Straws are discrete research notes that relate to a particular aspect of the company. Grouped under #hashtags, they are ranked by votes.
A good Straw offers a clear and concise perspective on the company and its prospects.
Please visit the forums tab for general discussion.
Just went through the AGM voting materials for 4DX yesterday.
It looks like a couple of the directors have opted to forgo their cash compensation for Options or RSUs which I’d read as being a positive sentiment towards the business’ progress and potential future increase in share price.
https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02868298-3A653410
Chairperson took Options https://www.linkedin.com/in/lil-bianchi-65a4602?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=ios_app looks like she is a professional board member
Dr McGinty from looking at her profile looks like she might not need the cash http://drgeraldinemcginty.com/bio-and-headshot
Positive sign or just window dressing … this company is still spending like a drunken sailor and diluting shareholders and looks to still be some way from profitability.
DISC: Held IRL (and Strawman)
Title: 4DMedical Ltd - Webinar Date: 11:00am AEST, Tuesday 1 October 2024Link:
Click here to join the webcast on the event date.https://event.choruscall.com/mediaframe/webcast.html?webcastid=spqX9wlZ&securityString=aquvig6KqoaoVEiRUFQ2xqZH
This message is automatically generated. Do not respond to this email.
Interesting distribution agreement signed with Phillips for the US today.
https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02858402-3A651737&v=fc9bdb61fe50ea61f8225e24ce041a0e155a9400
The market seems to like the announcement with about a 30% pop in share price this morning. The devil will be in the detail so I'll tune in to the briefing next week. In my experience in the past (with distribution agreements), adding things to product catalogues is one thing but unless this is retiring quota for Phillips sales reps it probably won't be as valuable as the market hopes.
Interestingly according to my favourite AI's Phillips is only #3 in US market share:
Siemens Healthineers:
GE Healthcare:
Philips Healthcare:
Big pop of about 16% yesterday with a flurry of trading at the open and just before close (higher than normal volumes) and for the conspiracy theorists … no news!
I’m not sure if anyone else has any idea what’s happening. I’m guessing it might be buying ahead of the S&P index rebalances that were supposed to be on Friday (maybe 4DX is being promoted into a bigger index).
The most recent market update was positive (i.e. USA equivalent of Medicare has decided on the rebate rates for the services) but that’s nearly a month ago.
DISC: Held IRL and SM (but feeling a bit lonely here in Strawman)
Ord Minnett report for 4DX. Going to be 2026 before FCF it seems. Tricky one for me. Price target double todays actual.......
4DX broker report May 2024.pdf
Nessy
Boy, this company sure knows how to kill off any momentum built up in the share price with a capital raising.
This is the second we have had within a few months.
The terms are generous to the institutional buyers not not great for existing shareholders (big discount to the prevailing market price of ~18%, 1 free attaching option with every 2 shares). Existing shareholders don't get an SPP btw.
The acquisition is of US-based Imbio, which is an early stage company which is touted as a "leader" in cardiothoracic imaging. Seems alright, but is this a case of juggling too many balls too early?
Following the stall at resistance in the 70s, we have had additional newsflow this week.
First, with the CT LVAS US FDA clearance on Monday, and then new SaaS contract wins to expand into Detroit and Michigan.
Shares are currently trading well above resistance, and if these levels can hold, will set up well to test the 52w highs over the coming weeks/months.
Nice win for the company which significantly increases coverage. Technically though, there has been a clear rejection from levels that have acted as support on prior pivots (so far anyway, we'll have to wait till the close), so this is probably as good as it gets until the next catalyst.
The SPP and Placement combined raised $45 million (before costs) and is being deployed to strengthen and accelerate the Company’s commercialisation strategy.
Life support for of $1.1M - 4DX will have to grow profitability eventually though.....
We are extremely excited to have been awarded the $1.1 million CTCM funding announced today. Combining both functional components of airflow and blood flow into a single analytical process represents a dramatic advancement in respiratory healthcare, providing the ideal test for phenotyping, early detection and evaluation of specific treatment responses for high-impact lung diseases such as Chronic Obstructive Pulmonary Disease (COPD), Cystic Fibrosis, pulmonary hypertension and pulmonary embolism.
A total of 28,044,096 fully paid ordinary shares New Shares will be issued to SPP applicants at an issue price of $0.89 per New Share. The New Shares issued will represent 8.1% of 4DMedical’s issued capital and will rank equally with existing shares on issue from their date of issue.
The New Shares issued under the SPP are expected to be allotted on Wednesday, 31 May 2023 and are
expected to commence trading on ASX on Thursday, 1 June 2023. The total funds raised, comprising the Placement ($20m) and SPP ($25m), amount to $45m (before costs).
Proceeds raised under the Placement and SPP will be used primarily to accelerate commercialisation of 4DMedical's respiratory imaging software and significantly strengthen the Company's balance sheet. Funds raised leave the Company with a cash balance of approximately $79.6m after costs as at 31 March 2023 on a proforma basis
Fouras - CEO (2012) circa 23% voting power.
1 Month ago 4DMedical (ASX:4DX) signs first US hospital SaaS contract https://youtu.be/ef8j0lr2JUI
Dr Fouras is the founder, Managing Director and Chief Executive Officer (CEO) of the Group. He is also the Groups Chief Technology Officer being the inventor of its core XV Technology, maintaining a direct role in its evolution and development. Andreas career in academic research has a foundation gained within the Department of Mechanical and Aerospace Engineering at Monash University in Melbourne, Australia. This research into wind tunnel quantification garnered recognition as a young leader in the scientific discipline of fluid dynamics, developing a number of new approaches to the imaging of gas and liquid flow. Following completion of a Masters degree by research and a Doctorate (PhD), Andreas rapidly rose to the position of Professor of Mechanical and Aerospace Engineering and Director of the Laboratory for Dynamic Imaging.
He received accolades from a wide range of premier research bodies including the National Health and Medical Research Council (NHMRC) and the American Asthma Foundation. Andreas applied a novel concept to clinical use through the development of XV Technology, uniquely measuring airflow within the breathing lungs at every stage of the breath, providing both high spatial and temporal resolution at very low dose.
This research has been documented in over 100 peer reviewed publications and resulted in 72 patent applications with 40 granted. In December 2012, Andreas founded 4DMedical resulting from a deeply held personal and professional desire for his work to reach and positively influence as many people afflicted by respiratory compromise as possible, through global clinical translation.
Andreas leadership is evidenced as a commissioned officer in the Australian Army (Infantry) and through the prestigious Australian Davos Connections Australian Leadership Award for 2013. The focus of Andreas substantial intellect and energy is now concentrated upon applying business acumen, drive and innovation to the successful commercialisation of 4DMedicals technologies. Andreas is a member of the Medical Advisory Committee.
THE BUSINESS
4D medical is a medical technology company that specializes
in developing and commercializing medical imaging software and visualization
tools. The company's flagship product is its imaging platform, called VX technology,
which uses advanced imaging techniques to create a four-dimensional image of a
patient's lungs in real-time.
This technology allows doctors and healthcare professionals to better
diagnose and manage respiratory diseases, such as asthma and chronic
obstructive pulmonary disease (COPD). VX technology provides a more detailed
and comprehensive view of a patient's lungs, enabling doctors to detect and
monitor changes in lung function that may indicate the progression of a disease
or the effectiveness of a treatment.
4D medical offering consists of the following:
1) XV LVAS -Software used to analyse ventilation efficacy of lungs using X-ray hardware. This product has been released commercially.
2) CT LVAS -Software used to analyse ventilation efficacy of lungs using CT hardware. This product has been released commercially.
3) XV Scanner – Is 4DMedial’s prototype lung scanner, base don X-ray diagnostics. The scanner can perform imaging, with a fraction of radiation exposure compared to conventional X-ray hardware, and significantly shorter patient turnover times. Target market – Paediatric hospitals (where X-ray exposure is a critical consideration), and veterans affairs hospitals. Where high throughput / productivity is required.
4) CT:VQ – Software used for ventilation / perfusion analytics. Currently under development.
ADDRESSIBLE MARKET
In the United States alone, 74 million respiratory diagnostic procedures are undertaken every year at a value of $13.7 Billion USD. Worldwide, 378 million diagnostic tests are performed annually.
In particular, Veteran’s Affairs presents a significant opportunity, with an estimated 3.5 million (out of 19.2 million) veterans being exposed to toxins from burn pits. It is possible that all 3.5 million veterans will need to be screened on a regular basis, with the US PACT Act appropriating $280 Billion USD over the next ten years for exposed veterans. News article here.
At a cost of $171 USD per scan (Agreed pricing with DoD and VA), assuming 1 million scans per annum from Veterans Affairs alone, the 4DX potential revenue is in excess of $250 M AUD per annum. Globally, the addressable market is 10+ billion dollars.
The number of Paediatric and military Hospitals in the US is 200 and 50 respectively. These hospitals are the target market for the XV Scanner.
COMPETITIVE ADVANTAGE
XV Technology has the following advantages:
· Improved insights from imaging, leading to better clinical outcomes.
· Faster, more efficient testing, using existing hardware.
· The only non-invasive technology that can detect burn pit exposure lung damage, using existing X-ray hardware, currently available.
· Lower cost compared to existing technologies.
· Equipment agnostic.
· Management claim 4-D X-ray scanning is being legislated under US PACT ACT– this may be true, but unable to confirm this at the time of writing.
KEY PEOPLE
Founder - Dr Fouras, who owns about 20% of business.
Advisor - Dr Sam Hupert - Founder and CEO of Pro Medicus -
owns about $1 M in 4DX shares. Great back ground in medical imaging software,
and proven experience in execution.
Advisor - Dr David Shulkin - Former Secretary of US Dept. of
Veterans Affairs. He worked with current Deputy Under Secretary of Health,
Veterans Affairs; among others in Veterans Affairs.
COMMERCIALISATION ACHIEVEMENTS TO DATE
1) June 28, 2022 - Signed commercial, 3 year, contract with Australian radiology network, I-MED. XV Technology currently rolled out to 30 I-MED sites (up from 27 at year end 2022). Expect this to growth to 100 sites nationally.
2) October 19, 2022 – XV LVAS application for Category III CPT code accepted by US AMA. These codes are a set of temporary codes for new / emerging technologies, and is the pathway towards Category I codes, which allows US insurance reimbursements.
3) April 5, 2023 – Signs five year SAAS contract with University of Miami Hospital. ($200-300k AUD per annum.
4) April 13, 2023 – Dr David Shulkin joins advisory board.
5) May 1, 2023 – First veterans affairs scan under commercial arrangement.
6) May 5, 2023 – US Dept. of Defence contract – commercial pilot.
MANAGEMENT GOALS
Management have advised goals / milestones are as follows:
1) News on VQ trial results imminent (within weeks). Management advise the initial data / results are looking great.
2) Prioritise US Veterans Affairs and US Defence opportunities. DoD pilot contract expected to end by August, with management already in discussions regarding expansion into a wider commercial agreement post August.
3) Guiding for significant progress with Veterans Affairs + DoD in relation to screening opportunities.
4) Achieve Category I CPT code within 2 years (enables insurance reimbursement). This step requires further clinical trials. Management reports 12 prepares are in progress (up from 4 papers 12 months prior).
5) Guiding to hit profitability within 24 months, with growth beyond the US to be self-funded.
RISKS
4D Medical is burning $8 million cash per quarter. It has approximately 2 years of cash runway to reach cashflow positive position. The key risks are:
1) Delay, failure to execute Veterans Affairs / Defence Health opportunity. 4D Medical is focussing on this opportunity to achieve the sustainable revenue scale they need. Given the pilot contract will end around August, failure to extend this pilot in 2023 would be a red flag.
2) Key personnel – Should any of the three key people leave, this would be a big red flag, as these key personnel hold the key networks / relationships 4D Medical need to convert near term opportunities.
3) Regulatory clearance / hurdles may delay the adoption cycle, and increase development costs.
4) Delay in achieving Category CPT I code within two years will inhibit growth beyond VA / Defence health.
5) Competitors may disrupt. impede 4D Medical’s progress.
VALUATION
Number of shares on Issue: 358 000 000 (incl options) - Excl/ SPP.
Share price as at 11/5/23: 95 cents
Market Capitalisation: $340 M.
Cash: $56 M
EV: $284 M
Guidance for gross margins: circa 85%
Assume Veterans affairs contracts result in $150 Million AUD revenue per annum in FY 2026. Assuming operating costs of $120 million per annum, and $20 M NPAT. This equates to EPS of 5.6 cents per share. At a PER of 35 (assuming 20-30% revenue growth at this scale), I come up with a valuation of $1.95 per share.
Discounting this share price at 20% (high risk), and including a 20% margin of safety, I come up with a valuation of 94 cents per share.
POTENTIAL UPSIDES:
1) Broader adoption across US war veterans (potential $100 M upside).
2) Adoption by US dept. of defence to screen existing defence force pre and post deployment ($50 M upside)
3) Broader adoption for long COVID, industrial disease health claim paediatrics (???).
4) Adoption beyond the US and ANZ.
POTENTIAL DOWNSIDES
1) VA and DoD slow to adopt technology, reducing revenue stream & delaying profitability – medium / high probability.
2) New technology enters market – disrupts XV technology – low probability.
3) Clinical trial results delayed / poor results delay CAT I reimbursement – medium probability.
Since my last Straw from a couple of weeks ago, price action has continued to be bullish, aided by another positive announcement yesterday.
Price is getting closer to levels which will now act as resistance ($1.15-$1.50). Let's see if it has the legs to chomp through that.
It's been quite the run for 4DX on the back of their first significant SaaS contract announcement, approaching 3x in just a few weeks from the recent low under 30c near the recent highs.
While the market has been happy to extrapolate this development and the valuation looks mighty stretched given it is trading mostly on distant future potential, technically, the momentum has taken the shares above key resistance levels around the mid 70s where price broke down last year. Today's action looked dismal with the price plunging well below those levels (indicating a lack of follow through to sustain further gains), but the buyers have stepped up over the course of the session and pushed it back to support. If it can consolidate around these levels (and the company can back it up with further positive announcements), we could be off to the races again.
Disc.: Small position held IRL.
4D Medical has signed a 5 year contract with University of Miami Hospital to provide XV LVAS software services. XV LVAS software is applied to X-ray scanners already in use at medical facilities.
This is following a clinical trial. with Miami researchers publishing results from their trials a a recent American Thoracic Society conference. The contract is effective immediately.
Early days, but it is proof the product is marketable and builds on its recent contract for using the software on existing CT scanners with I-MED.
I recall (don't quote me), that revenue is around $150 per scan. Each surgeon has about 700 cases per annum. That is about $100 k revenue per surgeon (assuming 1 scan per patient), and there are 4000 surgeons in the US. So that is a TAM of about $400 M USD per annum.....
DISC - HOLD tiny position........
Piqued my interest an wanted to jot down a few thoughts:
Reasons this could be a great company!
- No capex required by hospitals can use existing equipment
- Essentially just software = ability to generate software margins
- Recent significant decline in market cap with general market conditions.
- Seems to be just reaching the point of potential commercialisation.
- Cool new medical tech (I am an ICU doctor)
First some physiology:
Picture the lungs as giant sponges that inflate and deflate as blood is pumped through the lungs into tiny blood vessels past tiny gas pockets designed by eons of evolution to maximize surface area to ensure efficient diffusion of carbon dioxide and oxygen. Your breathing increases and decreases to match the amount of blood coming out of the heart and vice versa and the amounts tend to remain synchronised and in balance in a healthy person. This is ventilation and perfusion and is often considered together as a ratio "V/Q".
This ratio should be roughly 1. If ventilation is too low for the blood flow (diseased lung) this number goes down. If Blood flow is too low for the ventilation (blocked vein) then this number goes up. Both are bad and are suggestive of different diseases.
4DX reckon their technology can use equipment that hospitals already have with some new software to look for this V/Q mismatch.
This is a great business model. Software margins highly likely with almost zero capital expenditure required.
Potential indications:
The big money here would be diagnosing (or more commonly ruling out) pulmonary emboli (lung clots) however, there are several issues I have with this technology and this particular indication.
Firstly the good news; there is no way to diagnose pulmonary emboli in patients other than doing a scan. The symptoms of a lung clot are the same as many other conditions and require a very specific treatment that has significant enough associated risks that you can't really give it without a pretty definitive idea of if there is a clot or not.
Gold standard is CT pulmonary angiogram.
Unfortunately 4DX scans wont displace this. Squirting radio-opaque dye into the pulmonary veins and then bathing the lungs in 360 degrees of radiation is always going to be a more sensitive scan. I'm not an expert but I probably look at at least one of these scans per week and can usually see if there are any clots well before the radiologist report comes through.
Other scans like a VQ scan or a contrast free pulmonary angiography as they are developing here wont be as good and because the information is somewhat inferred it will be reported as a probability which unfortunately wont instil confidence and unless its very clear will likely just make us want to do a CTPA to know for sure.
Unfortunately CTPA isn't perfect. It may not be the imaging of choice in young people who we want to avoid radiation where possible or in people who have poor kidney function due to the supposed toxic effects of contrast on the kidneys (this isn't actually a thing but it is a widely held belief in medicine to the point where is may as well be).
Currently in these situations we do a V/Q scan which is basically a process of photographing a patient with a gamma ray camera while they huff radioactive aerosols and also have a small dose of radioactive fluid injected into vein.
If 4DXs scan proves a viable alternative to VQ scans which can be hard to get, needing nuclear medicine facilities Vs an X-ray then I imagine that people would order them. These scans are not fantastic.
Unfortunately V/Q scans are not used for much beyond identifying PE's (and not for that much anymore)
- Monitoring lung function following lung transplant.
- Provide preoperative estimates of lung function in lung cancer patients, where pneumonectomy (Chopping the lung out) is planned.
- Can identify shunts (blood bypassing the lungs)
There will more than likely be some other niche indications for this scan that become apparent over time. I could 100 percent see it becoming part of an extended investigation panel mainly ordered by respiratory specialists along with lung function tests etc. This could take a really long time to permeate the industry though without a hard and fast need to do indication. Currently it seems a bit like a solution looking for a problem.
It must be noted that given the market size a bit of traction could go a long way. To quote the company's own presentation "Given the large market size even low market penetration could see substantial revenue generation with high growth margin"
Seasoned investors will approach the old "if we could just snag x% of $$$$$ market we will make $$" with the level of skepticism it deserves.
4D Medical reported successful results of Vanderbilt 'burn pit' clinical trial.
Results: XV Technology confirmed diagnosis of constrictive bronchiolitis with less than 0.001% uncertainty. The only alternative to XV Technology for a reliable diagnosis is expensive and risky biopsies.
Market Potential:
1) US PACT Act provides USD $280 billion in additional healthcare benefits to veterans exposed to burn pits and other harmful toxins.
2) US Veterans Health Administration to provide toxic exposure screening to each of the 9 million US Veterans enrolled in the VHA heatlhcare program.
3) 4DX pricing structure with VHA is $171 USD per scan.......
DISC: I hold a small position in 4DX.
Capital Raising Presentation
Applications are due Monday 29th March for those that are holding.
Have a feeling the Friday FOMO rally was due to people reading the recent announcement with the DoD in the USA and maybe securing as much shares as possible so they get their full allocation from the raise.
I've put in my SPP application already. I heard the $40m for the institutional and sophs was fully raised.
Disc: I hold
4DMEDICAL SECURES STREAMLINED ACCESS TO U.S. DEPARTMENT OF DEFENSE & VETERANS AFFAIRS CONTRACTS
4DMedical Limited (ASX: 4DX, “4DMedical” or the “Company”), a medical technology company focused on commercialising its patented respiratory imaging platform, is pleased to announce that it has been granted a streamlined process for securing contracts with the U.S. Department of Defense (DoD) and Veterans Affairs (VA) through NASA’s Solutions for Enterprise-Wide Procurement (SEWP) program.
This access will allow DoD and VA affiliated healthcare facilities to contract with 4DMedical to integrate and use 4DMedical’s proprietary XV Lung Ventilation Analysis Software (XV LVAS™) to deliver valuable insights of lung health. Revenue will be generated as the Company secures supply contracts from each facility adopting the technology.
The DoD is the largest government agency in the U.S. with 2.15 million active-duty service members and over 730,000 civilian personnel. In addition, the VA healthcare system represents the largest integrated healthcare system in the U.S., providing life-long care and services to eligible military veterans and their families. The VA operates 1,255 healthcare facilities, including 170 medical centres and 1,074 outpatient clinics, offering a variety of care to over 9 million veterans enrolled in the VA healthcare program.
As part of the arrangement, 4DMedical has negotiated a fixed price for its XV LVAS offering at DoD and VA facilities without requiring separate reimbursement. This will streamline commercial engagements with these facilities by having a pre-agreed pricing structure.
08-Oct-2020: 4DMedical Goldman Sachs Healthcare Forum Presentation
The COVID-19 pandemic should be giving a company like 4DX a decent boost, i.e. providing them with a strong tailwind, considering they specialise in digital four-dimensional lung imaging and data interpretation. They rose +14.11% today on the back of this presentation at the Goldman Sachs Healthcare Forum.
Introduction to 4DMedical
[I'm not a shareholder, but they look interesting. I would need to do more work before investing, such as establishing whether they have a credible path to profitability within a reasonable and realistic timeframe.]