Rory Hunter - SGH Insights

How we assess the commercialisation prospects of medical devices

3rd Oct 2023

CurveBeam AI: A case study

Rory Hunter, Portfolio Manager for the SGH Emerging Companies Fund and the SGH Medical Technology Fund.

CurveBeam AI (ASX: CVB; website link) combines market leading point-of-care diagnostic cone beam CT imaging solutions with artificial intelligence (AI) and deep learning AI (DLAI) expertise to deliver solutions across orthopaedics and bone health (fragility fracture prevention).

CVB’s existing product in-market is the HiRise weight bearing CT scan device. HiRise scans a patient from foot to the hip under gravitational load. The device generates up to 66% less radiation than traditional CT units and is much smaller in size, allowing it to be easily placed in clinics, giving surgeons access to scans in-house. This presents a compelling commercial proposition as well as making life more convenient for patients.

The company has also developed supporting clinical assessment software aids that, using AI and DLAI, are designed to automate the analysis of CT images to assess a patient’s bone mineral density (BMD) and bone microstructure (OssView).

When assessing the ability of medical device companies to deliver returns to shareholders, we typically use criteria related to:

  1. regulation;
  2. the reimbursement landscape in key jurisdictions;
  3. distribution strategy;
  4. return on investment (ROI) for clinicians; and
  5. how easily the device can be incorporated into existing workflows.


In the US, regulation of medical devices falls under the jurisdiction of the Food and Drug Administration (FDA). While simple Class I devices are exempt from the premarket notification process, Class II devices require a premarket notification, also known as a 510k.

In December 2020 CVB received FDA clearance for HiRise, while OssView has received FDA Breakthrough designation and is currently under review.


In the US, medical device reimbursement is a complex process involving multiple stakeholders. The process dictates how much manufacturers, hospitals, and healthcare providers get paid for using or providing a specific medical device. This plays a significant role in determining which devices are adopted by hospitals and healthcare professionals.

There are 3 keys aspects to this, being:

  • Coding – before a device can be reimbursed it needs a specific (CPT) code that describes the device or procedure in which it is used;
  • Coverage – referring to whether a payer will cover the device depending on medical necessity and clinical evidence; and
  • Payment – once a device is covered the next question is how much the payer will reimburse for it.

CVB can make use of existing CPT codes and broad coverage for lower extremity scans amounting to an average of US$140 per scan. This can be applied to HiRise’s existing CT scans, and additional software modules covering bone mineral density (BMD) for pre-surgical planning and bone fragility assessments (OssView), once approved.


Key to handling a large and complex market like that of the US healthcare market is a successful distribution strategy.

For small players like CVB, direct distribution can require a substantial monetary and time investment. Since regulatory approval of HiRise in late 2020, CVB has utilised a small in-house sales team for distribution.

Despite this, and operating during a period disrupted by pandemic lockdowns, CVB already has an installed base of 45 devices following 18 device sales during FY23.

During FY23 CVB signed a co-marketing agreement with Stryker, one of the world’s largest surgical product manufacturers and distributors. This distribution strategy will be rolled out during FY24 and we are excited to see the results.

Not only will this add hundreds of sales personnel to the distribution effort, there also exists a successful precedent to this agreement. Stryker has previously signed a similar agreement with Mako surgical Corp, before acquiring them for $1.6bn in 2013, under which they drove the installed base of Mako devices from 150 to over 1,800 units.

Return on Investment (ROI)

Purchasing a HiRise up front will cost clinics US$410,000 per unit. Therefore, CVB must highlight considerable value to make the investment worthwhile.

The value comes in two main aspects: a direct monetary return on investment and an indirect one, stemming from enhanced efficiencies and patient satisfaction.

When considering a standard CT scan reimbursement rate of US$140 per scan, clinics conducting 15 scans daily can expect a return on their HiRise investment in less than a year.

This ROI becomes even more attractive if clinics opt for Stryker’s “Flex Financing”. With this plan, clinics commit to buying set amounts of Stryker surgical products over multiple years, with Stryker covering the upfront cost of the device in return.

There exists a substantial growth opportunity for CVB and clinicians if and when the company’s AI and DLAI software modules get regulatory approval. BMD assessments are currently underutilised due to the inadequate accuracy of existing DEXA technology.

Surgeons currently look to avoid sending patients for BMD tests because of inaccuracy and the bottleneck it creates waiting for the test result. The inclusion of the BMD module will provide surgeons with an extra avenue for revenue.

Moreover, it will improve patient results through more precise surgical planning, minimising the necessity for subsequent corrective procedures.

Workflow Integration

HiRise is relatively small, meaning it can be easily installed at point of care locations. While smaller orthopaedic surgeries will likely need to scale up their operations to manage the administrative burden, it is our view that the ROI from the CT scanning alone justifies this investment, let alone the uplift from additional software modules, including BMD and OssView. There is also the benefit of managing and capturing patient revenue through the journey, driving efficiencies.

To summarise, there appear to be few obstacles hindering the successful commercialisation of HiRise, and, upon receipt of regulatory clearance, the additional BMD and OssView software modules.

The prospect of driving the company towards profitability and generating substantial returns for shareholders now lies with management and successful strategy execution. We take comfort in alignment of interests given board and management account for nearly 20% of the register.



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