Initiation: The Journey to global Disruption

4DX is a med-tech company specialising in advanced respiratory imaging algorithms, many of which already have FDA approval and reimbursements.

• CT:VQ is 4DX's latest (3rd gen) solution and currently the most important. CT:VQ disintermediates Nuclear VQ tests, which are time-consuming, expensive and invasive. With reimbursement for CT:VQ now approved, we think the last hurdle to broader commercial adoption is now removed (Fig ?).
• AMCs ramp: While it took PME almost 5 years to sign on their first 6 AMCs (academic medical centres) 4DX has achieved this in less than 6 months Fig 1. This will be a strong industry moat for 4DX and they have a first mover advantage.
• Primed for global disruption: CE Mark & UKCA certification in March & April respectively illustrate the global potential of CT:VQ. Though the economics aren't as attractive as US they are still material. We estimate successful penetration of the EU market to be worth A$2.2/share. We have currently ascribed no probability for this in our current valuation.

Recommendation: We initiate on 4DX with a valuation of A$5.0. If CT:VQ were to entirely displace Nuclear VQ, 4DX's upside is multiples of current (see long view & valuation sensitivity Fig ? for details). Execution of CT:VQ rollout remains a risk, but significantly de-risked with UK/EU/US regulatory approvals and AMC uptake. At current prices we see good risk adjusted value in 4DX.

Fig 1: 4DX vs. PME Academic Medical Centre (AMC) ramp

Source: Company data, Homodeus research