Aiforia (Artificial Intelligence for Image Analysis) is a Finnish software company focusing on automating pathology. Their software is used to aid pathologists in tissue analysis. Their software can, for example, quantify the number of certain cancer-diagnosis related cells and highlight them in a scanned image of a tissue sample. Pathologists can then check if the cells are correctly identified and write their report for the doctor treating the patients. Pathologists can create their own image recognition models by annotating their tissue sample slides, so they don’t need to wait for ready-made models that software providers need to push through regulative approval processes.
Demand for automation in pathology seems clear: population is getting older and living longer, which unfortunately brings more cancer cases to medical services. There is already a shortage of pathologists and meeting the demand of cancer diagnostics creates a need to improve productivity in pathology laboratories. Cloud storage has gotten cheap enough quite recently (tissue sample slide images have pretty huge file sizes) and COVID pandemia gave laboratories a reason to start going digital (you need to have tissue slides scanned to digital format to work remotely - pathologists used to look at their images with microscopes). Adding to these market drivers is the recent increased interest in AI & automation. Together these changes seem to have now triggered the first wave of investments in digital pathology and related AI-solutions.
Aiforia started from medical research / education segments and already had a global customer base in this segment when they did their IPO late 2021. Since then, their entry to the clinical market (which has the big revenue potential) has progressed steadily. Mayo Clinic (USA, often ranked #1 hospital in the world) begun Aiforia’s clinical use in breast cancer diagnostics in March 2023. Aiforia has also signed clinical deals with a NHS trust (UK), Veneto Hospital district (Italy), City of Hope & Wake Forest (USA, including pre-clinical use and clinical use), and many large pharmaceutical companies (10+ large customers in the segment). While there is a varity of players competing in this market, Aiforia has gotten really strong reference cases (especially Mayo Clinic) and seems to have a competitive solution.
The customers Aiforia has already won have significantly broad & high volume use cases and we believe that each of their existing ~3 large clinical customers have revenue potential of at least a few MEUR per year. Aiforia’s 2022 revenue was just below 2 MEUR and hence their growth is largely dependent on especially how fast they can expand their existing customers. New customer wins are naturally also important, but their near-term growth is leaning heavily on a selected number of existing customers.
At the flipside of the potential and good market momentum in an attractive market, Aiforia is at their early stage of growth and still burning cash. With our current estimates cash would run out early 2025. Their growth is also difficult to forecast and long term development of their competitiveness & market is naturally really hard. However, if their good market momentum continues, we see a good likelyhood that the needed growth capital would be available at reasonable terms and dilution.
We published our latest report after their H1’23 report today, feel free to take a read / ask us questions / add your thoughts here 
