Medicsight PLC (AIM: MDST), industry leader in the development of Computer-Aided Detection (CAD) and image analysis software which assists radiologists in the early detection of disease, today provides an update on recent events.

The proposed decision of the CMS (Center for Medicare and Medicaid Services) in the USA not to reimburse CT colonography for colorectal cancer screening has been made in spite of consistent lobbying made by professional groups and advisors. Although this proposed decision comes as a disappointment for Medicsight, the CMS continues to cover CT colonography as a diagnostic procedure (i.e. where the patient has already presented symptoms of bowel disease) and the Company is confident that the decision will not affect the long term viability of the business model. A number of the private health insurers currently do reimburse CT Colonography both as a standard screening procedure and a diagnostic procedure, and the number is expected to gradually increase. The general consensus within the industry is that the CMS will revisit this decision.

One of the reasons cited for the proposed CMS decision was that CT colonography is not as accurate for detecting polyps as the current gold standard, optical colonoscopy when the scans are read by less experienced reviewers. Software such as Medicsight's ColonCAD^™, which assists radiologists in their detection of polyps, could significantly help to overcome this problem.

Medicsight has global partnership agreements in place with leading visualisation and PACS/ OEM partners that provide access to the USA, Japan, Europe, China and other markets. Medicsight's ColonCAD application is already installed (but not activated) on a significant number of these partner workstations. Upon the Company receiving FDA and MHLW clearance, Medicsight and its partners will immediately start marketing the software in the USA and Japan respectively.

Current economic conditions mean that hospitals are experiencing pressure to reduce capital expenditure on items costing over $1 million. At a transfer price of $10,000 per license, Medicsight's software licence is considerably below this threshold, therefore the Company believes that these cost constraints in hospital expenditure should not have too large an impact on the business.

David Sumner, Executive Chairman of Medicsight, said: "The CMS proposed decision and the current economic climate are unfortunate setbacks for Medicsight. However, whilst the CMS' proposed decision will impact more on the elderly population, there remains a large proportion of the at-risk US population in the 50 to 65 year-old age range who will increasingly be covered by the private health insurers for colorectal cancer screening by CT colonography. We have £18 million of cash in our year end balance sheet, and have recently implemented a plan to streamline our costs. We continue to seek new marketing partners and believe that when ColonCAD gains FDA and MHLW approval we will be well placed to begin an aggressive sales and marketing drive in the US and Japan."

For further information:

Medicsight PLC
www.medicsight.com
David Sumner
+44 (0)20 7605 7950

Nomura Code
Juliet Thompson
+44 (0) 20 7776 1204
Jonathan Senior
+44 (0) 20 7776 1219

Media enquiries:

Abchurch
+44 (0) 20 7398 7700
Heather Salmond / Stephanie Cuthbert / Simone Alves
+44 (0) 20 7398 7718
stephanie.cuthbert@abchurch-group.com
www.abchurch-group.com

Notes to editors
Medicsight PLC is a UK-headquartered, research driven, leading developer of computer-aided detection (CAD) and image analysis software for the medical imaging market. The CAD software automatically highlights suspicious areas on computerised tomography (CT) scans of the colon and lung, helping radiologists to identify, measure and analyse potential disease and early indicators of disease. Medicsight's CAD software has been validated using one of the world's largest and most population diverse databases of verified patient CT scan data. Medicsight's ColonCAD^™ and LungCAD^™ software products are seamlessly integrated with the advanced 3D visualisation workstations of several industry-leading imaging equipment partners.

About Computer-Aided Detection
With increasingly sophisticated radiological imaging hardware such as Multi-Detector CT scanners, radiologists are facing a growing challenge in the amount of detailed patient image data that they must review for each patient examination. Some CT scan examinations generate as many as 2000 images per patient. Review of this data by the radiologist is not only time-consuming but also prone to error due to reader fatigue. CAD software can help the reviewing radiologist by analysing the image data and automatically highlighting suspicious regions of interest for closer inspection. Without CAD software some potential abnormalities or areas of disease may be overlooked. This can be critical for diagnosis and the management of patient outcomes as early detection of disease greatly increases the probability of successful treatment and a positive therapeutic outcome. In addition to supporting individual radiologists CAD also has the potential to help standardise CT interpretation across both individuals and institutions thereby supporting population based screening programmes.

About Medicsight's CAD software
Medicsight's ColonCAD^™ and LungCAD^™ software use an advanced CAD algorithm to analyse CT scans of the colon and lung and automatically highlight suspicious areas that may be indicators of disease. CAD may highlight areas easily overlooked by the reviewing radiologist, such as small lesions or regions that are hidden from view behind folds in the colon or normal structures and surrounding tissue in the lung.

Both CAD products seamlessly integrate with the advanced 3D visualisation platforms of industry-leading imaging equipment partners. The integrated systems provide sophisticated image viewing capabilities, including 3D reconstructed image data, with the added advantage of demonstrating automatic CAD findings to assist clinical end users in the detection and analysis of disease. This allows clinical end users to perform either a 'second read', where CAD findings are displayed to the user after completion of an initial review of the CT scan data, or a 'concurrent read' where CAD findings are displayed during the user's initial review of the original CT scan images.

Since inception, Medicsight has developed close and lasting relationships with some of the world's foremost clinicians in product related areas. This provides the Company with a wealth of clinical expertise and dedicated clinical research to support ongoing product development. Medicsight also collaborates with a number of leading academic institutions and clinical research programmes worldwide to develop the Company's comprehensive database of population diverse verified patient CT scan data, thus allowing Medicsight's products to be validated to the highest possible standards.