4DMedical launches IPO to commercialise lung imaging technology in the United States
4DMedical will use funds raised to advance development of technology that helps improve the diagnosis of respiratory diseases.
A month away from hitting the ASX, 4DMedical has its sights set on the United States and its spiralling COVID-19 situation as a target market for its lung imaging technology.
The Australian medtech is developing a patented X-ray imaging platform, XV Technology, that scans a patient’s respiratory system to help improve the ability of physicians to diagnose and manage lung diseases.
The company has announced an initial public offering (IPO) to raise $55.8 million through the issue of 76.43 million shares priced at $0.73 each. This indicates a market capitalisation of $193 million at the offer’s completion.
Funds raised will mostly be used for marketing, operating expenditure, product research and development, as well as sales and distribution in the US.
The offer closes on 10 August with 4DMedical anticipating commencement of trading on the ASX under the ticker code ‘4DX’ on 14 August 2020.
The XV Technology platform
According to 4DMedical, its “non-invasive” technology enables physicians to better understand regional lung motion and air flow and to identify deficiencies “earlier and more sensitively”.
“There are patients and doctors receiving poor quality information and we know that better information leads to better decisions, and better decisions lead to better healthcare outcomes,” 4DMedical managing director and chief executive officer Dr Andreas Fouras said.
Ventilation in a healthy and diseased lung as measured using 4DMedical’s XV Technology.
The XV Technology platform is delivered via a cloud-based Software-as-a-Service (SaaS) model, which the company claims makes it a lower cost option to existing procedures and it doesn’t require capital expenditure to be compatible with existing hospital and clinical equipment.
With an initial focus on the US market, the company received the green light from the Food and Drug Administration (FDA) in May to use the technology in its ventilation analysis software.
4DMedical also has numerous granted and pending patents in other commercial territories including Australia, the European Union and Asia.
The respiratory diagnostic market
4DMedical aims to supplement or replace existing respiratory diagnostic systems, which can be expensive and outdated (with some technologies dating as far back as the 1850s).
Its target market is the US, where over US$13.7 billion (A$19.7 billion) was spent on respiratory diagnostics across more than 73.5 million procedures in 2019.
The company’s secondary focus is Australia, which last year spent more than US$281 million (A$404 million) across 5.3 million procedures.
Adding to this is the current COVID-19 pandemic, which has created a significant increase in global demand for lung health technologies.
As at 13 July, there were more than 3.3 million confirmed cases of the virus in the US and over 135,000 deaths have been recorded (about a quarter of the global total).
4DMedical said it expects COVID-19 will “substantially and permanently increase the demand for lung health assessments and in turn, grow the respiratory diagnostics market”.
Use of funds
4DMedical plans to use the IPO proceeds to fund marketing through clinical trials and trade shows, product research and development, as well as for operating expenditure including governance and working capital costs.
Some of the major trade shows the company regularly attends and supports include the American Thoracic Society annual conference, the American College of Chest Physicians annual meeting, and the Radiological Society of North America meeting.
4DMedical is also planning to conduct 10 clinical trials in the US to further demonstrate the sensitivity of XV Technology and its capacity to provide advanced warning of early-stage disease.
In addition to IPO costs, a smaller portion of the raised funds will go towards US sales and distribution, including clinical liaison and reimbursement costs, and costs relating to intellectual property and trademarks.
Health and tech experts fill board seats
4DMedical was founded in 2012 and formerly operated under the name ‘4DX’.
The company’s XV Technology was first conceived in 2005 by Dr Fouras while he was working as a professor of mechanical and aerospace engineering and researcher at Melbourne’s Monash University.
Dr Fouras is backed by a board chaired by Bruce Rathie, who also serves as a non-executive director of healthcare junior PolyNovo (ASX: PNV) and info tech company NetLinkz (ASX: NET).
Mr Rathie is joined by non-executive directors Dr Robert Figlin, a globally recognised leader in thoracic oncology (lung cancers), LBT Innovations’ (ASX: LBT) former chief executive officer Lusia Guthrie, and one of the founding partners of Integral Diagnostics (ASX: IDX), John Livingston.