Volpara (ASX:VHT) share price under spotlight on lung screening expansion

Volpara is planning to expand in the lung screening sector.

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The Volpara Health Technologies Ltd (ASX: VHT) share price is in focus today after the ASX healthcare tech share announced it's expanding in the lung screening industry.

What is Volpara doing?

Volpara told investors that it's further expanding its footprint in the lung cancer screening market with a strategic partnership with Seattle-based lung AI company Precision Medical Ventures (PMV), which actually trades as RevealDx.

RevealDx was described as one of the leaders in the application of AI for lung nodule diagnosis (the task after detection) with its RevealAI-Lung offering.

Volpara has been operating in the lung cancer screening market for a couple of years after its acquisition of Seattle-based MRS Systems in June 2019. The company noted that its lung software is currently covering around 8% of the US market.

What is the advantage of working with RevealDx?

Volpara said that the partnership would enable lung cancer screening programs to have access to expanded services for patient reporting and tracking through to AI for detection and diagnosis.

It's going to invest US$250,000 into RevealDx through a convertible note.

The ASX share is also going to receive non-exclusive rights to sell the RevealAI-Lung product into the US, a number of free licenses to seed the market, and exclusive rights to sell RevealAI-Lung into Australia and New Zealand.

Volpara will also have the right to appoint a board observer to the RevealDx board.

The company also said that RevealAI-Lung is CE marked and is working towards TGA and FDA clearance. It's also seeking publication of two pivotal studies.

This partnership comes after the recent collaboration with a leading US lung imaging company, Riverain Technologies. The Volpara share price is relatively unmoved since that announcement earlier in September 2021.

How big is the lung screening opportunity?

According to RevealDx, the total available market for lung AI screening is estimated to be up to US$750 million globally in recurring revenue, once screening programs ramp up.

The Seattle business noted that early clinical data for RevealAI-Lung suggests that many cancers can be detected earlier by using the AI nodule analysis rather than waiting for a scan in a few months' time, while simultaneously reducing false positives, with potentially significant cost savings. Those cost savings formed part of the estimate of the total global market.

The idea is to sell to payers and providers first, and then seek reimbursement in the US.

The Volpara CEO Dr Ralph Highnam said:

The benefits of lung cancer screening using low-dose computed tomography (CT) have become more widely accepted globally, with the US doubling the number of people eligible, and countries like Australia starting the process of scoping out nationwide programs. Despite the clear benefits of screening in reducing mortality, a major issue those programs face is the number of false positive nodules found not just in routine screening but incidentally while scanning for other diseases such as pneumonia. That differentiation of nodules is exactly what RevealDx has been focusing on.

This is a pivotal moment for lung cancer screening globally, and our involvement in it. The combination of RevealDx and Volpara and other parties will be as compelling in lung as Volpara is in the breast space today.

Volpara share price snapshot

Currently, the Volpara share price is down 0.4% at the time of writing.

That currently gives it a market capitalisation of $308 million.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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