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ASX stock of the day: 4DMedical share price surges 7% on market opportunity

The 4DMedical Ltd (ASX: 4DX) share price has surged more than 7% today after the technology company released an investor presentation outlining its market opportunity.

The company says its lung diagnostics software will create a step change in the capacity of physicians to diagnose and manage patients with lung diseases, which gave the 4DMedical share price a boost in today’s trade.

What does 4DMedical do?

Founded in 2012, 4DMedical is a Melbourne-based software company focused on diseases of the lung. The company is seeking to commercialise its four dimensional lung imaging technology which converts X-ray images into scan data. 4DMedical says existing lung diagnostics are “decades out of date, not fit for purpose, and ripe for displacement.”

4DMedical says its technology provides a non-invasive way of understanding regional lung motion and airflow in real time. Use of the technology is expected to improve patient and health outcomes and reduce costs of care. The company runs a software-as-a-service business model, allowing hospitals to access its technology without issues associated with hardware integration, capex or additional staff. 

How does the technology work? 

4DMedical’s technology integrates with existing X-ray equipment, meaning clients are not required to make a capital investment. The XV technology converts X-ray images into 4 dimensional data (3 dimensional plus time) which can be used to inform patient treatment. The platform allows the company to rapidly deploy a suite of respiratory diagnostic products across its network of clinics and hospitals. This provides a strong ability to defend market share from future competitors. 

4DMedical’s technology has won influential fans, with the head of the Alfred Hospital’s Lung Transplant Service saying, “4DMedical lung imaging technology provides a rare and exciting opportunity to improve lung health outcomes for patients globally.” 

What’s next for 4DMedical?

The respiratory diagnostic sector represents a global market of over US$31 billion per annum. The United States market is worth $13.7 billion. 4DMedical’s initial focus is on rapid penetration of the US market – given the large market size, even low market penetration could see substantial revenue generation with high gross margin. FDA approval is in place for 4DMedical’s XV Ventilation product, which is set to launch into the US in FY21. 4DMedical will commence TGA and CE Mark approval process for the XV Ventilation product in FY22. Launch in Australia and New Zealand is also slated for FY22. Launch in Europe is expected to take until FY23. 

The 4DMedical share price is currently up by 7.23% to $1.70 per share at the time of writing, giving the company a market capitalisation of $450.09 million.

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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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