4D Medical, a company that designs software for assessing regional airflow and other functional lung characteristics, is expanding its CT analytics capabilities with the acquisition of AI algorithm developer Imbio, a portfolio company of Invenshure, for up to $45 million.

Both companies have signed a binding agreement, which includes a $25 million upfront payment and contingent payments of $10 million in 2024 and two more of $5 million each in 2025. All payments are conditional upon milestone achievements.

Once it secures shareholder approval, 4DMedical plans to settle contingent earnout, paying with new shares of its company stock. The upfront payment will be funded with $35 million raised by issuing and selling approximately 44.3 million new, fully-paid ordinary shares through a placement. Investors who participate in this placement will receive the shares in exchange for their investment, providing the company with the necessary funds to complete the acquisition without taking on more debt.

Imbio’s solutions derive quantitative data on chronic lung and cardiothoracic diseases in medical imaging to personalize care for patients. Its automated system develops visual lung maps from chest CT studies with detailed reports on abnormalities, and can be applied for lung cancer screening, smoking cessation, surgical planning, and pulmonary embolism management as well as in clinical trials and academic research.

4DMedical’s patented XV Technology powers its FDA-cleared XV Lung Ventilation Analysis Software, the first modality that dynamically quantifies ventilation throughout the lungs, and its CT-enabled counterpart software, CT LVAS, both of which collect insights about regional airflow and other lung functions.

Combining their technologies will enable physicians to perform more functional, structural, and risk-based analyses to collect broader cardiothoracic insights from standard chest CT that can be applied to treating lung and heart diseases.

"Imbio is very excited to join forces with 4DMedical to create the leading lung imaging AI suite in the market, combining 4DMedical's functional analysis with Imbio's anatomical and tissue analysis,” said Imbio CEO Dave Hannes in a statement.

Imbio's expected 2023 revenue is $3 million, and it anticipates $6.3 million in revenue in 2024, driven by contracted revenue and a significantly expanded pipeline. It also is on track to be cashflow positive in its first full year of integration with 4D Medical.

Imbio algorithms include Lung Texture Analysis, for quantifying lung texture to identify interstitial lung disease and other fibrotic conditions; RV/LV, for identifying increased RV/LV diameter ratio, a sign of short-term mortality and adverse clinical events in patients with various pulmonary vascular diseases; and Airway Analysis, for accurate, repeatable airway measurements.

Additionally, it offers lung density analysis algorithms for detecting signs of emphysema, COPD, consolidation, ground glass, COVID-19, and pneumonia. Certain applications like Lung Density Analysis Inspiration include Imbio Noise Reduction Technology (NRT) to aid quantification and visualization of low-dose scans in cases of emphysema and COPD. The company also has an algorithm for checking calcium build-up in the heart’s arteries.

Invenshure, a venture studio, has spent years building up the company’s portfolio, which includes its XV Scanner. Imbio’s Software as a Service delivery model enables providers to generate XV LVAS and CT LVAS reports from this scanner or existing hospital equipment.

According to Danny Cunagin, chairman of Imbio and co-CEO of Invenshure, the combined platform will “maximize patient impact and shareholder value.”

The companies did not disclose a completion date for the acquisition.