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Strategic and Operational Review 

FINANCIAL REVIEW

In the six months ended 30 November 2017, the Group incurred a loss after tax of £348,079 (2016: loss £126,000) on revenue for the six-month period of £228,874 (2016: £203,000).  TexRAD^Ò software contributed approximately 55% of the revenue with the remainder attributed to Cadran cardiology and radiology systems.  The revenue growth of approximately 13% in the first half of the year reflects growing demand across global territories for TexRAD^Ò.  Notably, we have seen an increase in purchase orders for TexRAD^® from leading medical institutions in South Korea and we are receiving significant interest in China, underpinned by the exclusive distributor agreements signed during the period.  We anticipate that the benefits of these agreements will be seen in the full financial year.

The loss before interest, tax and amortisation was £337,300 (2016: loss £115,000).  The wider loss in comparison to the previous year is largely attributable to an increase in headcount and investment in staff, continued product development and increased marketing activities in order to generate prospective customer interest and develop longer-term revenue opportunities.  The cash balance at 30 November 2017 was £266,756 (2016: £63,000).

OPERATIONAL PROGRESS

CCI signed exclusive distributor agreements with Korea Computer Motion ISG (“Korea ISG”) in June 2017 and Boya Digital Technology (Beijing) Co. Ltd. (“Boya”) in July 2017 for sales and distribution of TexRAD^® in South Korea and the People’s Republic of China, respectively.  These agreements represent a significant step in expanding TexRAD^® sales to meet the fast-growing demand in Asian markets.  By successfully identifying and engaging with distributors who are experts in the local market, we can leverage the TexRAD^® brand to help build a regional sales pipeline.  During the period, joint marketing and promotional activities were well-received and we have seen an increase in purchase orders for TexRAD^® from leading medical institutions in South Korea and we are receiving significant interest in China.  We also see strong demand for TexRAD^® in India having increased our presence in this market. 

Feedback is committed to offering its customers the highest quality service across all areas of its business and therefore compliance with international quality management standards is of paramount importance.  CCI received certification for its compliance with the ISO 13485:2016 quality management standard in September 2017.  Importantly, on 20 November 2017 Feedback announced the first CE marked release of the TexRAD^® technology which represents a significant accomplishment for the Company.  CCI affixed a CE mark to “TexRAD^® Lung”; a “software only” Class 1 medical device providing additional information for the interpretation of computerised tomography (CT) and positron emission tomography (PET) scans of patients with lung cancer.  The CE mark confirms that TexRAD^® Lung meets the requirements of the Medical Device Directive (MDD – 93/42EEC) ensuring the technology satisfies the quality, safety and performance standards for medical devices in the European Union (EU). 

This first TexRAD^Ò clinical product from Feedback is a significant step after building on six years of installing TexRAD^ÒResearch in prestigious research centres worldwide, underpinned by 17 years of operational expertise in Medical Device Manufacturing and imaging management through our Cadran platform supplied by CCI.  Post-period end in January 2018 the British Cardiovascular Intervention Society (BCIS) held its annual Advanced Cardiovascular Intervention conference.  CCI’s cardiology viewing software, which facilitates interactive case review training sessions for cardiologists, has now been supporting this conference for 20 years, which illustrates the quality and longevity of the CCI platform technologies.  

Post-period end, on 11 December 2017 StoneChecker^® Software Ltd announced that it has affixed a CE mark to its first software product.  The StoneChecker^® software utilises TexRAD^® technology to make detailed analyses of kidney stones.  CCI granted an exclusive licence to StoneChecker^® Software Ltd in July 2015 and is eligible to receive royalty payments upon future sales.

CLINICAL PROGRESS: TexRAD Lung^Ò

TexRAD^® Research is currently installed in over 40 of the world’s leading research institutions across Europe, North America, Asia and Australasia.  The CE mark for TexRAD^® Lung allows Feedback to engage with organisations focused on clinical vs. research work and develop both the product and the application of its use in routine patient management.  TexRAD^® Lung is a hands-free quantitative software for use on existing medical imaging systems, designed to provide an objective assessment of the architecture/heterogeneity, evolution and prognosis of lung lesions based on texture analysis of PET/CT scans.  Generating an additional set of data and images directly into existing radiology viewing systems, known as the picture archiving communication systems (PACS), it integrates seamlessly within a radiology department adding information to clinicians’ reporting workflow, thus improving efficiency and potential clinical utility.

TexRAD^® Lung is capable of seamlessly integrating with hospital PACS and, in a matter of hours rather than months, review decades worth of data extracting information of lesion size, density, heterogeneity and a host of other features of potential clinical significance potentially missed by subjective review by radiologists or nuclear-medicine physicians.  This ability to rapidly and consistently assemble an accurate, parameterised database is the first and arguably most important step in applying the emerging techniques of machine learning and artificial-intelligence (AI) to healthcare problems.  The development of TexRAD^® Lung is based on wider research using published medical information.  Our technology can easily access and review thousands of data sets from existing medical scans, without further tests on patients, all within the CE regulated framework therefore reducing barriers to clinical implementation.  This technique offers a significant advantage over traditional, prospective clinical trials where, for example, a study of 100 patients could be considered a large trial, requiring a longer timeframe and could have significant costs associated.

Building clinical confidence in a new device is of paramount importance.  TexRAD^® Lung will need to be configured to various hospital IT systems in order to embed the technology within routine clinical imaging workflow.  This may involve workflow modifications or other enhancements to the software before TexRAD^® Lung can be implemented in clinical practice, and particularly for a large-scale commercial roll-out.  Accordingly, we are delighted to have secured three pilot TexRAD^® Lung installations with existing UK customers who use TexRAD^® for research purposes to further inform our configuration strategy.  We are currently implementing these pilots and, are also working closely with Alliance Medical Group (“Alliance”) on the future integration of TexRAD^® Lung into Alliance’s network of PET/CT scanners in UK hospitals.

RESEARCH AND DEVELOPMENT PROGRESS

Having invested in marketing activities in India, research demand for TexRAD^® technology is increasing.  We sponsored the American British Course in Neuroradiology in Mumbai, India in October 2017, which included a lunch-time symposium presentation on brain texture analysis using TexRAD^® technology.  Post-period end in January 2018, Dr Balaji Ganeshan gave a guest lecture at Dr D Y Patil Medical College in India and attended the 17th Asian Oceanian Congress of Radiology (AOCR) & 71st National Conference of the Indian Radiological and Imaging Association (IRIA). 

In November 2017, Dr Balaji Ganeshan presented at the 103rd Scientific Assembly and Annual Meeting of the Radiological Society of North America (“RSNA 2017”) in Chicago (IL), USA, the premier global event for radiologists.  Three additional papers co-authored by Dr Balaji Ganeshan were presented at RSNA 2017; one by Seoul National University and University College London focused on liver cancer (abstract SSK07-05), one by Cambridge University, the University of Rome and University College London focused on ischemic stroke (abstract SSQ15-02) and one by University College London focused on neuroendocrine tumours (abstract SSM13-06).  Overall, RSNA 2017 included at least 19 scientific paper presentations featuring TexRAD^® Computed Tomography Texture Analysis (CTTA) and Magnetic Resonance Texture Analysis (MRTA) and Positron Emission Tomography-Computed Tomography Texture Analysis (PET-CTTA), many of which won awards in the RSNA 2017 categories.  TexRAD^® research to date has shown great potential in many different oncological and non-oncological sites.  In particular, the papers presented at RSNA 2017 focused on liver, pancreatic, kidney, cervical, oral, genitourinary, head & neck, thyroid, neuroendocrine and endometrial cancers, as well as gastrointestinal stromal tumours, gliomas, thymic-epithelial neoplasms and carotid-plaques.  Further information can be found at https://rsna2017.rsna.org/program.

Post-period end, in December 2017, Dr Balaji Ganeshan presented at the Big-Data, Radiomics and A.I. Symposium in Italy and also secured a panel presentation at the prestigious Royal College of Radiologists annual conference which will be held in September 2018.  In light of the first CE marked release of the TexRAD^® technology, the theme for the panel session will be focused on the texture analysis of CT and MR data for routine clinical use.

We continue to receive significant TexRAD^® research interest from prestigious institutions worldwide which has resulted in multiple articles in leading publications.  For example, in October 2017 our customer at the International University of Health and Welfare Hospital in Tochigi, Japan published an article featuring TexRAD^® analysis in liver cancer. The paper, entitled “Impact of hepatocellular carcinoma heterogeneity on computed tomography as a prognostic indicator” was published in the Nature affiliated journal; Scientific Reports.  These research activities continue to support the potential future clinical application of TexRAD^® in other disease indications.  Post-period end, in February 2018, researchers at the Princess Alexandra Hospital (Australia) published a study demonstrating the potential for the clinical implementation of CT texture analysis (CTTA) in the assessment of tumour heterogeneity in lung cancer.  The publication in Academic Radiologysuggests that there is a significant potential for the implementation of quantitative imaging in the assessment of tumour heterogeneity and engagement from radiologists is key to its success.  The automated analysis capability of the CE marked TexRAD^® Lung product aims to facilitate adoption by radiologists. 

Our collaboration with Future Processing Sp. z o.o., a software development service provider based in Gliwice, Poland, to develop medical imaging software is fully underway.  Both teams continue to work closely for new software products to be brought to market, with current concepts focused on artificial intelligence and machine learnings strategies.

BOARD AND ORGANISATION

On 8 June 2017, we announced that Trevor Brown had resigned as a non-executive Director in order to allow the Company to move rapidly to the next stage in its development.  To further support the Company’s growth strategy, Tim Irish joined the Board on 8 June 2017 as Non-Executive Director.  Tim is a Professor of Practice at Kings College London as well as a board member of Bournemouth University.  He joined the board of the National Institute for Health and Care Excellence (NICE) in April 2015 and became its Senior Independent Director in May 2017.  Tim has worked in the life sciences industry for 30 years. His career has spanned global health technology companies across Europe and North America, including GSK, GE and Philips the latter two in senior positions responsible for medical imaging.  Tim also currently holds a number of non-executive positions in health and technology related entities.

Post-period end, on 14 February 2018 we announced the appointment of David Crabb as Chief Executive Officer and a director of Feedback to drive the growth strategy.  Mr Crabb brings 20 years of experience as an effective business leader to Feedback.  Most recently he was Chief Executive Officer of Cambridge Online Systems, a major software company providing services to UK and international customers, which was acquired by the global IT group Columbus in December 2016.  Under Mr Crabb’s management in 2011, Cambridge Online Systems delivered strong growth from a loss-making organisation to one with top-quartile financial results and was voted as one of the “Sunday Times Top 100 Companies to work for” in two consecutive years.  Previously, Mr Crabb held director-level roles in medium-sized technology and outsourced solutions companies with revenues from £50 million to over £1 billion, responsible for business optimisation, sales and marketing and workforce leadership.

We recognise that a small, multi-disciplinary team has its limitations, which resulted in some operational delays over the past 12 months, so we are delighted that Feedback has attracted Mr Crabb as a highly experienced executive to complement the strong technical and regulatory expertise within the Company. 

MARKET OPPORTUNITY

The use of quantitative data derived from data contained in medical images, a technique known as “radiomics”, has the potential to uncover disease characteristics which are visually imperceptible to the naked eye.  Radiomics uses algorithmic tools to provide objective and repeatable measurements of imaging biomarkers, such as size, texture, calcification, location in the organ and rate of growth.  These distinctive imaging features identified during disease development and progression may be useful for predicting prognosis and therapeutic response for various conditions, potentially providing valuable information for personalised therapy.  As a rapidly growing field, the quantitative imaging software market is expected to exceed US$500 million by 2021 (Signify Research 2017). 

Radiologists are under significant pressure due to increasing patient numbers, more examinations required per patient and the need for earlier diagnosis.  We are focused on the development of software to assist clinicians in the interpretation and analysis of medical images.  Our mission is to create evidence-based imaging software, arming clinicians with innovative tools to improve patient outcomes.  We do this by developing and supplying software platforms and solutions that have the potential to contribute to diagnosis, monitor therapy and assist in the cost-effective treatment of patients.  We now have our first product targeted specifically for disease management, TexRAD^Ò Lung, which has been developed with the goal of improving the care of patients with lung cancer. 

Lung cancer has been the most common cancer in the world for several decades, estimated at 13% of all cancer diagnoses globally.  It is also the most common cause of death from cancer worldwide, estimated to be responsible for 1.59 million deaths annually.  Furthermore, lung cancer places the highest economic burden of all cancers; in the EU this is estimated at €18.8 billion per annum and there are approximately 417,000 new cases of lung cancer in the EU every year.  Our particular focus in on non-small cell lung cancer (NSCLC) which comprises 85% of all lung cancer cases.  By analysing the texture features in routinely acquired CT scans, TexRAD^® Lung’s quantitative imaging capabilities will provide clinicians with additional information to help them make better decisions in order to improve patient outcomes.

STRATEGY AND OUTLOOK

Our ambition is to leverage our leading research, image processing and analysis expertise to position TexRAD^® technology for routine clinical use to drive future revenue growth.  Our strategy comprises four areas of focus:

(i) Strategic partnerships with global players to expedite market penetration

Promotional activity and distribution planning for TexRAD^® Lung continues, including discussions under the previously announced signed letter of intent with a leading global medical imaging company which would make TexRAD^® Lung available for purchase on its diagnostic imaging solutions platform.  This would, in due course, enable easy access to TexRAD^® Lung for hundreds of potential users around the world on a subscription basis.  We are also discussing our technology with other leading imaging companies to broaden the range of potential routes to market for clinical versions of TexRAD^®. 

(ii) Distributor agreements in key territories such as Asia

Our existing and future distributor agreements will continue to support the Company’s international expansion, ensuring that our technology continues to be used by the world’s leading institutions to expedite research in this important field.

(iii) Clinical evidence base for TexRAD^® Lung

Our primary goal over 2018 is to undertake specific studies with TexRAD^® Lung to build an evidence base from existing and new scans, across multiple customer sites, ahead of a large-scale commercial roll-out.  These studies will also inform the wider opportunity for follow-on products.  We have multiple strategic advantages in building clinical confidence, such as our relationships with world-leading institutions, our ability to access clinical collaborators through our existing research customer base and our industry-leading regulatory compliance.  By the end of 2018 we expect to have early adopters using the technology in the UK and Europe.

(iv) New product opportunities

The development of any new product is a commercially confidential process.  As announced on 20 November 2017, we expect that the rigorous regulatory review required for the CE mark will pave the way for TexRAD^®‘s clinical use worldwide and we are now investigating the clinical application of TexRAD^® in other indications.  Initially we expected the focus to be on liver diseases and chronic obstructive pulmonary disease (COPD), however given the significant potential for the TexRD^® technology across multiple disease indications our new Chief Executive Officer will be reviewing our clinical strategy over the coming months. 

Our long-term vision is to lead global innovation in quantitative medical imaging analysis and we have strong foundations to position ourselves at the forefront of this important field.  To leverage our platform technologies and domain expertise, we will need to continue to invest in staff and our product and business development activities to develop longer-term revenue opportunities.  We expect to have access to adequate cash resources for at least the next twelve months, from both existing cash balances and by considering appropriate funding options, if required, to enable continued product development and international expansion.

Dr A J Riddell

Chairman

FEEDBACK PLC

NOTES TO THE UNAUDITED INTERIM REPORT

1              BASIS OF PREPARATION

The consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed by the European Union (“IFRS”) and expected to be effective at the year end of 31 May 2018. The accounting policies are unchanged from the financial statements for the year ended 31 May 2017.

The information set out in this interim report for the six months ended 30 November 2017 does not comprise statutory accounts within the meaning of section 434 of The Companies Act 2006. The auditors’ report on the full statutory accounts for the year ended 31 May 2017 included an Emphasis of Matter paragraph in regard to Going Concern. The accounts for the year ended 31 May 2017 have been filed with the Registrar of Companies.

This interim report was approved by the directors on 23 February 2018.

2              LOSS PER SHARE

Basic earnings per share are calculated by reference to the loss on ordinary activities after and on the weighted average number of shares in issue.

3              INTANGIBLE ASSETS

4              AVAILABILITY OF THE INTERIM REPORT

Copies of the report will be available from the Company’s office and also from the Company’s website www.fbk.com