4DMedical Limited ($4DX)

Thank you, operator, and welcome, everyone, to today's conference. My name is John Hester from Bell Potter. And I'm joined today by the CEO of 4DMedical, Dr. Andreas Fouras. Also joining him is Julian Sutton, the CFO; and Chief Commercialization Officer, Matthew Tucker. Good afternoon and good morning, gentlemen, and welcome. Our mission today is to discuss the company's recent commercialization progress, highlighted by 3 material announcements over the last months. These are: number one, the CLEAR study targeting the market currently serviced by CT pulmonary angiogram for the diagnosis of pulmonary embolism, amongst a range of other lines. Second, we're going to discuss the recent acquisition of contextflow marking 40 Medical's entry into the medical imaging market in Europe. And finally, the company recently signed on SimonMed being a 17-site outpatient imaging center business operating across 10 states in the U.S. And Matthew Tucker will be telling us all about that deal. Time permitting, we'll take a few questions towards the end of the discussion. And if you would like to ask a question, please use the Ask a Question box on your screen and press Submit. So let's get started. Good afternoon, and Andreas, who joins us from Los Angeles. Hi, Andreas.

Hi, John.

Good to have you here.

We're going to talk about the CLEAR study in a few moments, but I'd like to begin with some background on what it's all about. So 4DMedical's CT:VQ exam already has FDA clearance for clinical decision support for thoracic disease diagnosis and numerous institutions, including Mayo and others, Stanford, being another one, have already started using the product. So what's driving this investment in this additional clinical trial?

Yes, so we've had as you say, really strong interest from leading sites in getting VQ on board. And one of the things that almost always comes up in those conversations is interest from those sites to also use it in the way of replacing CTPA as well as replacing nuclear VQ. So it's really been something that's been -- it's been on our cards, something that we're interested in. And of course, we already have FDA clearance for that cohort of patients as well, but with the strong interest we've had from customers and now the cash at hand to be able to make this investment in a clinical study that for us today isn't very expensive, but would have been historically a big amount of money. So with that strong interest, we have decided to sort of fast track the fast track that process and get this study going so we can enter the market on that space as well.

Yes. So I just want to take a step back, Andreas. So we've talked a lot in the past about pulmonary embolism and it's blood clots in the lungs, potentially leasable situation. Now for people who are indicated for CT so you often go away and have a nuclear medicine exam. That's one part of the market. But the bigger part of the market is clearly that, you mentioned a few moments ago, CTPA. So just take a moment for the benefit of our participants today to discuss the context of why someone would have a CTPA exam? And what is the need there for the 4DMedical exam to come in and potentially replace that?

Yes. Thanks, John. So look, blood clots in the lung, pulmonary embolism is a really significant problem in health care. And the reason that I say that is that we have somehow at the same time, 2 things that don't seem to make sense to happen at the same time, which is that, number one, a lot of these PEs get missed. You have folks oftentimes these blood clots are found too late after someone has passed. And at the same time, there's been this really big growth in the number of CTPAs delivered. And the reason that, that's a problem is because each CTPA test includes an iodine injection. And with that iodine injection, there's the risk of having an allergic reaction to the iodine. There's also a risk of -- there's a risk of causing kidney complications because the iodine is very kind of thick and dense and heavy material. And so as a result of both of those, there needs to be a doctor on call right there when the CTPA is administered as well. So you've got the difficulty of having access to the contrast and since COVID, that's been a little tricky. You got the doctor on standby and these other kind of complicating risks. And when we're talking about delivering that 5 million times a year, those risks kind of add up.

Yes. And so how does 4D or how does the 4DX CT:VQ exam expel some of those risks or mitigate some of those risks?

So one of the great things about CT:VQ is we have the only platform that's been FDA approved to measure blood flow to the image and quantify blood flow without using a contrast agent. And so first go around, we've put it up against nuclear VQ. And while Matt and his team are out there literally storming across the U.S., winning site after site with that, we're looking to target this other opportunity. So $5 million, as I said, 5 million scans a year, and we've already got the approval. And for us, really, the kind of the only key thing that will stand in our way to capturing that market equally as quickly is just having the head-to-head clinical data that shows that the CT:VQ without the use of contrast can give equal or in fact, we suspect or expect a superior result.

Yes. So just touching on that quickly. I'll just get you to elaborate on that final point. What are the things that you're actually trying to prove here with this? What are the end points?

So I think the we'll be putting it head-to-head and using the kind of language that I suspect a lot of our investors will understand, we'll be looking for non-inferiority. So we'll be saying that we'll be expecting to see the same results. And then if someone thinks will hang on noninferiority, then my answer to that is because we don't have to give the contrast, because we don't have those allergic reactions, we don't have the cost, we don't have kidney issues, we don't have to have a doctor on standby. And in fact, usually in the ED in the U.S. patient goesgets their first CT scan, and then later is getting pushed and sent back again a second time for another CT scan this time with contrast. So because all of all those financial and logistical and workflow savings, if we're not inferior on the clinical side, all of those financial and logistical issues make us a superior product and worth it. But that's what the study endpoint is. I think that we've got a good chance of coming out and perhaps being better than CTPA.

Yes. And just on that final point you made there, what happens if you detect a blood clot or something else on the -- with your product as opposed to CTPA, which detects nothing? What happens in those circumstances?

Yes. Thanks for the question, John. That's something that we're really excited about, about the study design. And we've explained that it's a head-to-head study but actually, we are doing significant follow-up of these patients over the weeks and months after. So if, for example, there was a CTPA that said that there was no clot and we saw a clot, we would be following up with that patient and seeing are there symptoms more aligned. There'll be a committee of doctors who'll look at the patient symptoms and the patient record and adjudicate to say which one was more likely to be correct. So exactly as you pointed out, on a standard kind of head-to-head when you're competing against the gold standard, you can't ever beat it. But in this case, by the way, the study is being designed by following up the patients after their night in emergency. We actually get the opportunity to show when the disagreement have a group of doctors adjudicate who was right.

So the patient comes into the ED department in the middle of the night saying, "Doctor, I can't breath. It's the middle of winter." The first thing that the emergency physician wants to rule out PE or amongst the first things, how does he do that in the context of what we're talking about? So how does this impact workflows is what I'm asking?

Well, almost always in that circumstance, there's a number of things that the doctor is going to want to rule out exactly as you say a CT scan is a very useful thing to have in that list. And so that same CT scan want to do as part of their standard workup that they do. And then if they're immediately looking to roll out a PE, then they can add our software on top. But in some ways, even more exciting, if let's say they don't want to do that, half an hour later during the work up, they changed their mind, they can just order the software at that point in time. They don't have to send the patient back down into radiology to get another CAT scan. So from a workflow perspective, it couldn't be smoother.

Yes. And all this takes place from a single CAT scan? There's no doubling up on the CTs?

Yes, that's right. So the one thing that's there that we that we sometimes that we get -- that we have to get people to is that when we do -- our software like lots of other things in the users what's called an inspiratory, expiratory CT, but that's very standard in the lungs for a doctor to ask to see both. So they ask you to breathe in and they breathe out and literally, on a 5-minute appointment to do a CAT scan. There's no extra cost in delivering that, and it's just literally another 10 seconds or just seconds after the end of that scan just to get them to breathe out and then they take another, they quickly snap another image.

Yes. Okay. The next point relates to the reimbursement for this. So you've got a CPT code for it. This is delivered on patients on an outpatient basis. So I gather this is just follows suit. There's no need for a change to the reimbursement situation.

Yes. I think that -- I don't think we'll have any issues with reimbursement. I think one of the things that we've found on that topic -- one of the things that we found is when we're talking to folks about the PE side of things, the C-suite of the hospital tends to get involved because you're directly impacting workflows through the ED and you're directly impacting the hospital's risk of lawsuits and so on from all of those missed PE. So I think reimbursement will be something we feel very good about on the PE side of things.

Great. And Andreas, do you anticipate having to go back to the FDA for any amendment to your label as a result of the CLEAR study?

I think that there's definitely going to be an opportunity that we could do that if we want to. I suspect that the CLEAR study will give us a ton of evidence to update the label but I also -- we're still leaving ourselves open there on that in that the current the current FDA approval already allows us to use -- we've been validated in PE. So that's not something that we need to do. It would be something that if we choose to do it because there's a significant advantage in doing that.

Yes. Just direct a question to Matthew, if I may. Matthew, this is a very large market, up to 5 million CTPA exams conducted annually in the U.S., broadly $2.5 billion in market size. Do you assess any impact here for your reseller agreement with Philips? And how might this impact their capacity to market the product?

It just makes the offering much more robust, I think, John, as Andreas mentioned. A lot of the questions we get from the academic medical centers when they're asking about deploying CT:VQ is, "Can I use this for acute pulmonary embolus." Now whilst we are out there actively marketing for that to be the #1 use model to start with, they want to make sure that they are able to offer it across the entire suite. So I think Philips will definitely benefit from that having a more rounded product offering as well for the entire suite. We still get questions on in package be just a single offering or can it be the full product suite available from 4DMedical. People don't want to buy just one product at a time. They want to know that they've got optionality in offering that and don't have to go and buy one widget from all the different companies out there and queue up their IT department. So I think Philips will definitely have some benefits of CTPA. And particularly, a lot of this actually occurs in outpatient clinics, John. And I know we're going to discuss SimonMed a little bit later, but out in the community, people get short of breath and GPs or primary care physicians as they call it in the U.S. need to roll out pulmonary embolism as a cause for that. Now they're not an acute patient walking rolling into a hospital all in an ambulance, they're walking into an outpatient imaging center, but it still is a disease that affects the community as well. So Philips will benefit from that.

Yes. Okay. And just finally, Andreas. I got in terms of patient numbers, what are we talking about? And secondly, you signed up a fairly high-profile institution to lead the study. Can you tell us a little bit about that?

Yes. Thanks, John. We're certainly -- as part of that swell of support or people asking us questions about, "Hey, is it really true? Can we use VQ to detect pulmonary embolism?" It was great to have MGB or what I think a lot of folks in Australia might think of as Harvard Medical School asking to be part of that. And we just -- it's too hard to turn down really to say, "Yes, of course, you guys can lead that study." We will be on a number of other sites. And to that, we'll be doing this across a number of sites. But actually, in some ways, amazingly, Harvard was so excited about doing this, that they got all of their paperwork done before our other sites. And so we've gotten themselves out to the front of the queue on the announcement as well. So yes, I think it's great to have an institution like that, the rigor that, that will bring. They have both an amazing radiology department and an amazing emergency department at the same time. And that combination of really world-class emergency plus world-class radiology makes them -- and of course, when we come out and say, "Look, we've got 1,000 or 2,000 patients from this Harvard-run study." I think you can imagine the value that's going to have in terms of shifting sentiment amongst doctors. And so I think if we look forward to a year or more when the results of this start coming out, we'll already have sites that are signed up to customers, right? They'll be already signed up they'll already be well into the adoption curve, and we'll be able to drop this value proposition on top of those, right? They probably don't need to change their contracts, that we won't do any IT work. There will just be this additional internal market there 5x bigger, and thousands of patients of data from top-tier sites to encourage them to change that view.

Yes. It's certainly a great sign. Okay, we're going to move on. Let's move on and talk about contextflow. This was the deal that the company announced a few days ago. contextflow is a small medical technology company based in Vienna. Andreas, you spent a few days over there recently meeting the team and bedding down this transaction. So tell us about the strategy for that acquisition and what it means for 4DMedical?

So John, I think we're still extremely focused on having our U.S. sales team being able to concentrate on selling VQ right now, and we're looking to build a strategy that we'd be able to grow that market share, but for the least amount of distraction for that team. And so for us, that meant that an acquisition that keeps us an on-the-ground presence that means we don't have to have our team spending a whole bunch of time hiring people, vetting people, building a strategy. We get to largely inherit a sales team and a regulatory team and, of course, plus other supporting people on the ground right away. And honestly, the price could have been better. It was a very good buy from a price side. And just we're talking something about $18 million of acquisition cost in cash and $30 million of tax loss against that. So we start kind of ahead of the ball there. And on top of that, they also had a really top-tier lung cancer screening product. That's not something that we spend a lot of time talking about, but lung cancer screening is an important and growing part of lung health, and it's great for 4DMedical to be able to offer our customers a full stack, that full solution. I think ever since the acquisition of Imbio, we've been saying that by offering a full stack or a full service offering to our customers, we just reduce the friction on their IT department. They can put one IT connection in so they can buy a VQ, and they get a whole portfolio of products in there to make that even more worth their while.

Okay. That's going to be an interesting next couple of years and as we sort of move forward with them. They've got CE Mark for their products. We certainly have gotten an approved product. What about the 4DMedical product suite and the entry point or are those products into Europe? Tell us more about that.

Yes. So look, I think we're we had a few days with the team. And then actually, we very quickly picked up from there from Vienna and headed a few hours down the train line Salzburg, where there was a lung radiology conference there. And Matt and I and a couple of folks from 4D plus the sales team from contextflow were able to really make an impact talking to radiologists in Europe about their interest in VQ. So I have a very good feeling about those leaders there at that conference got very excited very quickly, and it's just great to know you always need to validate. We had no reason to expect that it wouldn't be the same, but the European radiologist team equally is excited about getting their hands on VQ and our new fully operating team there in Europe is going to be able to deliver that to them quickly.

Okay. And you've kept the team that came with the acquisition and their leadership team?

Yes. Yes, we have. And they'll be -- they're a great team, and that's obviously a key part of the asset. And to make sure that we keep them. We're going to be shifting them on to -- we'll be giving some 4DMedical stock retention plans and I think with the performance of the stock we've had, we know it's very attractive to employees. So I'm sure they'll be hanging around to keep their hands on it.

Yes, it's nice. And they've got this lung cancer screening contract in Germany. Are you able to elaborate on that? Or is it still early days?

No, I think it's a really exciting part of the proposition. So contextflow has the only lung cancer screening reimbursement contracts with German insurers. So they really have led the way in terms of getting those contracts. Lung cancer screening is just something that's just quite new in Germany and these contracts to have German reimbursement, not just to the radiologist for doing the reading but effectively a separate reimbursement to for the software component, is really nice. And I think if we can -- that will make that lung cancer screening quite attractive. And it could be, I think, something that we can follow on quickly behind that and add VQ because once you've detected a lung cancer nodule or sorry, a nodule in the lung, you may need to biopsy it or you may need to do a surgery to resect it. And certainly, our experience in the U.S. is that surgeons are going to want a VQ scan as part of that process to continue to follow up treating that patient.

And just finally, what's the potential for that product, the lung cancer screening product, outside of its current market in Germany?

I think that certainly very interested in what that product can do. I think Australia is leading the way as they -- proud to say that Australia leads the way in programs. I think you're probably aware of other cancer screening programs that have been very successful in Australia. Lung cancer screening is doing well. We'll be excited to be able to bring that technology to Australia and save Australian lives with it. And then equally, in the U.S., to date, lung cancer screening has been something that the uptake hasn't been what we think it should be. And perhaps with 4DMedical leading away with an FDA-approved product, it could take about 12 months or so to get that referred. But I think in the U.S. market, it really could be hundreds of millions of dollars of opportunity there.

Okay. That's an exciting outlook. We'll just keep moving along. I want to talk now or change our focus onto the SimonMed acquisition, and this was announced a few -- sorry, acquisition -- SimonMed contract. This was a contract that was announced a few days ago. was led by Matt Tucker. SimonMed is a very large outpatient imaging group in the U.S.. For those of you in Australia, it'd be like an I-MED sort of arrangement. So Matthew, what can you tell us about this organization? And how did this come about?

Yes. SimonMed is across 170 clinics. So I think your analogy to I-MED is not too dissimilar there. I think they're about 250 these days in Australia, but across 10 states. So I think that's the critical part for us. It's not a concentrated group. It is a national group. And when we look at bringing reimbursement, having that coverage across multiple states will actually assist us in accelerating our pathway to getting a Category I code when we want to go down that pathway. So given that coverage is critical. They service outpatient communities similar to an I-MED in Australia, where primary care physicians, different specialists outside of hospital groups refer to them as an imaging chain. To put it into context, there's big imaging chains in the U.S. There's about 6,000 imaging centers all up. The big ones are publicly listed, not too dissimilar to Australia in that sense, the likes of RadNet and Rad Partners are very large. SimonMed is probably that second tier, second to top tier group like a RAYUS and some of the others. So they reached out to us after several conferences. We've been in contact with them for a number of years after meeting them at RSNA one year. And timing was just right. They're looking at how they can evolve their platform to offer more services to differentiate themselves in the marketplace. And they really grasped on to CT:VQ and its ability to transform the way they provide that same output of ventilation and perfusion without having to invest in more nuclear devices.

Yes. Okay. So tell us then, one of the key commercial terms. So you put in the announcement, this is a pay-per-view arrangement, a screen arrangement?

Effectively, it is. Yes, a 3-year agreement. I wouldn't get too specific. There are outpatient clinics to do it. So I wouldn't like to disclose their commercial terms to their competitors as much as I'd not like to do it. for my commercial confidence as well. But the 3-year term really built around growing on a per scan basis, the amount of reimbursed scans they're coming through. So they want to partner on getting as many claims pushed through Medicare to be reimbursed as possible. That's part of our joint mission on this, which was very attractive from our perspective given their coverage over those 10 states.

Yes. And that's a key point. You've mentioned there that you're targeting the upgrade to a Category I code. And how does this agreement help or push that borrow help you in that respect?

Yes. So you need a couple of different triggers to get across to a Category I code. One is coverage of different states being reimbursed. We obviously need clinical papers, which we got -- and it is having a multiple number of people requesting it. So the number of claims going through across multiple payers, across multiple jurisdictions is really the trifecta that we're after. And SimonMed just give us instantly a lot of that from the get-go.

Yes. That's going to be a tremendous boost. Okay. We're starting to run out of time. So Andreas, if I could just ask you perhaps to offer a few closing comments about upcoming catalysts? And what else do we expect over the next weeks and months?

Yes. Thanks, John. So I think our U.S. team will continue to -- their pipeline is looking very strong and very exciting where that's going. We have interest, for example, if we talk about our latest conference, ATS in Orlando, we had interest there from leading radiologists at academic medical centers and even from places like the VA, folks coming to our booth asking to see VQ. At the same time, our research team will be building that strong evidence so we can win that even bigger market opportunity replacing CTPA. And then I think that with the level of excitement from just 1 conference, only 3 days into the acquisition, we can expect to see sales coming out of Europe. So if I kind of just bring that back, we're going to have more AMCs signing up both in -- signing up across calendar '26 in '27. We're going to see scan numbers. starting to grow strongly. And at the same time in '27, we'll see, I think, green shoots coming out of Europe, that acquisition starting to pay dividends and also the data that we need to win against CTPA, starting really, really strong and clear set of catalysts over the next, say, 12 months for investors to follow.

Yes. And you've certainly got plenty of capital to bundle that and lead up to those revenues starting to accelerate over the coming year to 2 years. Operator, I am going to take a pause there. So I'll hand back to you for some questions, please.

Thank you. Your first question from the webcast today comes from Craig Hutchinson. Craig asks, congratulations on the journey Andreas. Will shareholders hear any updates on how the CLEAR evaluation is progressing? Or will we have to wait for a publication of the findings? Can you tell us why you are confident about the outcome?

Yes. Thank you, Craig. And we are absolutely going to do our best to -- we're not going to wait until the study is completely wrapped up before we start talking about the results. We'll follow proper processes, we'll do some interim analyses, and we'll share those results as we go along. And I expect the results to look really strong. And the reason I do is as we said, we have FDA approval for use in PE, and the reason we got that is we were able to put together really good evidence that shows that it's useful in that space. And we've even shared some conference data on using the technology to detect PE. And so far, the results look really, really good. So yes, I've feel very confident, the preliminary data shows that, and we'll keep that coming along with interim outputs from the study.

Your next question comes from [ Peter Horsfall ]. Peter asks to compete against CTPA. You will need to improve your specificity from the pilot trial. Please comment.

Yes. So I think that what you're probably referencing there is there was a study published at a conference and that study had -- if you look carefully, that study was CT:VQ plus an additional layer that we had on top an automated piece of software that could read the CT:VQ study and give the analysis. And just to be clear, to go up against CTPA, we're going to be delivering effectively the VQ or the scan, and we're going to be handing that to a radiologist or to an emergency doctor for them to do their work. So I think that it's just worth being really clear that the data that I do notice some folks have picked up at is not just the VQ product, but also an additional software layer on top of that. And I think you would agree with me that it made sense for that automated software to be in favor of making sure it didn't miss any PEs rather than that automated software having just the ideal accuracy. If someone's going to use extra software in an emergency room, they just want to make sure that it picks up every single case. And if a doctor has to come in and rule out some extra cases, that's fine. But that's not where this product is going to sit. I hope that clarifies for you.

Your next question comes from [ Simon Hale ]. Simon asks, Andreas, the Philips reseller agreement was signed roughly 20 months ago. Can you provide an update on how far away revenue from the agreement is? What are we likely to see this start to flow through?

Yes. Yes. Thank you. And I appreciate the situation that investors or shareholders are in being patient with Philips as that really big machine fires up its engines to move along. I have the luxury that a lot of you don't have, which is to have the opportunity to see the folks from Philips talk with a number of them, Jeff, the CEO and others on a regular basis to see where they're moving. And I can -- I do see really positive signs there. I see that the number of people they've got and the team is actually growing. The quality of those people and the team is really very -- is extraordinary and our sales team is on calls with people from Philips on a regular basis. So our sales team has done an incredible job. Everything you've seen so far has been Matt and his team delivering at an incredible pace. And so when that momentum comes in over the top from Philips, it is going to be very exciting to have that added to the pace that Matt and the team are already delivering for us on.

Your next question comes from [ Chris Pickett ]. Chris asks, Andreas, thank you for keeping us informed. Do you have any thoughts for the moment that investors on what is happening with the short selling of 4DX stock?

Yes. Look, that's a tricky one and I think something that is just, in my opinion, unfortunately, a part of life on the stock exchange. And what I can say and all of this is going to have to be my opinions, right? It can't be official sort of 4D policy. But look, I think in my opinion, that the short sellers must be getting pretty close to how much more stock they can borrow and therefore, short. And I suspect that if I was in that position, I'd be feeling concerned because the average price that they've bought at isn't much higher than where the stock is right now. And as we continue to make progress, we continue to deliver that will naturally look to drive the share price up. And I think at some point, who knows, but it certainly does happen, where at some point, the short sellers are in a position where they have to buy that stock back. So there's a couple of hundred million dollars worth of shares of money that in that circumstance would flow back into the market. So look, I appreciate the mom and dad investors sitting through this as large funds do what they do. But from my position, the core fundamentals of the company have never been stronger. In the last few months, we've added great customers. We've added this great opportunity to grow the business through CTPA. We've added this great opportunity to grow the business into Europe. We're going to continue to deliver. In fact, if anything, I think it's clear that we're accelerating. So as we do that, the share price will follow. And I don't expect there's much more borrow for the shorters to add on top of where they are.

Your next question comes from [ Richard Whittington ]. Richard asks, what is the current situation we getting the veteran hospitals to use our software?

Yes. Look, I think that is definitely warming up. And as I expressed just a few minutes ago, we do have continue or, in fact, warming up engagement across the VA. There are leaders in Washington, D.C., who are expressing interest in VQ for the VA and there are doctors at the ground treating patients who want VQ for their patients. And yes, many, many VA sites don't have access to nuclear imaging in the same way that it's available in the general community. So there's an additional advantage there for VA docs who want to deliver VQ scans to their patients. They have much better access to CAT scanners than they do to nuclear medicine instruments. So I think that's warming up. I know that's not something that's been at the front of our communication for the last year or so. But over the last few months, the level of interest there is warming up and part of that is, in fact, going back to a few questions ago, from really good leadership from Philips in that space.

Thank you. Unfortunately, that concludes our time for questions today. I'll now hand back over to Andreas for any closing remarks.

Yes. Look, thanks, everybody. Really appreciate your ongoing support and your interest. As the founder of the company, it's great to have all of you, I have all of you there supporting us as we do this. I hope you'll agree with me, though, the progress really has been very energizing and the continued acceleration, I think, just really shows how good an opportunity we have. I think that 2026 is going to be our best year of all. So thanks again, everyone. Thanks, John, for helping today as well. Thank you very much.

You're welcome.