In morning trade the Volpara Health Technologies Ltd (ASX: VHT) share price has charged higher following the announcement of a new sales agreement.
At the time of writing the medical technology company's shares are up 4% to $3.69.
What did Volpara announce?
This morning Volpara announced that it has entered into a full distribution agreement with artificial intelligence software company ScreenPoint Medical BV.
According to the release, the five-year, non-exclusive contract will see Volpara selling ScreenPoint's Transpara software via its established direct sales force throughout Australia, New Zealand, the United States, and parts of Asia.
What is Transpara?
The release explains that Transpara is next-generation computer-aided detection software designed to help radiologists read screening mammograms by marking specific areas of the breast image as likely being cancer or not.
Breast cancers can be missed or masked in a breast image for several reasons. These include breast density, poor image quality, the radiologist not seeing the cancer, and the radiologist misinterpreting the cancer's appearance.
However, management believes that combining both the Volpara and Transpara solutions will optimise the early detection of breast cancer, thereby reducing radiologist liability and risk. It also expects their combined use to cut screening costs by potentially eliminating a reader in systems that deploy double-reading mammography.
Volpara's CEO, Dr Ralph Highnam, believes the ScreenPoint distribution agreement is significant because it enriches Volpara's offering to breast imaging centres.
He explained: "Critically, it helps expand the software toolkit that our sales people can sell and increases potential ARPU still further beyond the Volpara and MRS products. Based on the clinical papers to date, we're sure that Transpara is world leading and will be very successful commercially, especially when it achieves its US clearance from the Food and Drug Administration (FDA) for 3D breast images."
In respect to its average revenue per user (ARPU), following the acquisition of MRS Systems and the ScreenPoint distribution deal, management believes the Volpara sales force can now sell a full set of products which potentially could generate up to US$10 of ARPU from breast imaging clinics.
As a comparison, in FY 2019 the average price per woman screened in the US for the base Volpara Enterprise product was US$2.17.
Elsewhere in the industry on Monday, Ellex Medical Lasers Ltd (ASX: ELX) and Somnomed Limited (ASX: SOM) shares could storm higher after the release of positive announcements this morning.
