While the number of companies set to list on the ASX is still quieter than usual, we are continuing to see many healthcare companies viewing COVID-19 as an opportunity to make their public debut.
4D Medical are a Melbourne-based medical technology company, who have spent the last 15 years developing lung imaging software. The ‘software as a service’ (SaaS), allows medical professionals to convert images into four dimensional data, fostering more effective patient diagnosis and treatment. The software is compatible with commonly used medical imaging machines around the world, with the company planning to generate revenue from selling the XV Technology on a pay-per-use basis and sales of their selected hardware products.
Currently focusing on the US market, with the Marketing and Sales Headquarters situated in California, 4D Medical received approval from the American Food and Drug Administration (FDA) in March this year for the respiratory imaging solution, the first and only product to do so. The company has also been able to patent the XY technology in the U.S and Australia, with pending applications in Asia and the European Union.
The opportunities within the medical diagnostic industry are especially lucrative in America due to its large cost per procedure and growing addressable market size. In the US every year, over 73 million procedures involved lung disease, equating to a cost of US$13.7B. In 2017 alone it was reported that 17% of the world’s deaths are represented by the top lung diseases; asthma, COPD (including emphysema), LRTI (including pneumonia and influenza), tuberculosis, and lung cancer.
The COVID-19 pandemic has seen global demand for lung health technology increase significantly with the US accounting for more than 25% of confirmed cases worldwide. 4D Medical are of the view that the virus will create a significant and permanent increase and demand for lung health assessments.
The company is not currently profitable and there are inherent risks associated with low market adoption of the software, new competitors coming into the marketplace, and regulatory compliance changes. Despite previously making losses of over $5m in the first half of FY20 alone, the company has made significant increases in their revenue since June 2019, recording an additional $405k in revenue in the first six months of 2020 as compared to the corresponding period in FY19.
The use of funds raised by the offer will be primarily put towards marketing activities undertaken through clinical trials and trade shows, followed by operating expenses for working capital and governance, and research and development activities respectively.
The company is expected to list on 14 August 2020, with offers expected to close on August 10. The company is looking to raise almost $56m at an offer price of $0.73, a market capitalisation at issue price of $193.28m.
4D Medical intends to trade under ASX: 4DX.
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