Imaging Biometrics LLC - Letter to Shareholders

27 January 2022

IQ-AI Limited

("IQ-AI" or the "Company")

Imaging Biometrics LLC Year end 2021 Letter to shareholders

Imaging Biometrics, a subsidiary of IQ-AI Limited (OTCQB: IQAIF: LSE: IQAI), discusses its most successful year on record.

·    Increases technology platform and expects record revenues

·    Rolls out Phase I clinical trial and prepares to file 510(K) with the FDA

Milwaukee, WI January 27, 2022, Imaging Biometrics, a subsidiary of London-based IQ-AI Limited, develops and provides visualization and analytical solutions that enable clinicians to better diagnose and treat disease, today published its year end 2021 letter to shareholders.

"Dear Shareholders:

We'd like to start by wishing you and your families good health and a great 2022. Over the last 12 months our company, like companies all over the world, had to manage the realities of the ongoing pandemic. As we mentioned in previous announcements, COVID-19 imposed a delay in sales activity as hospitals shifted resources to deal with the influx of patients. Internally, we are happy to report we experienced no interruptions to our operation and the development of key technologies. Our staff are well, and we are grateful that all our prospects re-engaged with us as the year progressed. As a result, we saw a step-change increase in revenue and completed our most successful year on record; more than doubling revenue to nearly $700K. While we continue to receive funding from the National Institutes of Health (NIH) for various grant activities, this marked increase was driving by growth in sales of IB Clinic-container edition (IB-ce). In addition to record sales, we continued to receive strong activity for trial requests of IB software. Most of these requests were for IB-ce, which enables fully automated generation of our quantitative parameter maps. We are the only company in the world with this capability and, given that IB-ce was introduced only a few short years ago, we are extremely encouraged with the initial adoption rate. The fully automated and seamless workflow, coupled with the proven accuracy of our quantitative maps, results in real clinical value for our clients and the confidence they have in our ability to impact survival and improve the quality of life in brain tumor and other patients. The conventional imaging approaches currently used by most hospitals and clinics remain inadequate, particularly when assessing brain tumors. The all-too-common question, "is the enhancing region tumor, or is it an effect due to treatment?" continues to be asked by treatment teams around the world. That remains our challenge; to educate and make clinicians aware of the advanced capabilities we offer and help them understand how we can provide the answer to that fundamental question.

Our partners, which include EnvoyAI/Terarecon, QMENTA, Medimsight, Blackford, Arterys, Cortechs.ai, and aycan Medical Systems, have been actively presenting our solutions to new clients and prospects.  While sales generated from our channel partners have been slow to gain traction, we remain optimistic that our combined efforts will gain momentum in 2022. We continue to provide training to their respective sales and marketing teams, we assist in the technical development of our combined platforms, and we participate in direct sales calls with prospective clients. Of significance, QMENTA recently obtained FDA 510(k) clearance for their platform, and we anticipate another partner to receive FDA 510(k) clearance for their platform in early '22.  FDA market clearance allows commercialization to commence in the USA. This is the pinnacle milestone for being able to sell medical devices without restriction, and companies must demonstrate compliance with federal quality regulations in the design and development of each device. In addition, a major pharmaceutical company is working with yet another partner to develop their own custom platform which includes 3^rd party artificial intelligence (AI) solutions. This company was very selective in choosing which 3^rd party applications would participate in early launch activity in the USA and in Europe. IB software was one of the few selected partners given our unique and proven capabilities. This is highly encouraging as we expect an accelerated penetration of our solution in the global medical imaging market with the backing and broad outreach of a multibillion-dollar organization.

Our IB Clinic suite of products are renowned for dramatically improving the ability of hospitals, clinics, and research organizations to get the most out of their magnetic resonance (MR) and computed tomography (CT) data. This improves the medical professional's ability to diagnosis and treat patients. In addition, our products enable our customers to standardize imaging protocols across various sites and platforms using the nationally recognized standard for MR perfusion imaging and other quantitative analyses. This is particularly meaningful for health care systems and imaging chains that have multiple satellite facilities. For instance, a patient could get scanned at one facility using vendor A's scanner, and a few months later be scanned at another facility using vendor B's scanner. If the data is processed using IB Clinic, the two exams can be directly compared to assess if the patient is responding to treatment. That is a key differentiator of IB's quantitative platforms. If any other software platform was used in this scenario, the two exams could not be directly compared to quantify changes and assess treatment response because they cannot generate output that is truly quantitative. Moreover, conventional imaging is not capable of answering critical questions, specifically, is the enhancing region tumor or is it an effect due to treatment? Thus, IB software offers several distinct advantages to patients. First, patients undergoing treatment can be scanned at any location convenient to them or the data from their MRI exam can be securely transferred to another site that has IB software. The built-in technology of IB Clinic will account for all the variations inherent with MR scanners and make the output "standardized" and consistent from one scan to the next. This is unique to IB Clinic and a reason why customers have repeatedly commented and published how our software is influencing their treatment and surgical decisions.  

Optimizing surgical guidance is an area we believe the accuracy of our solutions can be of additional benefit. Currently, surgical navigation systems provide sophisticated technologies that direct surgeons how to best navigate to the tumor site. Once at the tumor site, however, the surgeon needs to know where to biopsy or how much to cut. IB Neuro and IB Delta T1 maps can help provide accurate information that is currently not available. 

In June of 2021, we were awarded a US Patent for "gad free" imaging; a 0% gadolinium AI technology.    The ability to synthetically generate a post-contrast image, using only non-contrast images as input, highlights the power of AI and the disruptive potential it is having in healthcare. Translating this technology into routine clinical care remains a very high priority for us, and we are on target of submitting a 510(k) application to the FDA by the end of Q1, 2022. Motivating us is the fact that there is an immediate patient population that could benefit from this technology. Patients with compromised renal function cannot receive gadolinium-based contrast agents (GBCAs) since they are at risk of an untreatable condition called nephrogenic systemic fibrosis (NSF). In addition, younger children who require multiple MR contrast-enhanced scans, or any patient with concerns about GBCA administration, may find IB Zero G as an attractive alternative. From a hospital administration perspective, IB Zero G offers workflow benefits. First, it will remove the intravenous injection of GBCAs. This invasive step is not always performed properly, rendering the scan meaningless and requiring the patient to reschedule (and receive another dose of GBCA). Avoiding this step will foster higher scanner throughput and make MRI departments more productive due to the streamlined workflow. And the cost of GBCAs can be reduced. Outside of the hospital, environmental concerns have been steadily coming to the forefront as higher levels of gadolinium have been detected in areas near and around MRI departments, such as rivers, streams, and even drinking water. Thus, IB Zero G has far reaching implications and may prove to be an iconic landmark AI application in healthcare. 

As mentioned above, we feel the pediatric and neonatal patient populations represent a large and immediate market for IB Zero G. Our company is extremely proud that near the end of the year we signed a Data Use Agreement with St. Jude Children's Hospital. St. Jude's is the only National Cancer Institute designated comprehensive Care Center devoted solely to children. It has received the highest ranking for the treatment of children worldwide. The team at St. Jude's expressed immediate interest in IB Zero G and responded by presenting us the agreement that provides access to MRI datasets acquired in children of all ages. The data will be used to understand how the AI technology performs in rapidly developing brains of younger subjects, as well as the testing and validation required for full commercialization of our IB Zero G™ product.

In addition, a derivative algorithm that resulted from the development of IB Zero G has been implemented in our core IB Clinic processing platform for automatically generating perfusion-derived "fractional tumor burden" maps. These maps classify the output of IB Neuro's quantitative perfusion data per the specification of clinicians. Currently, the semi-automated process includes one final manual step: the outlining of the enhancing region on the Delta T1 maps using our IB Rad Tech module. IB Rad Tech is a plugin to the OsiriX DICOM viewer. The manual drawing of the enhancing outlines leverages some fundamental capabilities of OsiriX. However, OsiriX is dedicated to the Mac computer. Most hospitals and imaging centers are PC-centric and are not always open to installing or supporting 3^rd party workstations. The automated segmentation algorithm eliminates this final manual step and breaks the dependence on OsiriX and Mac computers. We are in the process of deploying the automated workflow as part of the platform-independent and fully automated IB Clinic - container edition platform to key sites and medical collaborators.

During 2021, we were awarded a European patent for dual-echo MRI perfusion. This technology combines MR acquisition and post-processing and is already patented in the USA. The development and translation of this technology has been accelerated by funding from an NIH grant awarded in collaboration with the Barrow Neurological Institute (BNI). Using a single MR acquisition sequence, two sets of parameter maps can be generated; DSC and dynamic contrast enhanced (DCE). Moreover, the accepted pre-load dose of gadolinium (shown to optimize the signal-to-noise ratio in perfusion imaging) can be eliminated under this approach and generate images of comparable quality. Harmonizing this protocol across all vendor platforms is part of the funded BNI grant and encompasses tremendous communication and coordination with the major MRI vendors.

During the latter half of 2021, we worked alongside the team at the Medical College of Wisconsin Cancer Center (MCWCC) to qualify of a new supplier of encapsulated oral gallium maltolate (GaM) for our sponsored Phase I clinical trial. Thanks to their diligence and effort, we have successfully accomplished that and have further completed the required stability testing for the newly encapsulated agent. The results have been sent to the FDA as an amendment to the already approved Investigational New Drug (IND) application, and the entire team is anxiously awaiting their response which would allow the first subject to enroll. In parallel with those efforts, we have aggressively contacted over 50 organizations focused on glioblastoma multiforme (GBM) brain tumors. These include foundations, patient advocacy groups, and clinical trial research organizations. Our goal is to not only heighten awareness about the trial, but to share information about our quantitative imaging platform and how it will be used to assess response in patients throughout the trial. Thus far, the interest received for both the trial and IB software has been very strong.

Brain tumor patients have limited options. The standard of care remains maximal surgical resection followed by concurrent chemo- and radiotherapy. These harsh treatments impose tremendous financial burden on patients and their families. Monthly costs for chemotherapy alone can exceed $20,000. Our hope is to offer a minimally invasive and non-toxic treatment alternative for these patients and their families. The entire team is eager to see if the tremendous results shown in the pre-clinical trial can be replicated in human subjects during this study.

We continue our development efforts on other key initiatives including IB Trax™ for the tracking of metastatic lesions. Brain metastases are 10x more prevalent than primary brain tumors and clinicians lack a robust and streamlined tracking and monitoring platform. IB Delta T1 maps (patent pending) will be used to help delineate lesions. And since IB Delta T1 maps are quantitative, volumetric longitudinal assessment can be done for both individual lesion and whole brain analyses.

We have completed our marketing plans for 2022 and are adequately resourced to execute them. We intend to participate at several tradeshows directly and many more through our channel partners and the conferences they attend. Maintaining and building upon the momentum gained during 2021 with sales of IB-ce will be critical to this year's results, and we are especially optimistic that 2022 will be a breakthrough year for our channel partners. Our regulatory strategy, including the preparation and submission of IB Zero G's 510(k) application to the FDA, warrants adequate and appropriate resources during Q1.

Our priorities are clear. We are focused on sustaining our exclusive core imaging platform, allocating development resources on novel and sophisticated imaging technologies, and we remain dedicated to ensuring the Phase I clinical trial is completed. We anticipate 2022 to be another record year for the company and I look forward to providing future updates as the year progresses."

The Directors of the Company accept responsibility for the contents of this announcement

-ENDS-

For further information, please contact:

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).