Great article in the AFR today!!4D Medical float set to sizzle,...

Great article in the AFR today!!

4D Medical float set to sizzle, as funds pile in

Aug 6, 2020 – 4.17pm

In theeight years since former Monash University professor Andreas Fouras foundedsoon-to-be listed lung imaging medical technology company 4D Medical, he hasput everything on the line to get his business to where it is today.

When the company floats on theASX on Friday with a market capitalisation of $193 million and an issue priceof 73¢ per share, it will vindicate the decision by Dr Fouras and his family tosell their house, put all their savings into the business, give up their livesin Australia and move to the US.

DrAndreas Fouras will list his lung imaging technology company on the ASX onFriday.

"It's honestly surreal ... I was originally the inventor and for me thechallenge was to prove the technology worked," Dr Fouras, the company'schief executive, told The Australian Financial Review.

"I realised there was no oneelse that could take it and make a difference with it. It was a chance to touchmillions of lives and genuinely make a difference and that's a biggeropportunity than many inventors dream of."

Dr Fouras was previously a MonashUniversity mechanical engineering professor, specialising in wind tunnelimaging, but left his academic career and moved to Los Angeles to develop 4DMedical, which was until recently named 4Dx.

Thecompany's lung imaging device leverages Dr Fouras' background in aeronauticalengineering to highlight if there are parts of the lungs receiving less air,helping in the early diagnosis of diseases such as asthma, chronic obstructivepulmonary disease (COPD) or lung cancer.

Current imaging techniques justgive an overall picture of the amount of air lungs are taking in.

Before the float, the business had raised almost$19 million through equity capital raises and an additional $17.4 million in convertible notes.

When the company lists on Friday,it will have the support of funds including Perennial Value Management, RyderCapital, Pendal Group, EFM Asset Management, OC Funds Management and QuestAsset Partners, which have all bought into the IPO.

Hugeinterest

Dr Fouras said the listing wasoversubscribed, but would not say by how much. However, he said no investor hadreceived the full allocation they had requested and the company had needed toincrease the size of the capital raise to $55.8 million from its target in Juneof $45 million, to account for the interest.

Perennial's head of smallercompanies and micro caps, Andrew Smith, said since his fund bought into 4D inNovember 2019, its business case had improved after it was granted broad FDA clearance forthe use of its device for any disease affecting the lungs.

"As a result the addressablemarket is much larger than we first anticipated, hence we are happy to make aneven larger bid into the IPO as the investment case had improved and de-riskedsignificantly," he said.

"Post FDA approval we areclearly very focused on the progress 4D Medical makes in the US, which is byfar the biggest market in the world. Beyond that we are interested to see thebroader implications for the technology moving from monitoring air flow toblood flow and the like."

When Mr Smith was introduced tothe business, he was attracted by the involvement of Dr Sam Hupert, theco-founder and CEO of medical imaging company Pro Medicus and a member of 4D'sadvisory board.

Mr Smith was optimistic thecompany could grow to be a medtech success story like Cochlear or ResMed and he believed it could get there more easily, since it had its roots in technology.

"It is really a softwarecompany, not a device company, so it should require less capital to grow andhave higher margins. Given this quality earning stream, if product adoption israpid then we expect the market would put a high value on the business,"he said.

Like Mr Smith, Ryder Capitalchief investment officer Peter Constable is optimistic about 4D's future, butsaid it was important for investors to be patient and take a long-term outlook.

He also backed the business in2019, having been introduced to Dr Fouras in 2017.

"Those overnight Australiansuccess stories are 20-plus years in the making, as will 4D Medical's futuresuccess, so it's not one for the impatient," he said.

"We originally invested onthe basis of some obvious use cases for the XV technology [non-invasive imagingtech] in relation to traditional lung diseases ... however, more recently wehave been actively thinking through the application of the XV technology in thediagnosis and treatment of COVID-19, particularly during the recovery phase, assome of the early evidence points to COVID-19 causing long-term damage to therespiratory function of many patients.

"With XV technology able tosit on existing X-ray infrastructure, it could provide a timely, cost-effectivesolution to assist the world scale in its diagnosis, treatment and monitoringof COVID-19-induced lung disease."

The application of its technologyin the current pandemic is something Dr Fouras considers an immediate priorityand will form part of its sales push into the US later this year.

"Our tech is very safe. Ithas much lower radiation than a CT scan and provides the ability to follow-uppatients and do scan after scan, which means I'm confident we're best placed inthe market for the follow-up of COVID patients," he said.

"We know there is lungdamage even for those who don't end up in hospital, and for those who are inthe ICU and come out, they're still unwell for months after."