Companies: MDST   

On flotation in June last year, cancer-screening software provider Medicsight was valued by the City at £170m. Now, one credit crunch and no real revenues later, the company is worth almost two-thirds less.

Its software works with CT scanners to better identify cancers in the bowel or the lung. Demand for these techniques, which have recently been endorsed by major professional bodies in the US and Europe, is growing as they speed the diagnostic process and save hospitals money.

Medicsight has signed deals with the companies whose products allow these CT scans to be visualised, including Toshiba, Infinitt and Vital Images, and has received regulatory approval in the EU, Canada, China and, most recently, Brazil. The company is looking forward to a similar result in Japan that would allow the landmark deal with Toshiba to begin generating its considerable expected sales.

Executive chairman Tim Paterson-Brown, who with fellow directors has just bought a total of £130,000 of the company’s shares, says this is expected before the end of October, with similar Korean sanction by the end of the year. A decision to delay its final US regulatory application, which began last year, until the current quarter has also held revenues back, but Paterson-Brown says, ‘We are the only company to have started its clinical trials in the US, so we have a year’s headstart on anyone else.’

In the first six months of the year, Medicsight lost £4.5m before tax, with £4.9m spent during the six-month period and just £44,000 of revenues generated. New house broker Nomura Code has reduced its revenue forecasts for the current year to £3.5m, predicting break-even in 2009 from £24m sales.

With £20.3m of cash left in the coffers at the period end and apparently poised to break into revenue generation, Medicsight is a classic high-risk, high-reward play.

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Medicsight	AIM	£45.88m	29.50p	-0.50p
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