Data Knights Acquisition Corp (NASDAQ:DKDCA) is a global provider of clinical imaging innovation and curator of regulatory-grade Imaging Real-World Data (iRWD™). The company's innovative solutions connect healthcare providers and patients, satisfying a crucial need within the Life Sciences field by offering direct access to clinical images and the associated contextual patient record.

Business Overview

Data Knights was founded in 2006 to solve the deficiency in how clinical images were shared between healthcare providers. This resulted in the company's initial product, BEAM™ image exchange, which enabled the successful sharing of images for more than a decade. The company's largest customer during this time was the Country of Ireland.

As the demand for Real-World Data and Real-World Evidence grew, Data Knights continued to innovate. The company leveraged its internal technological competencies and healthcare provider installed base from BEAM™ to become the first RWD solution for Life Science companies with the launch of iRWD™ in 2019. iRWD™ provides regulatory-grade image-centric data that exactly matches Data Knights' Life Science partners' case selection protocols, paving the way for Real World Evidence.

Data Knights' innovative solutions unlock the significant value contained within clinical image archives. With a growing federated network of 95+ healthcare facilities, the company has the immediate ability to quickly search and extensively curate multi-layer data. These 95+ contracted facilities represent more than 200 locations, generating regulatory-grade imaging from over 200 customers. Among these customers, all are data providers and some are data purchasers.

Significant Market Opportunities

The global Real World Evidence solutions market size was valued at $37.2 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 7.6% from 2021 to 2028, according to Grand View Research. The drug development and approvals segment accounted for the highest revenue share of around 28.9% in 2020.

Numerous factors have accelerated the adoption of Real World Evidence, including an industry-wide shift from volume-to-value-based payment models, personalized medicine, and the need to adapt clinical trials during the pandemic. These factors have influenced regulatory bodies globally and fuel interest in using Real World Evidence to "understand and demonstrate the value of pharmaceutical and medical device innovations."

In 2021, the real-world datasets segment is estimated to account for the larger share of 51.2% of the global real-world evidence solutions market. The market size of this segment is projected to reach $1,792.0 million by 2028 from $1,038.3 million in 2021, at a CAGR of 8.1% during the forecast period according to Meticulous Research® Analysis.

Based on end-user, the global Real World Evidence solutions market is segmented into pharmaceutical, biotechnology, and medical device companies; healthcare payers; healthcare providers; and other end-users. In 2021, the pharmaceutical, biotechnology, and medical device companies segment is estimated to account for the largest share of 36.5% of the global real-world evidence solutions market. The market size of this segment is projected to reach $2,025.7 million by 2028 from $739.7 million in 2021, at a CAGR of 15.5% during the forecast period according to Meticulous Research® Analysis.

Financials

For the fiscal year ended December 31, 2022, Data Knights reported annual revenue of $1,021,651 and a net loss of $23,205,456. The company's annual operating cash flow was negative, as were its annual free cash flows for the year ended December 31, 2022.

In the first nine months of 2023, the company generated revenue of $680,918, a decrease from the $888,970 reported in the same period of 2022. This decrease is attributable to an iRWD revenue delivery being delayed to the fourth quarter of 2023.

Data Knights' research and development expenses increased by $422,787, or 37.3%, in the nine-month period ended September 30, 2023, reaching $1,133,149 compared to $710,362 at the end of 2022. This increase was driven by the addition of employees and the company's decision to allocate the discovery portion of curation expenses to research and development.

Total other income (expense), net, increased by $243,617, or 44.6%, from $302,624 for the nine-month period ended September 30, 2022, to $546,241 for the same period in 2023. This increase was primarily due to higher interest expenses on the company's financings.

As a result of the factors mentioned above, Data Knights reported a net loss of $4,957,647 for the nine-month period ended September 30, 2023, representing an increase of $900,587, or 18.2%, compared to the net loss of $4,057,060 for the same period in 2022.

Liquidity

As of September 30, 2023, Data Knights had $611,822 in cash and cash equivalents, compared to $270,859 as of December 31, 2022. The company also had $86,392 in accounts receivable as of September 30, 2023, compared to $18,975 as of December 31, 2022.

Data Knights' accumulated deficit was $36,834,868 as of September 30, 2023, compared to $31,877,221 as of December 31, 2022. The company has had negative cash flows from operating activities for the period ended September 30, 2023, and the year ended December 31, 2022, which raises substantial doubt about its ability to continue as a going concern.

To continue in existence and expand its operations, Data Knights will be required to, and management plans to, raise additional working capital through an equity or debt offering and ultimately attain profitable operations.

Competitive Landscape

Data Knights' business is highly competitive, facing competition from national and regional providers of imaging data. This competition could present an ongoing threat to the success of the company's business, affecting its ability to obtain and retain new customers and leading to pricing pressures.

The competition in the RWD and real-world evidence (RWE) arena includes firms that access imaging along with electronic health records, such as Flatiron, Aetion, ConcertAI, Life Image, and Optum, as well as companies that provide support for research projects using RWE, like Nuance and Truveta. However, Data Knights believes it has a significant advantage due to its specialized expertise in Artificial Intelligence/Machine Learning technology, data privacy/security, and clinical patient condition(s) and healthcare record keeping.

Outlook

Data Knights has not provided any specific financial guidance for the upcoming fiscal year. However, the company remains focused on expanding its federated network of healthcare facilities, enhancing its proprietary technologies, and strengthening its position as a leading provider of regulatory-grade iRWD™ solutions to the Life Sciences industry.

Conclusion

Data Knights Acquisition Corp (NASDAQ:DKDCA) is a promising player in the rapidly growing Real World Evidence solutions market. With its innovative iRWD™ offering, the company is well-positioned to capitalize on the increasing demand for regulatory-grade imaging data to support drug development and medical device approvals. While the company faces competitive challenges, its specialized expertise and growing network of healthcare providers give it a competitive edge. Investors should closely monitor Data Knights' progress as it navigates the evolving landscape and works to achieve profitability.