Five years since being founded, Seoul-based health care startup Vuno is now betting big on an initial public offering.
The loss-making company is pinning its hopes on a turnaround, as it has managed to launch products designed to streamline the workflow of radiologists and expects a sharp hike in revenue from client hospitals starting late next year, its founder said in an interview with The Investor.
“Until last year, I was not sure of the marketability of products we have developed,” Vuno CSO Kim Hyun-jun said. “But now I’m sure our balance sheet will improve, because Vuno’s income from purchase agreements with hospitals this year will be reflected after a year.”
The confidence of the Korean equivalent to San Francisco-based Enlitic was based on its own deep-learning engine called Vuno Net.
Vuno CSO Kim Hyun-jun
Vuno Net honed its artificial intelligence technology, by collecting and analyzing de-identified patient data from hospitals. Vuno will match Vuno Net’s interpretation of a scanned medical image with the actual status of a patient -- normal or abnormal -- so that the engine will be able to tell without human assistance if the finding translates into abnormality.
Repeating the process, Vuno Net has been able to come up with its own diagnosis based on its vast database, to the degree that the products using the engine can help radiologists and play a supplementary role in physicians’ medical decision-making. The solutions have been showcased in annual meetings of the Radiological Society of North America.
This gave birth to four commercial products selling in some 50 hospitals in Korea. Of them, BoneAge and Chest X-ray helps radiologists in hospitals assess bone age and detect abnormalities in chest radiographs. DeepBrain allows radiologists to catch neurodegenerative disease, while Medical ASR automates transcription of voice-recorded medical reports with speech recognition technology.
“Now that the AI engine is full-fledged, we are able to implement the technology for different types of diseases. All we do is to apply a different user interface,” Kim said.
Moreover, the startup is eyeing the launch of more clinical trial-stage software. These include a screening solution detecting fundus abnormalities and conditions in pulmonary nodule.
“At Vuno’s nascent stage, all we had was the deep-learning technology, and the question was which field it could be applied,” said Kim, one of the three Vuno co-founders who were all research staff members of Samsung Advanced Institute of Technology.
“What we were looking at was how significant the impact of our technology could be. We concluded the impact would be large when applied to the medical field.”
The conservative field of medicine rather made room for trailblazing the new market, so that the startup could be the first mover in the domestic market, he added.
Efforts of the startup have been combined with the government support to steer clear of legal uncertainties and to encourage listings of innovative companies that are in the red.
Kim recalled hurdles it had to face in its maiden voyage, due to the void of state guidelines for licensing AI-powered health care products.
What cleared the hurdles was the push for innovation by Korea’s Office for Government Policy Coordination – at the Prime Minister’s Office. The office urged the Korea Food and Drug Administration to come up with guidelines to grant a license to AI health care products. As a result, new guidelines were announced in November 2017.
Under the guidelines, Vuno’s first product BoneAge became eligible for domestic sales in May 2018, for the first time in the nation.
“It took three years for BoneAge to gain state approval after we first developed the product,” Kim said. “Afterward, it takes up to one year to go through clinical trials before the launch.”
Vuno CSO Kim Hyun-jun (left) and CFO Lee Sang-jin
Logging 2.6 billion won ($2.2 million) net loss in 2018, due in part to heavy spending on payroll, Vuno was assured of fundraising through a forthcoming pre-IPO round and an IPO, a year after it raised a latest 11.7 billion won series B round in October 2018.
According to its listing plan, Vuno pseeks to go public on the Korea Exchange’s development board Kosdaq as a technology growth company. Under the abridged listing policy, companies meeting technological standards by tech credit bureaus are eligible to go public regardless of their financial performance. It has selected Mirae Asset Daewoo and Samsung Securities as IPO underwriters.
“Our business model is already here, and we are ready to go public with the tech achievements so far,” Vuno CFO Lee Sang-jin said. “The upshot in costs does not simply go nowhere, because we are bearing fruits from our spending in research and development.”
The proceeds will be used to commercialize products that Vuno expects to pass clinical trials, Lee added.
By Son Ji-hyoung (firstname.lastname@example.org)