Area (the ‘EEA’) for ProFound AI Risk, the world’s first image-based 2-year risk assessment model that assesses short-term breast cancer risk based primarily on information found in a 2D mammogram. In September 2020, ProFound AI Risk for 2D was introduced in the U.S. market as a decision support tool for radiologists. In September 2021, ProFound AI Risk for DBT was launched as a clinical decision support tool that provides an accurate short-term breast cancer risk estimation that is truly personalized for each woman, based only on a 2D or 3D mammogram.

Breast AI Suite

The company’s breast AI suite includes cancer detection, automated density assessment, and breast cancer risk assessment solutions for both 2D and 3D mammography. These solutions are designed to enhance breast cancer screening by improving clinicians’ clinical performance and efficiency.

PowerLook

PowerLook is the company’s back-end architecture platform, which hosts AI algorithm solutions and manages the communications between imaging acquisition systems (‘Gantries’), and image storage and review systems such as Picture Archive and Communication Systems (‘PACS’) and breast imaging viewing and interpretation systems. Workflow efficiency is critical in digital imaging environments and PowerLook was designed to streamline these processes. PowerLook includes a powerful and flexible DICOM (Digital Image and Communications in Medicine) compliant connectivity solution, which is designed to enable universal compatibility with leading PACS and review workstations. iCAD has worked with its industry partners to ensure optimal integration into the graphical user interface of their PACS and review workstations. The algorithms supported on the Powerlook platform have also been optimized for, and tested with, each supported digital imaging acquisition manufacturer based upon the characteristics of their unique components.

PowerLook v11.2 was commercially launched in late 2022. This latest version of the platform provides a scalable architecture that allows customers to optimize computing resources across an enterprise by automatically load balancing large data image processing.

Additionally, in 2022, the company introduced a containerized version of its PowerLook platform to integrate more easily into third party AI platform hosting environments. Several leading AI platform providers, including Sectra AB (Linköping, Sweden) and Arterys (Redwood Shores, CA), adopted the containerized environment and introduced integrated commercial offerings based on the company’s AI algorithms in 2022.

SecondLook

SecondLook is a machine learning-based cancer detection algorithm that analyzes 2D FFDM images to identify and mark suspicious masses and calcifications. This technology provides radiologists with a ‘second look’ that helps detect potentially actionable cancers earlier than screening mammography alone. SecondLook uses a sophisticated, patented machine learning algorithm designed to identify the masses and calcifications that are most likely to be malignant. The algorithm was trained using data from 2D mammography studies, enabling the product to distinguish between characteristics of cancerous and normal tissue. This differentiation results in earlier detection of hard-to-find cancers, improved workflow for radiologists, and higher quality patient care. SecondLook first received FDA premarket approval in 2002 and is primarily offered in the United States and select countries where the company’s latest 2D ProFound AI solution is not yet available.

Automated Density Assessment, 2D and 3D

PowerLook Density Assessment provides automated, consistent and standardized breast density assessments based on the American College of Radiology’s BI-RADS 5th Edition density categorization system. In the United States, at least 38 states and the District of Columbia require some level of breast density notification to patients as part of their screening mammogram. In 2022 the European Society of Breast Imaging also announced recommendations that women should be informed about their breast density and recommends screening breast MRI every two to four years for women with extremely dense breasts. In July 2021, the company introduced the latest version of the company’s automated density solution, a deep learning breast density assessment algorithm based on 2D synthetic images generated by DBT gantries from multiple vendors, including General Electric, Hologic and Siemens. In addition, the product continues to support breast density assessment based on 2D FFDM images from leading manufactures.

ProFound AI, 2D and 3D

DBT was first FDA approved in the United States in 2010 and has been demonstrated to offer multiple advantages compared to 2D mammography, including improved tissue visualization and detection that results in lower recall rates for patients. Clinical studies indicate that, when compared to 2D FFDM, DBT improves the ability to distinguish malignant from benign tumors and can better detect malignant lesions hidden by overlapping tissues, each of which can reduce the number of unnecessary biopsies and false positive recall rates. Initial studies have indicated that physicians using DBT have the ability to detect 41% more invasive cancers than those using 2D mammography, and also can reduce false-positive reads by up to 15%.

While DBT has been shown to offer clinical benefits for screening mammography, it can also significantly increase radiologist interpretation time compared to 2D mammography. AI-based solutions can significantly improve the efficiency and efficacy of reading breast tomosynthesis cases by identifying and highlighting suspicious breast masses and calcifications.

In 2018, the company received regulatory clearances in the EU, Canada, and the U.S. for its multi-vendor, DBT AI cancer detection and workflow solution, PowerLook Tomo Detection 2.0, which was subsequently rebranded ProFound AI for DBT.

ProFound AI for DBT is iCAD’s deep-learning algorithm specifically designed to detect malignant soft-tissue densities and calcifications in DBT exams by analyzing each DBT image, or slice. In early 2018, the company completed a large multi-reader, multi-case crossover design clinical reader study, which showed that ProFound AI can increase radiologist clinical performance by improving radiologist sensitivity by an average of 8%, improve radiologist specificity by an average of 6.9% and reduce recall rates in non-cancer cases by an average of 7.2%. The reader study also showed that the product can reduce DBT reading times by an average of 52.7%. Results from this reader study were published in the peer-reviewed journal Radiology: Artificial Intelligence in July 2019.

In 2019, the company launched ProFound AI for 2D, a similar AI cancer detection and workflow solution for 2D mammography. ProFound AI for 2D is CE approved and primarily targets the European market, where 2D mammography remains the predominant procedure for breast cancer screening. In March 2021, Version 3.0 of ProFound AI for DBT cleared FDA 510(k) review for use in clinical reading of DBT exams from compatible DBT systems. ProFound AI for DBT Version 3.0 included algorithm changes that improved both sensitivity and specificity in reading DBT exams compared to prior versions. In May 2021, ProFound AI received expanded EU approval for use with Fuji and Hologic Clarity HD DBT systems. In the fall of 2021, ProFound AI 3.0 for DBT added support for Hologic’s Clarity HD DBT in the U.S., as well as adding support for highlighting suspicious findings in GE, Hologic, and Siemens systems’ synthetic 2D images and in Hologic’s 3D Quorum slab images.

In 2022, ProFound AI was granted an Authorization to Operate (ATO) from the Department of Defense (DoD). The DoD’s Risk Management Framework (RMF) requires technologies be granted an ATO in order to be approved for use at a DoD healthcare facility. There are more than 500 DoD hospitals, inpatient facilities, ambulatory care and occupational health facilities worldwide.

In May 2022, real world evidence presented at the Society of Breast Imaging (SBI/ACR) Breast Imaging Symposium showed ProFound AI improved radiologists’ screening performance, increased cancer detection rates and reduced abnormal interpretation rates.

iCAD plans to continue its focus on advancing the performance of its ProFound AI for DBT solution through algorithm improvements and additional training on larger datasets, and building clinical support for and adoption of its products and solutions. iCAD has presented ProFound AI for DBT data from numerous studies at various prominent industry meetings and trade shows. The company has Original Equipment Manufacturer (‘OEM’) relationships with General Electric Company (‘GE’), Siemens AG (‘Siemens’), and FUJIFILM Corporation (‘Fuji’) and expects to use ProFound AI to expand its OEM partnerships with other mammography systems, PACS providers, and cloud-hosted AI platform providers.

ProFound AI Risk, 2D and 3D

ProFound AI Risk is the first commercially available clinical decision support tool that provides an accurate and personalized estimation of short-term breast cancer risk, based solely on a screening mammogram.

The company worked with leading researchers at the Karolinska Institute in Stockholm, Sweden, one of the world’s foremost medical research universities, to develop and clinically validate ProFound AI Risk. Unlike existing risk models that focus on family history and lifestyle factors to estimate longer-term risk, ProFound AI Risk focuses on a short-term risk interval. The estimation of risk of cancer occurrence within the next one to two years provides potentially more accurate information on which to base further actions relative to breast cancer risk. iCAD believes short-term risk models, such as ProFound AI Risk will enable risk-based screening approaches rather than the commonly used age-based approach of annual screening. The COVID-19 pandemic highlighted the benefit of risk-based screening as at the height of the pandemic in 2020, several medical societies recommended women of average risk postpone routine annual mammograms until the threat of COVID passed. As mammography screening begins to evolve from what has traditionally been an age-based annual screening paradigm to a short-term risk-based paradigm in the years ahead, iCAD is on the leading edge of this shift.

In July 2020 ProFound AI Risk for 2D FFDM received a CE Mark in Europe, and in September 2020 iCAD announced the publication of data in the peer-reviewed journal, Radiology, that confirmed ProFound AI Risk more accurately identifies the prospect of near-term development of breast-cancer than traditional risk models.

The October 2021 launch of the latest version of ProFound AI Risk was a significant achievement for iCAD, as this latest version offers the flexibility to work with 2D and 3D mammography images with high accuracy, showing over 10% improvement in the Area Under the Receiver Operating Characteristics Curve (AUC), a commonly used statistical measure of clinical accuracy, when compared to the Gail and Tyrer-Cuzick conventional lifetime risk models. Designed for global application, the latest version of ProFound AI can provide a one, two or three-year risk estimation, factor in ethnic and racial backgrounds in the assessment of the score, and factor in country specific screening guidelines and incident and mortality rates.

In May 2022, a study published in Science Translational Medicine found ProFound AI Risk accurately determined women who were at a higher risk of developing breast cancer, with up to 2.4 times more accuracy than traditional lifetime risk models.

In addition to superior accuracy, the image-based ProFound AI Risk solution offers a simpler approach to breast cancer risk assessment for providers, as there is no requirement to collect and manage patient history and lifestyle information, which can be costly and inaccurate.

Expansion of Software Licensing Model Options for the Breast Health Solutions Suite

iCAD has historically offered solely perpetually-licensed software, primarily pre-installed on and sold with an iCAD configured, off-the-shelf computer, capable of optimally running the software. As a result, customers using this model can only classify iCAD software and hardware as a capital purchase for accounting purposes and making an up-front capital purchase.

In 2022, iCAD began offering its full suite of breast AI solutions in a variety of more flexible and customer accessible options. First, iCAD uncoupled the purchase of iCAD software from the purchase of hardware, allowing customers to source their own computer hardware or use existing IT infrastructures. Second, iCAD launched several new software licensing models designed to accommodate both capital and operating purchasing for customers. In addition to offering perpetual licenses, the company introduced a new subscription pricing model that allows customers to purchase a term-based subscription based on the number of imaging gantries or annual mammography exam volume. To make iCAD’s software more flexible, the company’s software has been developed to run as a self-contained software package, making it executable within a variety of infrastructure environments, including iCAD-configured computers, alternatively sourced specification-compliant servers, virtualized environments, integrations into channel partner infrastructure and cloud-based hosting environments. iCAD will continue to sell iCAD configured servers to customers who prefer a single-vendor, turnkey solution with guaranteed compatibility and support.

iCAD is committed to providing solutions that will enable as many customers as possible to purchase or utilize the company’s products. The company’s Therapy business and the services and hardware product portions of the Detection business are expected to remain unchanged in the coming year. The subscription licensing model is being evaluated and the short-term and long-term impacts on the company’s results of operations are being tested, although iCAD believes subscriptions will be relatively slow to accumulate over time and will be largely additive to the perpetual license business. Additive customers will have positive revenue impact and while the transition of perpetual license customers to subscription customers will have negative effects in the short term, iCAD expects this to impact a limited fraction of the overall revenue base of the company in 2023. The company is also evaluating the future potential of providing a SaaS subscription model with the company hosting its software from the cloud.

Colon Cancer Screening Products

VeraLook is the company’s FDA-cleared solution designed to support detection of colonic polyps in conjunction with CTC. Field testing of the product was initiated in 2008. Results of the company’s multi-reader clinical study demonstrated that the use of VeraLook improved reader sensitivity by 5.5% for patients with both small and large polyps, and slightly reduced specificity of readers by 2.5%. VeraLook was CE marked in 2009, received FDA 510(k) clearance in 2010 and is distributed with advanced visualization reading workstations and CTC applications manufactured by Canon Medical Systems and Philips Healthcare.

Potential Future Cancer Detection Products Development

The company’s primary focus is on image analysis and workflow solutions leveraging AI in mammography, however, iCAD’s core technologies and product development capabilities can be applied to any imaging modality, including x-ray, CT, ultrasound, and Magnetic Resonance Imaging (‘MRI’). Additionally, the company could develop products that can be applied to screening and/or diagnosis of various additional cancer types, such as prostate, lung, and brain cancers, as well as screening and/or diagnosis of disease related to visually differentiated tissue abnormalities. The company continues to evaluate the adjacent or complementary opportunities in image analysis workflow solutions for future product development and commercialization possibilities.

Cancer Therapy segment

Cancer Therapy Products

The Xoft Axxent Electronic Brachytherapy System (‘Xoft System’) is iCAD’s proprietary electronic brachytherapy platform designed to deliver isotope-free (non-radioactive) radiation treatment in virtually any clinical setting without the limitations of radionuclides. The Xoft System utilizes a miniaturized high dose rate, low energy X-ray source to apply the radiation dose directly to the size and shape of the cancerous area while sparing healthy tissue and organs. While delivering clinical dose rates similar to traditional radioactive systems, the electronic nature of the Xoft System technology provides a faster dose fall-off which lowers the radiation exposure outside of the targeted area and eliminates the need for dedicated shielded treatment environment, such as that required with traditional isotope-based radiation therapy. As the Xoft System is relatively compact, it can easily be transported for use in virtually any clinical setting under radiation oncology supervision (including the operating room, where intraoperative radiation therapy (‘IORT’) is delivered).

The Xoft System is FDA-cleared, CE marked and licensed in an increasing number of countries for the treatment of cancer anywhere in the body. Active customers include university research and community hospitals, cancer care clinics, veterinary facilities, and dermatology offices with established strategic partnerships with radiation oncology service providers for supervised treatment delivery. The company’s commercial focus for the Xoft System has been the treatment of early-stage breast cancer, gynecological cancers, and non-melanoma skin cancer (‘NMSC’). Emerging applications include a wide and growing array of cancers, including brain and rectal tumors. Given that the Xoft System has regulatory clearance for the treatment of cancer anywhere in the body, treatments for emerging applications may not require additional regulatory clearance.

The company continues to make enhancements to the Xoft System controller (the ‘Controller’) unit, including upgrades to the high voltage connection, and the Streamlined Module for Advanced Radiation Therapy (‘SMART’) platform, which uses the Axxent Hub, iCAD’s proprietary cloud-based oncology collaboration software solution. The SMART platform is an adaptive, patient-centric solution designed to improve the eBX program’s workflow efficiency, flexibility, safety, and security. This comprehensive Wi-Fi enabled platform provides all members of a care team with a collaborative environment in which to manage patient workflow and eliminate challenges related to exchanging accurate patient data among providers.

In addition to the Controller unit, the company offers a 50kV isotope-free energy source, indication-specific applicators, a comprehensive service warranty program, and various accessories, such as the Axxent eBx Rigid Shield for internal IORT shielding. The 50kV energy source is typically sold under an annual contract and is customized to individual customer volume and usage requirements. The company offers FDA-cleared applicators for the utilization of the Xoft System, including breast applicators for IORT and APBI in the treatment of breast cancer, vaginal applicators for the treatment of endometrial cancer, cervical applicators for the treatment of cervical cancer, and skin applicators for the treatment of NMSC. The flexible single-use breast and brain applicators are offered in a variety of sizes and lengths based on clinical need. The endometrial, cervical, rectal, and skin applicators are reusable and are manufactured in various sizes based on the anatomical requirements of the patient or the size of the lesion.

Cancer Therapy Indications

The Xoft System can be used to treat a wide and growing array of cancers, including breast cancer, NMSC, gynecological, recurrent glioblastoma (‘GBM’) and various other forms of brain cancer, and additional IORT indications.

Breast cancer therapy is one of the primary indications for the Xoft system. Xoft used in IORT aims to simplify radiation treatment for early-stage breast cancer patients by delivering a single ten to fifteen-minute precise dose of radiation directly to the lumpectomy cavity in a single, safe and effective procedure. Xoft used in APBI may reduce the daily radiation treatment duration from weeks to days.

There are approximately 3.5 million cases of NMSC diagnosed annually in the United States. The Xoft System is a viable alternative treatment option for patients with lesions in cosmetically challenging locations (e.g., ear, nose, scalp, neck), locations that experience difficulties in healing (e.g., lower legs, upper chest, fragile skin), patients on anticoagulants, and patients who are anxious about surgery. The Xoft System has been used to treat more than 10,000 NMSC lesions. Clinical data published from 2015 to 2017 demonstrates promising local control and supports eBx as a convenient, effective, nonsurgical treatment option offering minimal toxicity and improved cosmesis for eligible NMSC patients.

The company is continuing to develop clinical support for brain IORT, primarily in the GLIOX trial, an international multi-center trial designed to compare Xoft IORT plus Avastin (bevacizumab) to the investigational arm of RTOG-1205 (EBRT plus bevacizumab).

Sales and Marketing

Cancer Detection

The company has now sold more than 1,300 ProFound AI licenses through December 31, 2022 and more than 2,000 total product licenses, including ProFound AI, upgrades, and other products. In North America, iCAD sells its AI mammography products through a direct regional sales force and through the company’s channel partners, which include OEMs, Radiology Picture Archiving and Communication System (PACS) vendors, AI Platform vendors and distributors. The company’s OEM partners include: GE Healthcare, focused on the manufacture and distribution of diagnostic imaging equipment, Fujifilm Medical Systems, a subsidiary of Fuji focused on the manufacture and distribution of X-rays and other imaging equipment, and Siemens Medical Systems. In Europe, the company sells its AI mammography products through a direct sales force and has also developed reseller relationships with regional distributors.

iCAD continues to build-out the company’s PACS partners, including Change Healthcare Inc. (‘Change Healthcare’), a leading independent healthcare technology company focused on insights, innovation and accelerating the transformation of the U.S. healthcare system; Sectra AB (‘Sectra’), an international medical imaging IT solutions and cybersecurity company, as well as the GE Healthcare division marketing GE PACS.

Additionally, the company has expanded on partnerships with additional AI Platform solution vendors. iCAD has three AI Platform vendor distribution agreements, including Arterys Inc. the world’s leading cloud native, vendor-neutral AI platform; Ferrum Health, who partners with global leaders of AI applications to provide a robust catalog of AI applications on a single, secure platform serving clinical service lines across healthcare enterprises; and Blackford Analysis, a wholly owned subsidiary of Bayer AG – a platform built for integration with existing systems while simplifying integrations and the management of multiple disparate AI applications and algorithms.

In March 2022, iCAD became one of the first healthcare companies to validate its AI cancer detection solution with the NVIDIA software suite, enabling thousands of healthcare organizations worldwide to virtualize AI workloads within hospital data centers using VMware vSphere and industry-standard servers.

In October of 2022, iCAD and Solis Mammography (Solis) announced a collaboration to develop and commercialize AI to evaluate cardiovascular disease based on breast arterial calcifications. Multiple studies have shown a correlation between the amount of breast arterial calcifications, which are visibly detectable on mammograms, to cardiovascular risk. iCAD and Solis are working together to use AI to quantify the amount of breast arterial calcification in mammograms, correlated to the risk of disease, and define meaningful clinical pathways for high-risk women.

In November of 2022, iCAD announced a strategic development and commercialization agreement with Google Health to integrate Google’s AI into iCAD’s breast imaging portfolio. iCAD intends to use Google’s 2D AI in its commercial product offerings, especially outside the U.S., where 2D mammography is primarily used for screening. The company expects to release its first product leveraging the Google AI technology in the next 1-2 years. Additionally, iCAD also announced plans to leverage the Google Health Cloud to launch its own cloud platform for the delivery of its breast AI offerings. The company has already received its first order from Radiology Partners, allowing hundreds of thousands of women to be screened at Radiology Partners’ owned outpatient imaging center sites with iCAD’s Breast AI Suite.

In November of 2022, iCAD and Radiology Partners, the largest radiology practice in the U.S., announced their intent to join forces to drive nationwide adoption of iCAD’s Breast AI Suite. The company has already received its first order from Radiology Partners, allowing hundreds of thousands of women to be screened at Radiology Partners’ owned outpatient imaging center sites with iCAD’s Breast AI Suite. The company has not yet entered into a definitive agreement with Radiology Partners.

These partnerships greatly expand visibility and access to the company’s Breast AI suite – including ProFound AI Detection, ProFound AI Risk and PowerLook Density Assessment - for more hospitals and imaging centers across North America.

Additionally, as part of its sales and marketing efforts, the company engages in a variety of public relations and local outreach programs with numerous customers and continues to cultivate relationships with industry leaders in breast cancer solutions, including at trade shows where the future of medical image analysis solutions is discussed.

Cancer Treatment

iCAD markets the Xoft System in the United States and select countries worldwide through its wholly-owned subsidiary, Xoft, Inc. a Delaware corporation (‘Xoft’). In the United States, Xoft utilizes a direct sales force and selected distribution partners. Xoft has been granted regulatory approval and has established partnerships in the United States, many European Union countries, the United Kingdom, Australia, Taiwan, China, and numerous other countries. iCAD continues to evaluate regulatory and distribution opportunities throughout the world.

A comprehensive medical education program is a key part to the company’s eBx market development strategy. Xoft actively participates in key industry scientific conferences and independent venues in the United States and Europe where the company provides professional education programs and product demonstrations relating to eBx. The goal of these programs and demonstrations is to broaden physician awareness of the Xoft System and eBx technology.

Competition

Cancer Detection

The company faces direct competition in its cancer detection and breast density assessment businesses from Hologic, Inc. (Marlborough, MA), Volpara Solutions Limited (Rochester, NY), ScreenPoint Medical (Nijmegen, Netherlands), Densitas Inc. (Halifax, Nova Scotia, Canada), Therapixel (Paris, France), and Lunit (Seoul, South Korea).

Cancer Treatment

The company’s eBx products face competition in breast IORT primarily from Carl Zeiss Meditec Inc. (‘Zeiss’) (Dublin, CA), which has an established base of breast IORT installations in Europe. Zeiss manufactures and sells eBx products for the delivery of IORT, for both breast and additional anatomical areas, including the spine, gastrointestinal tract, skin, and endometrial cancers.

The company’s NMSC products face competition from other mobile non-surgical treatment options (such as Sensus Healthcare’s Surface Radiation Therapy system and Elekta’s Esteya system), surgical treatment options and traditional radiation therapy.

Manufacturing and Professional Services

The company manufactures and assembles its detection products. When a product sale is made to an end-customer by one of the company’s OEM partners, it is usually installed at the customer site by the OEM partner or the company. When iCAD makes a product sale directly to the end-customer, the product is generally installed by iCAD personnel at the customer site.

iCAD’s professional services staff provides comprehensive product support on a post-sale basis. Product support includes product demonstrations, product installations, applications training, and technical support. The company’s support center is a single point of contact for the end-customer, and provides remote diagnostics, troubleshooting, training, and service dispatch. Service repair efforts are generally performed at the customer site by third party service organizations or in the company’s repair depot by the company’s repair technicians.

Xoft’s portable Xoft System is manufactured and assembled by contract manufacturers. Xoft’s miniaturized eBx X-ray source is manufactured by the company at its San Jose, CA facility. Once the product has shipped, it is typically installed by Xoft personnel at the customer site.

Xoft’s professional services staff provides comprehensive product support, physician support, radiation therapist support and billing support on a post-sales basis. Field service staff is involved in product installation, maintenance, training and service repair.

Government Regulation

In the United States, numerous laws and regulations govern the processes by which iCAD’s products are brought to market. These include the Federal Food, Drug, and Cosmetic Act (‘FDCA’) and its regulations, which govern, among other things, quality standards for product development, manufacturing, testing, labeling, storage, premarket clearance or approval, advertising and promotion, sales and distribution, and post-market surveillance of medical devices.

Some of the company’s products require submission of a premarket notification demonstrating that the device is at least as safe and effective, that is, ‘substantially equivalent’, to a legally marketed device that is not required to be approved under a PMA.

After the company’s products enter the market, iCAD and the company’s products continue to be subject to the United States Food and Drug Administration (FDA) regulation. For example, the FDA Quality System Regulations (‘QSR’) require manufacturers to establish a quality system, including extensive design, testing, control, documentation and other quality assurance procedures designed to ensure that their products consistently meet applicable FDA requirements and manufacturer specifications. iCAD’s third-party manufacturers are also required to comply with applicable parts of the QSR.

The company is also subject to FDA regulations covering labeling and adverse event reporting, as well as the FDA’s general prohibition against promoting products for unapproved or ‘off-label’ uses.

The company is also subject to a variety of federal and state regulations in the United States and regulations in other jurisdictions that relate to iCAD’s interactions with healthcare practitioners, government officials, purchasing decision makers, and other stakeholders across healthcare systems. These regulations, discussed in more detail below, include among others, the following:

anti-kickback, false claims, and physician self-referral statutes;

the U.S. state laws and regulations regarding fee splitting and other relationships between healthcare providers and non-professional entities, such as companies that provide management and reimbursement support services;

anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, the U.K. Anti-Bribery Act, the Canadian Corruption of Foreign Public Officials Act, and guidance promulgated by certain multi-national groups, such as the United Nations Convention Against Corruption and the Organization for Economic Cooperation and Development Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions;

laws regulating the privacy and security of health data, protected health information and personally identifiable information. These include the U.S. Health Insurance Portability and Accountability Act of 1996 (‘HIPAA’), the Health Information Technology for Economic and Clinical Health Act, the General Data Protection Regulation (‘GDPR’) in the EU, and the Personal Information Protection and Electronic Documents Act in Canada; and

healthcare reform laws in the United States, such as the Affordable Care Act (‘ACA’) and the 21st Century Cures Act, which include new regulatory mandates and other measures designed to reduce the rate of medical inflation. These include, among other things, stringent new reporting requirements of financial relationships between device manufacturers and physicians and teaching hospitals.

The company’s financial relationships with referring physicians and their immediate family members must comply with the Stark Law by meeting an applicable exception.

Intellectual Property

The company has certain patents to its ongoing programs that expire between 2023 and 2029. These patents help the company maintains a proprietary position in its markets. The company does not believe that the patents expiring in 2023 are material to its business. Additionally, the company has a number of patent applications pending domestically, some of which have been also filed internationally, and the company plans to file additional domestic and foreign patent applications when it believes such protection will benefit the company. These patents and patent applications relate to the uses of iCAD’s cancer detection technologies and products, including cancer detection solutions for tomosynthesis, CAD for CT colonography and lung and CAD for MRI breast and prostate. The company has also secured a non-exclusive patent license from the National Institute of Health which relates broadly to CAD in colonography, a non-exclusive patent license from Cytyc/Hologic which relates to balloon applicators for breast brachytherapy, and a non-exclusive license from Zeiss which relates to brachytherapy.

Engineering and Product Development

For the year ended December 31, 2022, the company incurred $8.7 million of research and development expense.

History

The company was founded in 1984. It was incorporated in 1984 as Howtek, Inc. under the laws of the state of Delaware. In 2002, the company changed its name to iCAD, Inc.