It is often said that an ideal market for venture investing is a large market on the verge of massive disruption. It is for this reason that the medical imaging market recently came onto my radar. It is a multi-billion dollar market that is on the verge of massive technology and market disruption.
The core technology for radiation-based medical imaging cameras are scintillators. This detector technology was first adopted around 1985 and is comprised of scintillator crystals that convert x-rays and radiation into visible light and a photodiode or photomultiplier tube that converts the light to an electric signal. Sounds like old technology.
From an environmental and health perspective, medical imaging with scintillator technology is not friendly. CT imaging uses significant x-rays that, cumulatively, can put a patient’s health and safety at risk. Many doctors now warn people to limit the number of CT scans in a life-time. Similarly, gamma (nuclear) imaging involves injecting radio-isotopes into one’s body. This procedure is often done to trace cancer.
Historically, venture investing in this market has been a challenge because it is dominated by a small handful of companies including Siemens, GE, Philips and Toshiba. Early-stage companies found it difficult to survive the lengthy development cycles placed on them by the big guys and ultimately could not extract decent technology premiums.
Pangaea has been tracking medical imaging for over a decade and believes that the technology and market is about to go through massive disruption, making for attractive venture investing.
A new type of semiconductor material is on the verge of revolutionize the industry. Cadmium Telluride (CdTe) and Cadmium Zinc Telluride (CZT) semiconductors are able to provide improved imaging at much lower levels of radiation dose.
These semiconductors are being deployed today in nuclear and dental imaging and are being developed for much larger applications such as x-rays and CT imaging. The benefit is similar: lower x-ray dosage with better image quality. However, the technical challenge for CT imaging is greater than gamma imaging. Gamma detectors need to read approximately 100 counts per second per mm2 while CT detectors need to read approximately 40 million counts per second per mm2.
CZT could be the ideal semiconductor material for this application. Its atomic absorption rate is over 20 times greater than silicon. The challenge is that CdTe and CZT crystals are incredibly difficult to grow at reasonable yields. Two particular material properties of CZT present unique crystal growth challenges. It has very poor thermal conductivity, making it difficult to grow single-grain crystals, and it has a non-congruent melting point which makes uniformity a challenge. In our view, any company able to grow CZT crystals at over 60% yield is very interesting. The only company we know that is able to do this is Redlen Technologies.
We also believe the market is about to under go massive disruption as well. Samsung purchased US based CT Scanner developer Neurologica last year, leading us to believe it will launch a CT scanner fairly soon. The Chinese are not far behind and are seen as a potential low cost competitor. Pangaea believes that technology adoption will accelerate if Samsung and the Chinese enter the medical imaging market.
Pangaea has made several semiconductor investments and tracts the adoption of next generation semiconductor materials like gallium nitride, gallium arsenide, silicon carbide, aluminum nitride, CdTe and CZT. Medical imaging may be the next market to benefit from improved crystal growth and semiconductor fabrication.