The 4DMedical Ltd (ASX: 4DX) share price shot up 4.6% in opening today before falling into the red early this afternoon. This, after the medical technology company announced it had received a government grant and would begin a capital raising program.
The 4DMedical share price opened at $1.81, up 8 cents on yesterday’s close but has since retreated to $1.73, putting it flat at the time of writing.
Shares in the company were placed in voluntary suspension for 2 days earlier this week, in anticipation of the news.
Why is the 4D Medical share price moving today?
In today’s release, the company announced a consortium led by 4DMedical, the Australian Lung Health Initiative (ALHI), has been awarded a $28.9 million federal government grant. The company said the cash will be used to develop “the world’s first” lung function scanners to provide “safe, easy and rapid lung analysis” for both adults and children.
The grant is a part of the Federal Government’s Medical Research Future Fund (MRFF) – a $20 billion program aiming to “transform health and medical research”. The government will allocate the funding over a 5-year period.
4DMedical has exclusive commercial rights for the XVD Scanners – including intellectual property rights. The medical technology company will receive 100% of the revenue from scanner sales.
In conjunction with the grant, 4DMedical will also complete a $40 million capital raising project. It will list 25.8 million new shares on the ASX at a price of $1.55 each. Existing shareholders will be able to apply for these shares, too. The cap for new shares for existing shareholders is a $30,000 value.
The company expects trading of new shares to begin 15 March. The issuance will occur on 7 April.
Words from the CEO
Commenting on the MRFF funding, 4DMedical founder and CEO, Andreas Fouras, said:
We’re thrilled with the huge vote of confidence afforded by the competitive assessment process, as we aim to deliver safe and accurate lung health technology to those who need it. I thank our partners on this project for their outstanding support as we look forward to bringing this Australian innovation to fruition.
[The capital raising initiative] will provide us with the funds needed to execute the long-term commercialisation strategy for XVD Scanners, which will open up an additional revenue stream for the business…
…[It] also provides us with balance sheet flexibility for future growth opportunities that can accelerate the commercialisation of the XV LVAS product…
The company estimates the lung diagnostics market at $40 billion a year.
4DMedical share price snapshot
This time last year, the 4DMedical share price was swapping hands at $1.59. At today’s price that calculates at 8.49% growth. However, the 4DMedical share price has been trending downwards for the year-to-date. The share price in the new year was $2.44 – representing a 29.3% fall.
4DMedical’s market capitalisation is $307 million.
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More reading
- 4D Medical (ASX:4DX) share price rises on maiden half-year results
Motley Fool contributor Marc Sidarous has no position in any of the shares 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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