4DMedical Limited (MQ7.F) Earnings Call Transcript & Summary

Fantastic. I think we're live. And there's Andreas. Andrew, if we can promote him to the panel. Hopefully, everyone online can see and hear me okay, and Dr. Hogarth. But conscious of everyone's time, especially yours, doctor, just given it's 9:00 p.m. in Chicago. We're really appreciative of the time you're giving us today. So look, we'll kick things off. On behalf of Ord Minnett, it's my absolute pleasure to introduce Dr. Kyle Hogarth today. He is Professor of Medicine at the University of Chicago. And I want to get this list right. Dr. Hogarth, the Co-Director of the Lung Cancer Screening Program, Director of Bronchoscopy and Medical Director of the Pulmonary rehabilitation program. And obviously, you're a practicing interventional pulmonologist. So, hopefully, I got all that right. We're really excited to chat to you today on both your practice and obviously, the 4DMedical product suite and how you're leveraging that technology day to day.

But maybe if we can kick things off a really helpful point to sort of start the conversation would just be a bit of a background on your career, your specialization, obviously, and your practice at the University of Chicago.

Absolutely. So I've been at the University of Chicago, I got there in '98 for my training, but in '04, they hired me when it was all done. And my task was to start the bronchoscopy program. So in 2004, there was little to no technology and little that we could do. And so I started a program from scratch. If you want a microcosm of everything that's going on in bronchoscopy, we now do 1,800 bronchoscopies a year. I've hired 3 other people that do what I do as well. We just got permission to hire a fourth or fifth, I guess, in total group. We do everything, we do robotics. We do lung volume reduction. We do mediastinal staging, stents, et cetera. So we're busy. And that obviously reflects the overall growth that's going on in bronchoscopy. And in particular -- obviously, the focus of partly today has been in the noncancer realm. Clearly, the cancer side of life has kept us busy, but the ability to improve people with significant emphysema has been a real godsend for us on multiple fronts. And then, that's actually how obviously, we started working with 4D.

Fantastic. And it sounds like a relatively significant practice in the scheme of respiratory diagnosis and treatment in the U.S. So are you able to give us any sort of sense of the scale, patients per year or how you look at it?

Yes. So for us, in fact, actually right now, we just got permission to expand and open up 2 other sites, and like I said, hire another person. And the reason we were able to do that is that the economics of doing lung volume reduction in the U.S. are quite positive. And things that hamper our ability to do that, my university is interested in removing. And so 1 of the things that 4D opened up for us was an increased ability to do more lung volume reduction and then we ran smack down into the blockade of just space to do all. So these are good problems to have, right? Oh, gosh, I'm too busy. What a great problem for our business. But the reality of it is, is that, right now, we're doing about 80 cases a year. We have definitive capacity to go up to about 150. And considering at least the way the U.S. model is set up, the profitability of lung volume reduction is ridiculous. It's an extremely profitable procedure. So anything that could increase the throughput. Now obviously, for appropriate patients, I mean there's no debate here. There's no point in doing it someone that won't benefit. But in the patients that benefit and -- where our interest in Imbio came about was that in my clinic, I would have to see multiple patients to get 1 person to qualify for valves. So there's a lot of work being done that doesn't yield anything for the patient. It doesn't yield anything for the hospital. But if you've upfront worked the CAT scan up and screen to the CAT scan, either broadly across the whole system or screened it upfront on any scan that I've ordered as part of this evaluation and that's where 4D comes in. This ability to rapidly quantify the emphysema, but most importantly, quantify it on the back end, so it's not interfering with any radiology workflow. And then I get essentially the ready-made report, that's their partnership with Olympus. I get the SeleCT report automatically built into my scan. Besides looking at the images, I get a report that tells me where the worst emphysema is, where is my target for my valves? And now the workup is honestly more than half done with little to no effort on my end. I mean, I always joke computers are supposed to make my life easier. I remember that. I'm 53. When I was a kid, computers, that was the future. It was going to make life easier. All computers have done us double and triple my workload, right? More [ scrap ], more garbage, more clicking. And the beautiful thing that I think is sort of the secret sauce behind 4D is the automation. And there's actually no clicking, right? Or little to no clicking, right? It's all built in. I'm already clicking to look at these images and there -- this report comes up. So it's embedded into my PACS images. And I mean, that's huge because then that's what's made it easy for my colleagues to refer more patients as well because they see the same reports that I see, and all I did was spend 5 minutes educating them on valves.

Yes, it certainly sounds like a step change in terms of your workflow and outcomes. And I'm very keen to sort of get into the 4D product suite and the Imbio products. But maybe, just in terms of setting the scene and you've alluded to a bit of it there, but can we chat through your case mix the types of patients you're seeing? It sounds like lung volume reduction surgery is a key part of that case mix, but just maybe a bit of background.

Yes, sure. So obviously, a significant -- when you have a bronchoscopy program, bulk of what you do is obviously related to lung nodules and lymph nodes. Cancer is the lion's share, obviously. And so we have 1 of the robotic platforms, and we spent a lot of time dealing with that and taking biopsies of lung nodules and then staging the mediastinum using endobronchial ultrasound. But obviously, benign airway disease, and obviously, in particular, valves, has been a key component. And we actually work with both valve systems. There's 2 available in the U.S. The SeleCT report is made by -- through Olympus, so it sort of skews towards aspiration, but the truth is you could put in either valve. There's technical reasons to use potentially 1 versus the other, that doesn't really matter. The nice thing for us on the valve side is, when you diagnose and stage lung cancer day in and day out, it is kind of nice once in a while to make someone breathe better. So the other value to lung volume reduction is the major impact it has on patient management and patient care. You dramatically improve people with advanced emphysema who are limited in their capacity to do things. And just they've already done all the medicines. They've done all the things we've asked them to do. And so they're limited. It's just finding that right patient. And I think the standard approach has been if you're a physician, you send me a patient and I work them up, and that work up was cumbersome. And you're not going to believe this when you hear it, but I would get a scan on you, and I would literally have to go get that scan burn to a CD, 30-plus-year-old technology, take it to 1 of the remaining computers that has a CD drive to allow me to upload it to a portal to an anonymous number, that's not directly tied to you that I have to keep a spreadsheet that tells me that number 694 is you and not someone else. Like it's as stupid as it sounds. It's cumbersome. It's heavy workload and it's fraught with potential error. None of that occurs, right? I mean this was -- probably when I first -- I first obviously met 4D prior with Imbio, right, this probably had to be the easiest sell they've ever done as -- all they had to do is say, yes, we're going to just scan everything and work it up automatically for you and give you a readout. I was like where do I sign. And so there's -- none of this worried about linking a scan to a patient. And then what it does is upfront since the biggest reason over 50% of people referred for valves fail on the CAT scan side. So being able to already clean the list up so that I can take every scan. So my university like most hospitals scans a ton of people for a ton of different reasons. And that scan was done to like make sure there's not a nodule or to make sure there's not a kidney stone or whatever because they get part of the chest and the abdomen. We get then the proof that, hey, this guy actually got pretty bad emphysema. So we can send a message to the doctor orders the scan. So that increases our throughput because, of course, there's a significant amount of people that are walking around with a decent amount of lung disease, they sort of maladapted their life. They just sort of, "Hey, I'm supposed to be short of breath walking around, my knees hurt, that's why I don't go upstairs. They come up with an excuse, right? And would you then say, look, no, actually, you have pretty bad emphysema, and I have a procedure that you already have qualified for. I mean we already have the data. You got to scan in the emergency room, it turns out your perfect candidate. We tell them about the procedure, obviously explain and make sure that other criteria are checked. But most of the other criteria are rare for people to fail, valve output, valves in. And so it's very satisfying as a clinician. It's great for the patients, and it's obviously great for the medical center. And because it's all essentially on the automated side, that's been great. And then obviously, I know we're going to transition to it, but the CTV queued, then bring in the perfusion side of this is even more exciting because if you are a candidate for valves, I do need a perfusion scan. And so historically that means yet another scan. And in the U.S., there's very little spec and most of what we have is planar perfusion scans. So you just get these like 3 -- well, 6 quadrants -- technically quadrant, but 6 areas of a patient. It doesn't have much in the way of anatomic correlation to try to figure out to get that automatically built into the CT that we've ordered for these patients is huge, right? Because then right up front, I've got the workup. I already know you have an elevated residual volume. Now I've got everything I need from the CT. Let's go. So the key for us, too, is that difference from when that first appointment is until you place valves, that time period is when some patients drop out. They just like, "Oh, they get worried about it, they get cold feet. I get it, right? They think about it too much. So also, if I can shorten that time period, you get more satisfied patients were it spreads. Our program has grown in volume compared to our competitors simply because we're faster. We do the work up quicker. And so we -- patients call us while they're busily waiting at another site and they join our place. And we can take the scan they've already known, and automatically upload and 4D takes care of it.

Got it. No, it certainly makes a lot of sense to us and you're sort of already touching on there, the value proposition across patients, doctors, hospitals, payers, it all seems to stack up really nicely and keen to get into the actual products. But I mean, not all hospitals have deployed this tech yet. Obviously, it's relatively new. I mean, in a pre Imbio and 4D world, can you sort of talk about how you would work up these patients, CT, X-ray, as you say, planar, some of those tests and their key limitations?

Absolutely. So you're referring to me for lung volume reduction because you've got COPD, emphysema and having trouble breathing. So I'll talk to you, I'll examine you, I'll explain the procedure. Then you will get scheduled for non-infused CT of the chest, X-ray, a planar, perfusion scan, pulmonary function testing with body box and potentially an echocardiogram. So that's multiple trips to the medical center. We try to obviously get them scheduled as many on the same day, but that's a lot of back and forth. And of course, depending on where they live, compared to the medical center, that's a lot of traffic, that's a lot of driving, et cetera. So it's frustrating. And these aren't healthy people, right? It's 1 thing if you're able to dash all around the city, but you add on traffic, you add on construction. It's just -- it's a hassle. And that's where there's also a drop-off. There's just people who say, you know what, it's not worth it. They just sort of -- if they're a little nervous and now they're annoyed, right? So anything that can shorten all of that. And so what ends up happening is when you get that scan, then we have to basically get that scale, like I said, burn to a disk and then uploaded to these portals that are run by the companies who make the valves to get the analysis that says you're a candidate for scan or for valves, and then put that data together with the perfusion scan, which of course, if you've ever seen a perfusion scan, it looks like a Rorschach test of just [ haze and dots ]. And even when it's spec-ed and it's been semi-anatomically located, it's still not clear always. And even when they quantify it, it's still pretty limited, and it doesn't have a direct correlation to the anatomy and in particular, obviously, where you're seeing the emphysema score. That was right up front the value prospect of the VQ part. But anyway, so then you're putting all that data together and then you have to ultimately call the patient back and then say, hey, you are a candidate. Do you want to come back in and talk about it some more? Or should we get you scheduled. But time has passed because it takes a while to get all that testing done. And you get this VQ scan, you get this echo, you get all these stuff, and it turns out they fail on the CT anyway. And so to get the CT and the perfusion built in automatically from that CT upfront, is huge. And for us, we immediately pivoted back originally when it was Imbio partly for the valves and then also everything else that it does in regards to -- slash 4D, obviously, now combined with the interstitial lung disease. I don't do interstitial lung disease, but my colleagues do, they were super excited about this. Coronary artery calcification scores. My liver transplant people, they were trying to remember the last time they did a cardiac cath auto patient, pretransplant that ever found disease, now they can prove that there's no coronary artery calcification, they're going to stop doing it. And these aren't healthy people. They don't want to do an unnecessary cath. So we're finding ways that the software suite is helping on kind of multiple fronts. And then obviously, they've added in perfusion. So that's going to dramatically shift our speed for lung volume reduction workup. But then 1 of the things that we're most excited about beyond the obvious, hey, newborn valves, is that by -- right now, going back to the cancer side, I do my CAT scan on you, there's a lung nodule. I bronch you, I prove it's cancer. You don't have great lung function. We're debating whether or not you're a surgical candidate. And the typical approach is to do pulmonary function and even in some cases, an exercise study. But if my CT scan right upfront can quantify just how much emphysema that area has. So you have a cancer, but it's also in a very destroyed part. And by the way, now I also know it's profoundly underperfused. So you may have been a borderline surgical candidate, but you're not anymore because actually your lung volume reduction surgery candidate/carrier lung cancer candidate all at the same time. So -- and we had already been doing that with the 4D SeleCT reports on emphysema trying to expand how many people could undergo surgical resection. The surgical techniques have gotten better as well and they have to cut out less. So this is kind of all hand in hand. But to me, 1 of the additional -- like really interesting applications that's going to come from CT:VQ is the potential expansion on who's a surgical candidate on these borderline patients.

Great. No, understood. I mean that sort of is a nice segue into talking about your journey with 4D and Imbio, and keen to sort of dig into that. I was just going to pause quickly. We've got over 300 people online. So plenty of interest in what you're saying, Dr. Hogarth. I wanted to say that if anyone does have a specific question that I haven't gotten to, please feel free to e-mail it to me, [email protected], and I'll ask it on your behalf. We obviously have a lot to get through, and only 45 minutes to do it. So send me an e-mail guys, and I'll endeavor to get to it. But, yes, Kyle, maybe if we could sort of touch on -- it sounds like your sort of gateway to meeting the 4D team was via the SeleCT product within the Imbio portfolio. But then obviously, you've been an adopter of LVAS and we're obviously all very excited about VQ. So maybe if you could just sort of step us through the initial journey with 4D, and then we can get into the specific products and advantages.

Sure. So the initial -- I mean, the initial journey started on the SeleCT side. And there was an ongoing discussion of the entire suite of services and then getting everybody else on board. So that when I was asking for it, I got the usual pushback from administration of nobody wants to buy anything for 1 person. But I got buying from the interstitial lung disease group and the liver transplant group. The radiology department, actually, 1 of their -- our ILD research guys was super excited about this to add to his portfolio from the CT. Then 1 of the things that was great is that we were -- I was working -- consulting with the Imbio folks and then ultimately 4D to also put together some of the patient-facing products from the -- sorry, from the CT emphysema scoring. So to use it as a smoking cessation tool, to take to a patient and say, look, this is literally how bad your lungs are in 1 of these easy-to-read, schematic, color wise, you can see the holes in your lung, et cetera, et cetera, right? And so to use this any other tool to help get people to quit smoking. And so as we implemented this, basically, then it was the good problem of, wow, there's a lot of emphysema within our practice or within our entire medical center. And it's interesting when the SeleCT screening got started at our institution, we obviously went through a ton of CTs and we did a ton of cases. The barrier on the screening side of my institution is that a lot of scans get done in cancer patients. So we do have a lot of people with a lot of emphysema, but who also unfortunately have multisystem cancer and so aren't candidates. When Olympus and SeleCT and 4D, Imbio went with some of the smaller community hospitals in the U.S., they obviously had a smaller number of CAT scans, but more patients per scan because they're community hospitals. They're not getting scan because of their repetitive cancer and so forth. So they found an equal percentage or a higher number, same percent ultimately, but they were able to get more cases done simply because of the nature of the patient population, right? Now the part that's been really great for us is that Imbio/4D runs off of the same CAT scans that I use for my robotic platforms. So I'm ordering a scan for that lung nodule to prove you have a cancer, and sure enough, and let's say, it's on the right-hand side, and I diagnose it and we stage you and you get treated for it typically with radiation. But the part that's really interesting is that I get the flag that says the other part of the lung has a really significant emphysematous slope. And so now while we're treating your cancer on the 1 side, we're doing your lung volume reduction on the other. And even though that wasn't on my mind, I'm thinking cancer. I am dealing with your nodule. The beauty of what 4D does in the background is flagged patients who are candidates for both. There's no reason I can't be working on your lung function while I'm busy dealing with your lung cancer, right, and staying with other diseases. We've had people -- we had a patient who was just newly diagnosed breast cancer, which she was pretty bad emphysema. They needed to do a large surgery. And the surgeons asked us, they saw the same Imbio report, and 4D report, they said, "Do your lung volume reduction first. Get her more primed and then we'll deal with the breast. The list goes on and on. And so that's where my interest with these guys and working with these guys kept going. And then obviously, when the discussion came about other ways to -- as VQ came out, right, what else can we do with our CAT scan. It's interesting. I've pushed my hospital to do this. They still haven't, but I've pushed up to essentially do a marketing campaign for our medical center versus others. I mean, the U.S. health system, it's all private hospitals, essentially, right? Even the public ones are still private in the sense of competing for patients. And so we're the only hospital in our area that if you get a CT scan, not only is it going to be read by the radiologists, which is clearly important, it's being read by 4D. So it is making sure what other things are on there. Because look, the radiologist will say, emphysema, small, mild, moderate, medium. They don't quantify. There's no -- there's nothing else. They'll say mild, moderate severe coronary artery calcification. They don't quantify. They might say it's early ILD. There's no quantification. There's nothing. And they don't -- because they don't have time and nor should they. Besides we've got this in the background. This is -- that's the beauty of it. So this has been a product that obviously advanced my valve program. That was my core interest in it. And helping to help people quit smoking. But the reality is it's touched on our lung resection model. It's touched on our ability to get more people for lung cancer resection. It's helped our coronary artery classification work for transplant, and it's helped our ILD group. So there's been a lot of other ways that this product has benefited the entire medical center that you've seen.

Got it. No, that's great. And I mean, maybe if we can just hone in on CT:VQ, obviously, FDA approval very recently and a lot of excitement about that product. You've sort of already touched on the limitations of incumbent testing there. But adding perfusion, how sort of talk through the game changer that, that will be for you guys?

Yes. So right now, what that means is, obviously, we have to order a scan, obviously, with inventory and expiratory views, but that's -- that's not a problem. That's easy to do. And that's it. I mean, that's literally -- I just have to add 1 click a different box on my CAT scan order, right? And then I get everything else I've been looking for. I mean, again, like I said, computers are supposed to make my life easier and they never have, and now they are. Because everything that they're doing under the hood. And to me, I think the ultimate compliment to 4D is how often I don't notice them, right? And so they're just there.

Yes. Makes perfect sense. Should be making life easier, not harder, as you sort of pointed out before. I mean I'm interested in terms of the actual output and report you're getting. Is that -- it certainly sounds like it's a less blurry Rorschach looking like image. But just in terms of the quality of the information and data you get...

You have the emphysema images and then you have the, obviously, the perfusion. So they're right there, right? They're side by side. They're essentially correlating directly. You can decide already from your select report, hey, my right upper lobe. The beauty of this is that frequently patients have 2 targets. And you want to go after the best possible target for the most effect, especially upfront. And so the tiebreaker is always perfusion. And so to really see it. And then where this has helped us already was on a patient who was borderline because she was advanced enough that she was holding on to carbon dioxide already. She had a significant amount of dead space. But when we saw that her target lobe was also profoundly under perfused, which means that if we shut that lobe down, we actually suspected we'd improve our carbon dioxide levels, and sure enough we did. And again, yes, before CT:VQ, this was me looking at the planar perfusion and trying to overlay it with the CT. I mean a lot of heavy cognitive burden on my end and a lot of time spent to determine if I could safely do this procedure, but now it's all just right there. So the only shift we've had to make is to just change the type of CAT scan we order. So CT:VQ won't apply to all the screenings that get done because all the regular scans are getting done throughout the hospital without inspiratory, expiratory because that's just not the typical for lung nodule evaluation, for example. But it's done that way then for everybody else. And of course, the beauty of it when we've talked about it with our surgeons, my surgeons never operate without a new CAT scan. So we just told them to order inspiratory, expiratory. So now they're going to get perfusion automatically. They're honestly probably more excited than I am, and I was already excited. To me, this was -- because I'm going to still do tons of valves. This was just value added, right? This didn't like open up a new patient population for me, but it's opening up a massive new patient population for them. Really, this is potential. We have to prove all this, obviously. But the data is there. And so we're working on that already.

Understood. And it sort of segued into my next question, which was broad strokes. There's 1 million of these nuclear respiratory tests done in the U.S. a year across planar aspect. You're expecting the size of that pie to increase if technology like CT:VQ is deployed, broadly.

There's just not a reason to do these perfusion scans. I mean the truth is in the U.S., at least nobody goes into nuclear med and if they do, it's for pet. That's it, right? This is -- the specced equipment, the VQ, the perfusion equipment is all old. God forbid, even it breaks. It's not the area. It doesn't have -- and honestly, it doesn't have that same value. And now that you can take something this easy. And I suppose the other value to this as well is the generation before mine knew how to read perfusion -- ventilation perfusion scans, right? That was how you diagnosed pulmonary embolism. It was -- so pulmonologists used to not to read them pretty well. But there -- it's such a dead technology. Whenever I show 1 even to 1 of my trainees, they don't know what is that? They literally don't even know what it is. But everybody knows how to read a CT. So then to get data that is essentially in CT form, if you will, albeit obviously with -- because of the color coding in regards to the degree of emphysema and things like that in perfusion, there's not a cognitive lift either because it's part and partial of what you're already doing, it's what you're used to looking at, right? Makes sense. And it corresponds anatomically, you're already tracking through the CT in the same way.

Yes, makes perfect sense. We've had a good question coming online that's sort of related to this just via e-mail. What's the most significant driver in terms of the adoption of CT:VQ both initially and eventually as an industry standard? So what do you sort of see as the key drivers there? Is it getting the hospitals on board? Is it changes to guidelines? How would you sort of view the longer-term rollout?

Yes. I think it's going to be a combination of hospitals on board, so they understand the value, but because of the financial implications of valves, this is not going to be hard. When I first put into my request, they said, well, this increase the number of valves you do? And I said, yes. And I said, how many do you need me to increase it by to pay for this? And they said, "You need to do 8 more cases". Then I said, that won't be a problem. That's because that's how profitable valves are. And so this is a no-brainer as far as rolling it up from the financial side to drive the hospital side. And it's to get them to understand that this leads to high profit procedures. Plus again, as the perfusion is going to add, I think, to the surgical side as well, anybody that can undergo a segmentectomy is extremely also for the medical center, profitable procedure. Not that radiation isn't, but this is superior from just the payer model. So that will probably be the biggest driver. And once the thoracic surgeons sign up, the beautiful thing about the hospitals the way they're saying, this thoracic surgeons almost always get what they want. It's the pulmonary guys that have to kind of fight for it typically. Luckily, I know how to speak C-suite. And so I speak to them in their language. But the surgeons more or less get what they want. So that's the other key, I think. As far as guidelines, I don't know, there's not really even per se guidelines as part of the management of valves, it's just the workup. So it's just essentially bringing it into the workup phase of things. And that won't be hard because upfront, the folks over at Olympus have been -- making a major push to grow this side of things. They've been doing pilot projects with SeleCT Screening in sites to try to kind of showcase it and that obviously allows opportunities for 4D to come in to offer the whole package. And basically, once we put our data out of showing how our collection of cases that we've obviously just been starting to implement with CT:VQ, I always say, we only just got approved, and we're going to -- we've been ordering inspiratory, expiratory CTs now for a little bit. I'm going to run and through all those old ones. Once the data comes out, it's going to, I think, easily shift once we publish it, how you work up valves. You're going to order the scan anyway. So just -- this is no big deal, right? This is -- it's like ordering it with infusion or not infusion, just inspiratory, exploratory, right? It's not a lift here.

Yes. So it sounds like from a hospital perspective the economics make perfect sense. It sounds like from a doctor perspective, like it's almost utopia in terms of your workflow and your workups and how it changes those. I mean maybe talk a little bit about patients. And then obviously, if they're getting better outcomes, it obviously makes sense for payers as well with less morbidity. So just maybe the payers and the patients perspective.

Well, on the patient side, obviously, valves -- when they work, obviously, people breath it significantly better. And you can see the value that it upfront. There's an area that I want to target, even though it's heavily destroyed for whatever reason, if it's highly perfused, then that means I'm probably going to worsen their gas exchange. And so then I can upfront, have a conversation saying, you will be less breathless, but you are likely going to need more oxygen. And if the patient says, well, that's a deal breaker for me. Then, that helps us all on the front end to screen out people we don't want to do or to say I can't -- obviously, nothing is perfect, so I can't promise you 1 way or the other on the gas exchange. So hey, you want to go for it, we'll go for it. But if we have to withdraw, we'll take them out of you, but at least we understood going upfront. So I can easily see that changing out from a patient perspective. Also from the patient perspective, just less testing being done. And again, in inspiratory and expiratory CT, ultimately isn't a difference in cost, but adding -- getting rid of a nuclear study is 1 less facility charge, 1 less professional fee of a physician reading it. So you save money on the front and for the patients. And then from the payer's perspective, the nice thing from my perspective is, is that, we'll bill for this, and there's a code and all that. But this is going to be 1 of those things that we're honestly not going to fight too hard to get paid for it if they decline it because the real money is ultimately being made into the valve. So that you're really fight over a couple of hundred bucks when there's $40,000 on the back end, I mean, it's like quibbling over the last $100 of your mortgage.

Yes. It sounds like the dollars makes sense, that's going to really grease the wheels in terms of adoption. I mean you made the point before that you speak C-Suite really well. I don't think that's an attribute for all doctors necessarily. So yes, I suppose, just sort of thinking through that, like this is obviously a step change in the way things are done for respiratory imaging. So I mean just thinking through the clinical inertia or the way getting people -- getting the doctors to adopt this, it all seems to stack up really well to someone that's sitting behind a spreadsheet and you, but how you sort of see that journey and getting this important technology adopted.

I think twofold. They've obviously -- at least on the U.S. side, they've got a really excellent sales force. There's a couple of people that are quite excellent, know the space really well. One of the -- I don't know what is official title is, but like this guy, Mr. Gallik, who works for them, has been in the pulmonary space in the device side for 20-plus years, knows everybody, and people know him. And so seeing them, obviously, the data as it comes out and seeing as we present what CT:VQ can do for your valve program, and I mean that's it, the money is there. The thing that's also interesting that we're going to do is -- so there's a new device that's being investigated called the Airway Scaffold, right? That's a device made by Apreo. They've had the BREATH 1 and 2 trial already published. One of the cases -- 1 of the centers was in Sydney at Macquarie, the rest were in Europe. But anyway, the Phase III trial is launching in the U.S., and they have to do quantitative CTs and all that. Now they work by a completely different mechanism, but -- and as part of the trial, we have to run all our scans through some third -- other third-party, not 4D. But all my scans get run through 4D anyway. And so we're going to right upfront already have a sort of background study of what can I determine that will make these things better when I know the perfusion upfront, right? What will happen with patient response? And we're going to try to dive a little deeper into this study as a sub study through just our partnership with 4D while we're busy doing this device.

Yes. And I mean, super interesting. You bring up the way that the actual treatments are changing in the Apreo trial. I mean, critically, they're still always going to need a CT and a work up, right? So 4D, it doesn't sort of change the way the intervention occurs. In terms of the diagnostics, 4D is always going to be there.

But I think once we start showing everything it's capable of and that's where the -- this is going to be podium presentations, right? The American Thoracic Society meeting in May, the American Association for Bronchology and Interventional Pulmonology is in August. For sure, there'll be lots of data presented there because obviously CT:VQ disseminates. And as those of us other early adopters are using it and presenting our data, it becomes sort of quickly. And meanwhile, plus with Olympus pushing the way they're pushing. It becomes immediately obvious of just sort of like, well, why aren't you doing this, right? I mean here's the data you're getting. And here's our outcomes. I will clearly show what we're demonstrating. This will not be hard to convince others. And again, because the economics of this are not a heavy lift. This is asking a C-suite to purchase a software or an agreement or a per click or whatever, I mean whatever they ultimately work out, who cares? We'll be able to demonstrate the increase in our valves and our outcomes, that's where the money is. That's what drives the whole program.

Very clear. I suppose I wanted to ask sort of a bigger picture question to you, just like in terms of the future of respiratory imaging, where you see things going 4Ds roll in that? Like, clearly, we're still using technologies that were developed decades ago. But there's some really great innovation in the space. So yes, a bigger picture question. Where do you see it all heading? And how do you see 4D playing a role in it?

Truth is, I think we're going to be on CT for quite some time. And the reason I say that is every time everyone starts talking about MRI and I look at MRI-based studies, the MRI is just really crappy for the lung. And every time people try to show us something new, it's always like, yes, it was 80% good, say, guys, this is not enough, plus never mind the hassle of getting MRI. So despite MRI being so great for soft tissue and it replace else in the body, the lung, it continues, in my opinion, to be a no-man's land. Maybe someday. But I don't envision that being any kind of a major focus for 4D anytime soon. I think it's going to be continued to expand all their capabilities across the CT scan. So it will be, to obviously further refine the ILD side of things, it will be to, obviously, keep refining CT:VQ, it will be to better quantify cardiac structures and so that we cannot just look for RV strain in pulmonary embolism, but to better quantify whether there's changes in the heart or infiltrate within the heart, especially in the world of amyloidosis of the heart, where there's now drugs for that. And then that's -- we're in partnerships with some of the manufacturers come in. The thing that I've been wanting to see is -- and it's been a discussion I had 1 with Imbio. When you look at the curve structures of airways as tumors are ever eroding through, they're pinching and obviously, the delta of what's happening in an airway is sort of the opposite of what's happening to -- like an aortic aneurysm. So the ability to kind of change and give me a heat map on where the worst parts of an aneurysm so that you can potentially anticipate where you would prophylactically put a stent in before an airway collapses down. So again, more palliative-based approaches and getting -- using multiple CTs to sort of give me dynamic images of over time of where things are going. The real thing that I want to do as soon as we put valves in because we have folks who occasionally do have indeed 2 targets. And so the CT:VQ helps us define the primary target. And they get the significant improvement, but they still -- if they're diseased enough, there is a role for doing the other side. And we and others have published on doing bilateral valves, obviously, sequentially but reworking them up after they've had valves and you've had redistribution of the vascular or the perfusion and the ventilation to really see them the delta of how the new scan versus the old 1 and then helping to predict whether this is actually a good candidate for bilateral valves or not, I think, is extremely compelling. And we need to prove it. But again, I think that's where I see 4D going because, look, CT is not going anywhere. It is everywhere, and it's easy to apply. It doesn't take a lot to run one, and the data is easy to digitally transfer.

Yes. I mean we sort of work off this 14,000-plus CT scanners like a very broad installed base already in the U.S. And if a patient can come in and have 1 chest CT, and then all of this technology works in the background off of that, it sort of feels like a step change in the way you work these patients up.

Well, that's always been our thought process was that to make it as a marketing say that if you come to the University of Chicago, you actually get the most for your scan, right?

Yes.

Well, look, I'll give you a microcosm. When I was in my training, when I was a registrar, we had a couple of CAT scanners, but it took an active guide to get 1 for your patient. And now my emergency room, just my emergency room has 2 of their own in the ER so they don't have to ever bother to take anyone to get one, right? There's everywhere in my building. You can get them instantly and they keep building more and they keep upgrading them, et cetera, et cetera. So that's the other thing, too. I think computing speed has gotten better on the scanner side, and hence, the AI side too and where 4D comes in, we just keep seeing this continued growth.

We've had a few questions coming online. A couple of them referring to sales momentum and whether we've seen any contract conversions. That's probably not 1 for you, doctor. We'll direct those to 4D at a later time. But I suppose...

I think that's probably the better right to go.

Yes. One was just around -- is there any pushback at all? Do you -- any of your colleagues, is there any resistance at all around new technologies like the 4D product suite?

No. And again, I think it was funny because the original potential perceived pushback would have come from radiology if it involve them, right, because they're busy. But it doesn't involve them. I mean, they obviously know it's there, but on another level, they don't know it's there, right? That would have been the only real perceived pushback. The only pushback that I've heard from colleagues around the country obviously, there's always a profound interest in nodules. And so I suppose when you ask like where else could 4D head and that would be in nodule detection. The trouble is that is a loud, crowded, noisy, dumb market of everyone coming up with their own predictive models for cancer and all of them being garbage. And so for me, I don't need help finding nodules. That's the easiest part of my job. And I already have lots of things that can help me to quantify the risk. I don't need someone to constantly reinvent the wheel and every software that does this never has a database of hundreds of thousands of scans to do it off of. And so it's a lot of garbage in, garbage out. So on the nodule side, I use not 1 that's AI to detect nodules. I use 1 that used as Natural Language Processing to read reports that say nodule, so then me, the clinician goes through them. And the beauty of that then is that I have a scan that's already been flagged for a nodule, and then, by the way, it's already been read by 4D and so I can see there is a nodule, but there's also emphysema lobe and et cetera.

Fantastic. I can see CEO of 4D, Andreas Fouras online. Andreas, I just wanted to see if you wanted me to pass to you for any additional questions. We've got a few minutes left with the...

Or correct everything I just said, Andreas.

No, certainly not, Kyle. Thank you. Thanks a lot. I mean the -- I found this just really great to listen into the conversation and hear the questions because especially that last part from Kyle is something that we hear from plenty of folks. And he's a global leader in this space of valves and surgery. And exactly for the reasons he articulates, that's going to be a leading driver for us. But we do hear -- I loved hearing him say, talk about pushback because that's what we hear across the whole space. We hear the similar things from people doing transplants, they're really keen to be able to get access and to see what's going on with their patients. People running post PE clinics are kind of having the same kind of -- the same kind of stories. And so I really -- it's really just great to hear that exactly from a leading doctor's mouth and to the ears of people who are interested in seeing what's going on.

Yes. And for what it's worth for everyone to do any of these things live, live, I'm going to be in Sydney between November 23 and the 27th for -- there's a master class for nodules going on in Macquarie through Taj Saghaie. So -- and he's a buddy of mine, so I'll be back in Sydney again, which is always ground.

Fantastic. Well, we look forward to welcoming you to our shows. And yes, we'd love to host you all here in town. But look, really appreciate it. I can't thank you enough for the time today. It's been a super insightful discussion, still at about 300 people online. So plenty of interest. It's obviously a really exciting time for 4DMedical. And obviously, for your field at large, Kyle, given the changes. Fantastic. Thanks, Andreas. Thank you, Dr. Hogarth.

Thanks doctor. Thanks, Tom.

My pleasure guys. Have a great day.

Thanks, everyone, for joining.