Beijing Eagle pupil Technology Development Co., Ltd. (hereinafter referred to as: Eagle pupil Technology) passed the hearing, with UBS and CITIC as its co-sponsors, the "first share of medical AI" fell to Eagle pupil Technology, according to Hong Kong Stock Exchange filings.

As a matter of fact, the listing of AI Healthcare has been one after another this year. From the point of view of the subdivided track, the field of imaging application has become a hot field of AI medical treatment because it is easier to achieve commercial value. According to industry statistics, from 2015 to 2020, the financing amount of China's AI medical imaging market increased from 500 million yuan in 2015 to 3.5 billion yuan in 2020, with a compound annual growth rate of 45.3 percent.

With the green eyes of capital, the companies in the field of image application have naturally become the main force for AI medical enterprises to go to the capital market. Eagle pupil technology took the lead in landing in the capital market, what is the "real" ability? Investors can follow the author to see what's going on.

Focus on the AI retinal image track, repeatedly won the capital glaucoma

According to the prospectus, Eagle pupil Technology was founded in 2015 and has been working intensively in the AI medical imaging industry since then, mainly providing early detection, auxiliary diagnosis and health risk assessment solutions for AI retinal image recognition. The company's solution improves the traditional early detection and auxiliary diagnosis of chronic diseases to achieve non-invasive, accurate, rapid, efficient and scalable detection and diagnosis of chronic diseases in medical institutions and large health providers. According to Frost Sullivan, Eagle pupil Technology is the global market leader and pioneer in this field.

According to the observation of Zhitong Financial APP, from the perspective of prevention and treatment of chronic diseases, Eagle pupil Technology has walked out of a more forward-looking and differentiated route-focusing on AI retinal imaging track. Compared with other artificial intelligence medical image solutions, artificial intelligence retinal image recognition analysis can be more widely used in medical and large health scenes, which makes the artificial intelligence retinal image recognition market grow explosively. In China, artificial intelligence retinal image recognition technology is increasingly used in medical and health scenes, including hospitals, community clinics and physical examination centers, as well as major health scenes such as insurance companies, optometry centers and pharmacies.

According to Frost Sullivan, the market for artificial intelligence retinal medical imaging is expected to grow from 76 million yuan in 2020 to 34 billion yuan in 2030, with a compound annual growth rate of more than 80 per cent from 2020 to 2030. Among them, there are still a large number of unmet demand for artificial intelligence retinal medical images in large health scenarios, and it is expected that the compound annual growth rate from 2020 to 2030 will be 90.7%, which is faster than that in medical and health scenarios.

Eagle pupil technology is not only located in the artificial intelligence retinal medical imaging market with huge imagination space, but more importantly, it has occupied the first-mover advantage. The company's Airdoc-AIFUNDUS is an artificial intelligence medical device software ("SaMD"), which is approved to assist in the diagnosis of diabetic retinopathy, and is the first of its kind to obtain the third Class Medical device Certificate of the State Drug Administration and the second approved global artificial intelligence retinal image recognition and analysis SaMD, so it is used in domestic hospitals to assist doctors in medical diagnosis.

In a new track, getting approval one step ahead of competitors means that the company's products can be commercialized first, and then enter the market one step ahead. It has the first-mover advantage in the industry where the competition is not fierce, and the snowball effect is more likely to be achieved in the future.

The prospect charm of the track and the huge development potential of Eagle pupil technology have naturally attracted the attention of many strength capital. According to the prospectus, Eagle pupil Technology has completed seven rounds of financing, with a financing amount of nearly 800 million yuan. There is no lack of head figures in the list of shareholders, including Sogou holding 7.31% through Century Si Sui; Ping An Insurance holding 8.82% through Ping an Medical Technology; and Fosun holding 12.64% through Asia Northeast Chen.

Comprehensive Retinal Image Database to promote Multi-dimensional Commercialization

Eagle pupil Technology has established a solid moat with integrated software and hardware product solutions, multi-dimensional commercial channels and strong R & D strength.

At present, Eagle pupil's product line consists of three major parts: SaMD for detection and diagnosis, health risk assessment solutions and unique hardware equipment. Among them, Airdoc-AIFUNDUS is the company's core product, which is an artificial intelligence SaMD using complex deep learning algorithms, which uses retina images and other data to accurately detect and assist in the diagnosis of chronic diseases.

At present, there are three versions of Airdoc-AIFUNDUS of Eagle pupil Technology. From the point of view of market demand, the commercial prospect of Airdoc-AIFUNDUS of Eagle pupil Technology is clear. In recent years, the number of diabetes patients in China has gradually increased. In 2020, there were 124 million diabetes patients in China, but their control rate and awareness rate were low, which were 32.2% and 43.3%, respectively. In other words, almost half of the patients did not know that they were suffering from the disease.

Diabetic retinopathy is the most common complication for patients with diabetes, but because the disease is usually asymptomatic in the early stage, nearly 90% of cases of diabetic retinopathy in China remain undiagnosed in 2020.

In view of the limited and uneven distribution of medical resources available in China, there is an unmet demand for high-performance and cost-effective medical devices for the detection of diabetic retinopathy. The launch of Airdoc-AIFUNDUS, the core product of Eagle pupil Technology, can not only fill the gap in this market, but also help patients with early detection and early treatment. In its multicenter clinical trial of recruiting 1000 patients, Airdoc-AIFUNDUS showed an industry-leading sensitivity of 91.75% and specificity of 93.1%, according to the prospectus. In addition, Airdoc-AIFUNDUS is widely compatible with most fundus cameras on the market, enabling Eagle pupil Technology to better seize important market opportunities.

More crucially, Eagle pupil Technology is working to promote its core products to cover new indications and aims to develop the most comprehensive diagnostic solution for artificial intelligence retinal image recognition in China. As of the latest practical date, the company is preparing a clinical trial of Airdoc-AIFUNDUS, which aims to cover hypertensive retinopathy, retinal vein occlusion and age-related macular degeneration. The company plans to start multicenter clinical trials in October 2021 and apply for approval from the State Drug Administration for new indications in the second quarter of 2022. According to Frost Sullivan, Airdoc-AIFUNDUS (2.0) is expected to become the first artificial intelligence-assisted diagnostic SaMD in China for a variety of approved indications.

In addition, the company is developing Airdoc-AIFUNDUS for pathological myopia and retinal detachment to address the increasing myopia and vision problems in China, especially the younger generation, and plans to start multicenter clinical trials in October 2022 and apply for new indication registration from the SFDA in the first half of 2024.

According to Zhitong Financial APP, Eagle pupil Technology is one of the first companies in China to commercialize early detection, auxiliary diagnosis and health risk assessment solutions for artificial intelligence retinal image recognition. Benefiting from a multi-dimensional commercialization strategy, the company has rapidly infiltrated the market, including medical and non-medical health scenarios, and built a solid and diversified customer base, growing from 46 to 85 customers from 2019 to 2020.

As contestants in the new track, the speed of commercialization has been ahead, and it is very important to continue to expand the lead and build their own moat. At present, Eagle pupil Technology's retinal image database has accumulated comprehensive, massive and diversified image data, including about 3.7 million complete real-world user retinal images and corresponding multimodal data, marked by senior experts and treated according to diseases and lesions.

This part of the database not only becomes the industry entry barrier of competitors, but also provides a solid foundation for the company to continuously optimize deep learning algorithms. In addition, the company has 148 patents and patent applications and 6 issued Patent Cooperation Treaty (PCT) applications in China. According to the prospectus, the company has published more than 20 papers in authoritative peer-reviewed scientific journals such as the Lancet series, British Journal of Ophthalmology and British Journal of Dermatology, as well as influential artificial intelligence conferences such as MICCAI. In addition, the excellent performance of its products has been reported in a variety of authoritative peer-reviewed scientific journals such as the Nature series.

In short, Eagle pupil Technology through the core product iteration, to achieve multi-dimensional commercial landing, the establishment of the first barrier to entry. Secondly, with strong R & D strength and in-depth understanding of the industry and policies, we can continue to lead the industry, continue to expand market share, and thus occupy a stable market position.

The main business is to accelerate growth and increase gross profit margin at the same time.

The core product strength is tough, coupled with the promotion of multi-dimensional commercialization strategy, the profit situation of Eagle pupil Technology continues to improve, with full potential. According to Zhitong Financial APP, the company's revenue in 2019, 2020 and the first three months of 2021 was 30.415 million yuan, 47.672 million yuan and 22.168 million yuan respectively, and increased by 56.7% and 980.3% respectively in 2020 and the first three months of 2021. The scale of the company is not large, but it is growing rapidly, mainly because China's artificial intelligence retinal medical imaging market is still in its infancy, as mentioned above. The market size is only 76 million yuan in 2020, and Eagle pupil Technology has a market share of 63%, far exceeding its competitors. Even in the artificial intelligence medicine market with a larger track scale, the company has a market share of more than 15% and is already in a leading position.

From a business point of view, the provision of artificial intelligence software solutions is the main revenue of Eagle pupil Technology. In the first three months of 2021, the revenue reached 19.555 million yuan, an increase of 981.6% over the same period last year, accounting for 88.2% of the total revenue. The sales revenue of hardware equipment is 2.022 million yuan, accounting for 9.1% of the total revenue.

The revenue scale of core products is rising rapidly, which verifies the success of the company's multi-dimensional commercialization strategy. In the first three months of 2021, the revenue of medical and health scenarios reached 4.022 million yuan, an increase of 425.8% over the same period last year, accounting for 18.1% of the total revenue. In addition, the revenue of the Great Health scene reached 18.078 million yuan, an increase of 1924.4% over the same period last year, accounting for 81% of the total revenue. The proportion of the two sources of income increased at the same time, indicating that the company's products continue to infiltrate in the use of the scene, but also means that the products are recognized by the market.

While the revenue scale has increased significantly, the company's gross profit margin has also improved significantly, from 53% in 2019 to 66.6% in the first three months of 2021, mainly due to a sharp increase in core business gross profit margin, during the same period, the gross profit margin of artificial intelligence software solutions increased from 46.3% to 71.3%. The increase in gross profit margin on the one hand shows that the company's research and development has been implemented, on the other hand, it shows that with the expansion of the scale of business, the economies of scale effect is further reflected. With the further expansion of the company's market share, there is still room for further improvement in gross profit margin.

All in all, the AI medical imaging market has hundreds of billions of market capitalization potential and considerable development prospects. Eagle pupil Technology cuts into the track with AI retina, which has obvious first-mover advantages. The process of commercialization of the company is considerable, the revenue is growing steadily, and the gross profit margin continues to rise. after successfully landing in the secondary market, the company will have more strength to accelerate on the road of market coverage.