4DMedical (ASX:4DX) share price lifts on 71% income increase in FY21

Shares in the drug development company are on the rise after it reported its FY21 earnings

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The 4DMedical Ltd (ASX: 4DX) share price is climbing today after the medical technology company reported its FY21 earnings.

The 4DMedical share price is now $1.50, a 5.63% jump from the market open.

Let's investigate further.

4DMedical share price jumps on strong growth in cash reserves

4DMedical outlined several investment highlights in its report, including:

  • Increase in cash reserves of 860% to $80.9 million, with no debt
  • Total income of $5.8 million, a 71% year-on-year increase
  • 52% increase in operating costs to $24.5 million
  • Net loss after tax of $21.4 million, which was down 3% from the year prior
  • Successful initial public offering (IPO) by raising $50 million of investor capital.

What happened in FY21 for 4DMedical?

In a positive for the 4DMedical share price, total income growth of 71% was underscored by operating revenue and "other income" of $5.6 million, as per the release.

Moreover, as a result of its IPO, 4D was able to strengthen its balance sheet and grow its cash position by more than 860% to about $81 million year on year.

Additionally, 4D made "strong progress against its commercialisation strategy", laying the groundwork with "the establishment of clinical trials and pilots".

As of 30 June 2021, the company had received approval for eight clinical trials, investigating a range of applications for its "FDA-cleared and TGA approved" respiratory imaging platform. The conditions under examination in these trials span from pulmonary hypertension to constrictive bronchitis.

Recall that this imaging platform, the "XVD Scanner", is the "world's first dedicated lung scanner", according to 4DMedical.

In addition, the company's subsidiary Australian Lung Health Initiative was awarded a $28.9 million contract by the Australian Government's Medical Research Future Fund (MRFF) to develop the XVD scanner. This initially saw a jump in the 4DMedical share price.

Furthermore, the company also secured "streamlined access" to the US Department of Defence, and also Veterans' Affairs (VA), to implement contracts on its "XV Lung Ventilation Analysis Software (XV LVAS)".

In a further possible boost for the 4DMedical share price, the company also secured another $46 million in capital raising to support its XVD Scanner while strengthening its balance sheet.

What did management say?

4DMedical founder and CEO Andreas Fouras said:

We are extremely proud of 4DMedical's progress in what was a foundational year. Having successfully listed on the ASX, combined with ALHI's MRFF grant and 4DMedical's follow-on capital raising, the company is very well funded to support the commercialisation of our technology in one of the world's largest markets.

We have seen a significant shift in momentum in the past few months, with our pipeline of clinical trials and pilots experiencing significant growth. Additionally, 4DMedical has been highly successful in attracting top class talent during the year, doubling our headcount to 95 employees over the period, ensuring that we are well placed to achieve our commercialisation goals in FY22 and beyond.

What's next for 4DMedical?

4D is progressing another two pilot studies in the US with the Department of Defence and VA's healthcare networks. Both of these networks "represent a significant opportunity for the company".

Moreover, the company "expects key milestones to be delivered in 2022" in its XV LVAS scanner, by integrating with a "broader range of hospital equipment", such as CT scanners.

Finally, "subsequent to the year's end", the company signed its "first pharmaceutical-focused contract" with Novartis. Under the contract, Novartis will use XV LVAS to "assess and validate pharmaceutical therapies" in patients with chronic obstructive pulmonary disease (COPD).

4DMedical share price snapshot

The 4DMedical share price has had a choppy year to date, posting a loss of 39% since January 1. It has also fallen around 8% in the last 12 months.

This has lagged the S&P/ASX 200 index (ASX: XJO)'s return of around 14% this year to date.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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