- 4DMedical could replicate Pro Medicus’ US success
- Its new tech could revolutionise lung disease diagnostics
- Potential Philips deal drives optimism for 4DX
Stockhead’s markets guru Eddy Sunarto brings you the latest updates from leading Australian brokers.
Not many Australian radiology companies are looking to make their mark in the US, but 4DMedical (ASX:4DX) is taking on the challenge.
Inspired by the success of Pro Medicus (ASX:PME) in the US, 4DMedical is aiming to carve out its own path in that lucrative market.
The company offers advanced lung imaging technology called XV, which provides detailed views of the lungs and can enhance existing scans like X-rays. Founded in 2013 by Dr Andreas Fouras, the company received FDA approval in 2020.
Broker Ord Minnett has recently given the stock a Speculative Buy rating, with a target price of $1.05 (versus current price of $0.42).
Ord Minnett is optimistic about 4DMedical for several reasons.
First, 4DX recently posted impressive revenue growth of 5x in FY24, reaching $3.8 million, even though it reported an EBITDA loss of $30.5 million.
But what has the broker excited is the potential reseller agreement it will sign with global giant, Philips.
This deal, although delayed, is expected to drive significant revenue growth in the US.
Ord Minnett believes that once finalised, that agreement could be a game changer for 4DX, particularly with opportunities from US federal agencies like Veterans Affairs.
“4DX remains well positioned to disrupt the >US$30b global respiratory diagnostics market,” said the broker’s note.
“And we expect its share price to re-rate strongly post the Philips agreement (and visibility on associated US revenue generation).”
More about 4DX’s XV technology
Every so often, a medical breakthrough comes along that really changes the game.
We saw this with the COVID-19 mRNA vaccines from Pfizer and Moderna, which played a huge role in fighting the pandemic.
Australian biotech companies have also been contributing new innovations of their own.
For instance last year, Neuren Pharma (ASX:NEU) became the first company in the world to release a drug for Rett Syndrome. And Zelira Therapeutics (ASX:ZLD) also showed that its diabetic nerve pain drug works better than Pfizer’s.
Similarly, 4DMedical’s XV Technology could revolutionise respiratory imaging, shaking up methods that have been around for over a century.
The company’s CT-VQ software, based on the XV technology, is designed to detect diseases like pulmonary embolism—a serious condition where a lung artery gets blocked by a blood clot.
Right now, detecting this condition is complex and costly, involving radioactive dye and expensive scans. But 4DMedical’s CT-VQ software can detect it using a regular CT scan, making the process quicker, cheaper, and safer.
The company is also working on XV LVAS, another product using XV technology that provides detailed images of lung function and movement.
This software, already FDA-cleared, could replace outdated diagnostic tools like traditional X-rays and spirometry, offering a clearer and quicker diagnosis for lung diseases.
4DMedical is eyeing big opportunities, especially in the US Veterans market, where many veterans suffer from lung conditions due to their service.
Big opportunity in the US
Ord Minnett believes there’s a big opportunity for 4DX.
The company has made significant strides with key commercial milestones, such as expanding its collaboration with Philips, as well securing CMS reimbursement in the US.
CMS reimbursement refers to the process by which the Centers for Medicare & Medicaid Services (CMS) in the US cover the costs of healthcare services provided to Medicare and Medicaid patients.
Although there are some concerns about short-term revenue and operational expenses, Ord Minnet believes 4DX could achieve break-even cash flow by the second half of FY26.
Also, the recent cap raise is anticipated to bolster the company’s financial position, providing room for further investment and expansion.
“Both 4DMedical and Philips are well advanced to establishing a formal reseller agreement,” said Ord Minnett.
“This agreement will allow 4DMedical’s products to be added to Philips’ product catalogue as third-party solutions for the VA and other U.S. federal agencies in North America.
“We maintain our Speculative Buy rating.”
The views, information, or opinions expressed in this article are solely those of the broker and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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