Thank you for standing by, and welcome to the 4DMedical Limited, David Shulkin Investor Forum. I would now like to hand the conference over to Mr. Andreas Fouras. Please go ahead. Thank you. Thank you everyone for your interest in being on the line today. It's my great pleasure and privilege to introduce to you today the Honorable David Shulkin, M.D. Dr. Shulkin was the ninth Secretary of the Department of Veterans Affairs, educated at Medical College of Pennsylvania, followed by Yale University and University of Pittsburgh. Dr. Shulkin has been Chief Medical Officer and CEO of large and esteemed healthcare systems in the United States. In 2015, Dr. Shulkin was nominated by President Obama to be Under Secretary of Health for the Department of Veterans Affairs, and then in a rare event, was then further nominated by the Trump administration now to be the Secretary of the VA in its entirety. The... As Under Secretary, and then later as Secretary, Dr. Shulkin was responsible for hundreds of medical centers and the healthcare of 10 million veterans. As you know, and as I articulated, is both a experienced healthcare leader in both the private and government systems. And so from there, sorry, from there, I'm, you know, as I said, very pleased and proud to be introducing Dr. Shulkin. And David, Dr. David and I, again, will be talking through some questions with Dr. Shulkin. Thank you, Andreas, and thank you everyone for joining, and welcome, Dr. Shulkin. It's a great pleasure to have you here in Australia. I hope you're enjoying your time so far, and thank you for making the time to speak with us. So I think we'll just start, if we may, by asking you if you could please just articulate your view on the current state of the U.S. healthcare and what the current administration's near-term policy objectives are in that area. Yeah. Well, first of all, thank you for having me, and it—this is my first trip to Australia, and what a amazing trip this has been. The people are wonderful, and really, I've heard so much about what's happening here, especially with 4D, but to come and to visit and to see it myself is very meaningful. The U.S. healthcare system is, in many ways, probably similar to what the Australian healthcare system's going through, in that people are coming out of the recovery period of COVID and looking forward to what that next period represents. In the United States, it's hard to really call our healthcare system a system. It really is a series of market verticals that have, in some cases, alignment of interest, in other cases, a lack of alignment, but perfectly situated to keep the system going, but not from having major changes. So I see a lot of stability going forward in the U.S. system, primarily for two reasons. One is the economic pressures in the U.S. are lifting, and with that, I look largely at employment. Since the U.S. healthcare system is largely either funded by an employer or the government, when employment is low, that means that companies are seeking competitively workers. They tend to not decrease healthcare benefits. In fact, they look to augment or increase healthcare benefits. And then secondly, when you look at the government system, we are in a presidential election with a very, very divided Congress. So that means that it is less likely that we are to see major health policy shifts, whether it's in reimbursement or major health policy changes. When you look at whether healthcare is a big issue in the presidential election, most presidential elections, healthcare is generally in the top three. In this year's election, healthcare is in the top three, but primarily around political issues like reproductive rights. And so the big issues on restructuring the healthcare system are not likely to be addressed in this presidential election. There's a lot of speculation that if Donald Trump were to win or Joe Biden were to win, what would happen? I think in the Biden administration, you will continue to see a stability of the policies that currently exist in the Trump administration, if that were to occur. President Trump has recommitted to repealing the Affordable Care Act, which is really a way to provide uninsured Americans with a government-sponsored insurance plan. But what that would be replaced with, my guess is it would look very similar or just be called something different to claim a political victory. So, I see a lot of stability going forward in the U.S. healthcare system. There are challenges in the system. Providers, that means hospitals and physicians, are under increasingly cost pressures, which means that they're looking to do their work more efficiently, primarily with improving labor productivity. I think that the pharmaceutical and device industry has really weathered some legislation recently that has only had very marginal impacts on a few companies, and so they're probably in as strong a position as they've been in a long time, without any real significant new threats coming to them. That's a really, that's a really great overview. Thank you. And then, I guess next, we'll turn to the Veterans Affairs, which is where you've had, you know, a large part of your career. So could you just, for those listening from Australia, could you just tell us about what is the Department of Veterans Affairs, its size, its structure? What exposure do clinicians have within that department, patient numbers, admission, and really, how does it differ from other public healthcare in the United States? Yeah. Yeah, this is, this is where, of course, the U.S. is different than the Australian healthcare system, since we don't have a national health system. The closest that we do have is the Department of Veterans Affairs. The Department of Veterans Affairs has, as its mission, to serve those that have served in the U.S. military. That's about 20 million American veterans. As Andreas said, about 10 million of them currently get their healthcare in the Department of Veterans Affairs. That means that the VA is the largest integrated healthcare system in the United States. It has facilities in almost every congressional district in the United States, which means that there are thousands of VA facilities across the country, and therefore, it is the largest employer of doctors, nurses, psychologists, social workers, physical therapists, of any healthcare system in the U.S. About 70% of physicians who train in the United States will train at some time in the Department of Veterans Affairs, so it gives very broad exposure to the U.S. healthcare professionals throughout the country. In terms of the size of the agency, it's the second-largest government agency. The Department of Defense is the first, then the Department of Veterans Affairs. It employs 405,000 people. It has a budget of $315 billion each year. So it is a very large system that has a very public stance because people care a lot about how our veterans are being treated, so therefore it gets a lot of attention among our politicians and in the U.S. press. Thank you. That's, I mean, that's quite remarkable. It, it's the largest integrated system and employer in healthcare in the U.S., probably makes it the largest in the world. So that's, that's very impressive. I mean, you've had, you've had an extensive career, in private health before you came to, to the public side. What, what was it that, you know, brought you to, to serve in government? What was, what was your reasoning there? Yeah. Well, the way I ended up in government, as many people who lead U.S. agencies find themselves in this situation, I was not seeking to enter government. I was running. I was the CEO of a very large healthcare system in northern New Jersey, and I was approached by the White House, and it happened to be during a time of crisis in the VA, when many of our, excuse me, many of our soldiers were returning from Iraq and Afghanistan and actually were overwhelming the capacity of the VA, so they had long wait times to get their care. And that really is not acceptable to the American public, that people who serve should not be waiting long times. So it ended up that the current secretary and undersecretary were asked to resign, and the White House was looking for new people to come in who could fix the system. And I was approached, and even though I had not sought this, you know, when the president asks for your help, I feel that there's an obligation to help, and so I was, you know, willing to leave my job and to go to Washington. And that's the way that our government works, is that what are called the political appointees, who run the agencies, are generally private citizens who leave their industry, go into government for a set period of time, and then return back to industry. That keeps the ideas and the practices very fresh and also close to where the private sector is, as opposed to having career-long government people run these agencies. Yeah, I mean, the overcapacity issues were quite well known, and by, you know, outsourcing some of the patients to third-party providers, I think you were able to address some of that in your time. Yes. Yes, that's right. Part of the solution to fixing the wait time crisis was using technology, using the people who worked in the VA more efficiently, but also creating a system where veterans could go into the private sector to get care if they were not getting their needs met in the VA system. Can we now talk about, you know, one of the main issues that we're here to discuss today is patients with respiratory conditions? Yes. As it relates to 4DMedical. So there are a lot of people within the VA who are veterans who have come back from theaters of conflict, where they've been exposed to toxic burn pits. Could you just tell us a little bit about what are toxic burn pits, and what is the PACT Act, which is something that has been brought forward in recent times to address this challenge for veterans? Yeah. Throughout the history of military conflicts that the United States has been involved in, there's often been some type of exposure or harm that has been discovered, that at the time we didn't know about, but that veterans continued to suffer with. And so in World War II, we saw the use of mustard gases, and in some cases, radioactivity, where veterans had significant health consequences. In Vietnam, the big toxic agent that became known about later was Agent Orange, that affected millions and millions of American veterans, particularly with its link to cancers. We saw in the Gulf Wars something called Gulf War Syndrome, where veterans came back with all sorts of symptoms that were unexplained, but clearly related to some type of environmental exposure. But in Iraq and Afghanistan in particular, which are conflict which lasted 20 years, it has become known as what is called the burn pit exposures. And that, that relates to the fact that it was common practice, and unfortunately, still exists in the U.S., military, where when troops are overseas near a base, they will commonly burn the refuse and the trash and the jet fuel and the, you know, old computers and things that they don't want to have around in a landfill. They will burn them, and that smoke that comes out of burning, whatever it is that they're burning, unfortunately, is located close to the base, so people end up breathing it in. And that has exposed millions of veterans to potentially adverse health consequences that have now been studied. And so in 2018, after years and years of fighting to get these veterans the type of care that they needed, the U.S. Congress and President Biden signed what is called the PACT Act. The PACT Act gives this type of benefit of both a financial benefit and a health benefit to 3.5 million veterans who previously were not eligible for this type of care, so that they can now enter the VA system and get the type of care that they need because of these exposures. And how well is it being implemented, and how quickly is it being implemented? And I believe there's a list of presumptive diagnoses... Yes. For patients that would allow them to then enter the system. Is there a way that patients are able to be screened for those diagnoses, and can you talk about the screening process that occurs? Yeah. Well, this is - in the veteran community, this PACT Act or this new coverage for toxic exposures is well-known and discussed in the veteran circles, so that people are being encouraged, who are eligible, to apply for this benefit. We are seeing hundreds of thousands of people each month coming to the VA to start the process. The VA is doing what it can in prioritizing the processing of this paperwork, and so we're seeing hundreds of thousands of new people enter the VA system each month. And the process is simply that the veteran needs to be able to identify as being in one of these locations where a burn pit may have been located. There are now, you know, lists of where these locations are, and then have to have some type of symptom or potential health consequence that they believe is related to that time that they served. Then they will enter the process where they are screened, and then people who need additional treatment are sent down certain healthcare paths. And so I guess this brings us to 4DMedical and their technology, which is the velocimetry and the XV LVAS scanning technology for respiratory function. Yes. Could you tell us, you know, what is the opportunity, as you see it, for 4DMedical to assist veterans in this whole process of? Yes. Screening and treating those who have been exposed to burn pits? You had mentioned earlier that the way that this new law is being implemented is that there is a list of presumptive conditions that give the veteran the right to enter the system and to get coverage. And many of these presumptive conditions are respiratory in nature. When you have a burn pit, and you're breathing in toxic fumes or particles, the lung is the most likely target of the toxic exposure. And so therefore, having the ability to evaluate and diagnose whether somebody has had respiratory injury is one of the key factors that VA needs to do and needs to do in an objective way. Currently, many of the conditions that VA studies do not have those types of objective measures. So a condition called constrictive bronchiolitis, which is the damage to the very small airways, is not picked up on CAT scans or X-rays or pulmonary function tests that typically are used to evaluate respiratory conditions. And so, in order to diagnose that, today, the VA would need to order an open lung biopsy, which is really a surgical procedure where you have to open the chest and remove a piece of the lung to look at it under the microscope. But what the 4DMedical technology allows is the ability to evaluate that accurately without an invasive surgery. And so, therefore, you can use that at a much broader level for scaling, you know, many more people. You can do it with less cost, and you can do it with less morbidity to the veteran. I think that there's a very important role here for the use of this technology, particularly in evaluating these respiratory syndromes that many of our veterans suffer from. So if we stick with constrictive bronchiolitis for now, how do you see the 4DMedical scanner actually, or sorry, the software that is derived from X-rays or CT scans, how do you see that being implemented within the existing VA workflows? Do you see it as something that's used up front as a triage tool or something that's used by pulmonologists, by nurse practitioners? What is your sort of your view on how this would actually work within the system? Yeah. The law itself, that was passed in 2018, requires that every one of these veterans be screened. The screening procedure today is primarily asking the veteran two questions: Did you serve in an area where there were burn pits? And if so, are you having any of the following symptoms? For those that answer yes, that they are having breathing symptoms, respiratory concerns, the question is, what's the best way next to screen these people? If they are to go ahead and to get today what would be most commonly an evaluation, which would include a low-dose CAT scan, the 4D technology can simply be overlaid over that to look for the types of conditions that aren't picked up today without the open lung biopsy. I think that there is a very, sort of seamless workflow. It does need for a VA clinician, a doctor or nurse practitioner, to be able to evaluate which patients would be appropriate for this. But I think once they have the types of tools that they should have available to them, they'll be in a very good position to make those determinations. How many patients do you think could be eligible for those sorts of screening assessments? Well, I think that the screening procedure, if you've had this type of toxic exposure, in my view, while these decisions need to be made at an individual patient level, but on a population level, we're talking about the majority of people who are presenting, because they're coming to VA saying, "I believe that I have been exposed to a burn pit or another toxic exposure." And in this case, since the respiratory system is the most likely system to be impacted, screening on a broad scale makes sense for the majority of those people. We're talking 3 million- plus? Yes. And so on the other side of the equation, what are the incentives for the VA in adopting this technology? Well, you know, is there any cost or financial improvements, efficiencies, as we talked about some of the capacity challenges before? Yeah, I'd like to get your thought. Well, the most important objective in the Department of Veterans Affairs is to fulfill its mission to serve those who have served our country. And so, therefore, it is not a system that is trying to generate a profit or to maximize its cost efficiencies. Of course, everybody who works in the VA, particularly the Secretary, understands that it is their obligation to use the taxpayer dollar efficiently. So I'm not saying that efficiency or cost savings is not important, but the primary objective, the reason why people work in the VA, the reason why the VA exists, and Congress funds it very liberally, is to make sure it's doing the right job for the veteran. Therefore, when you look at what the VA should be doing the best at, it is not necessarily, at least in my view, it doesn't need to be the best at something that the private sector is already doing well, because the veteran can go out to the private sector if they need services. What the VA has to absolutely be best in the country at are those things that primarily affect those who have served and been affected in their military service, what we call a service-connected illness. The number one condition at the top of that would primarily be toxic exposures, and followed or at least equal in importance is the behavioral healthcare consequences that are often associated with service and the increase of veteran suicide and other behavioral healthcare issues. You know, but this toxic exposures, if there's anybody in the United States who needs to have the best technology, the best way to diagnose and to assess patients, it would be the Department of Veterans Affairs. And ultimately, who is it within the department that would make the decision whether or not to use XV Technology? And does it require, you know, levels of gold standard clinical evidence, or could it be something that is piloted, for example? Or what are your thoughts on how it could actually be brought into the system? Well, you know, we've talked about the responsibility for this being resting with the two positions that the United States Senate confirms, and is appointed directly by the President, and that's the Secretary and the Under Secretary. The Secretary, who has primary responsibility for the entire agency, and the Under Secretary, who has responsibility for the healthcare system and is a physician. Those two positions generally hold the responsibility for making sure that the right type of care is being delivered. But the VA system itself, the healthcare system, is a very large system with lots of expertise. This issue about does there need to be evidence-based gold standard, you know, clinical trial-proven, you know, evidence before using something? The reason why the law was put in place was to actually make sure that that high bar and standard was not preventing veterans from getting the care that they need now. So when something is named a presumptive diagnosis, that means if the veteran has that diagnosis and is associated with being in a location that had a burn pit, they should get the care right now and not have to wait until extensive evidence is produced. Now, the VA wants to see that the FDA has looked at technology for safety primarily. And fortunately, 4DMedical has already gone through that process and has the FDA approvals. So, there should be no reason why the VA is not implementing the very best care available right now. So really, it's a case of it, you know, it's been demonstrated to not pose a risk of potential, potentially severe harm. That's the primary threshold for the FDA. There is a significant upside in terms... Yes ... of the diagnostic potential. Correct. Yeah. And then I guess, the VA, they report to Congress, or they- No. Congress is in control? No, the VA is an executive agency. It means it reports to the President. That's why a secretary has sat in the President's Cabinet. Uh. So both President, the President is the primary direct report. The Secretary reports directly to the President. Congress has what's called the oversight role. They pass laws, and it's their job to oversee that the executive agencies, like the Department of Veterans Affairs, are fulfilling the legal obligations that they have under the law. And Congress, I understand, have used language that is supportive towards the implementation of enhanced screening for veterans. And that is something that you think would benefit 4DMedical, the language that Congress is using? It's already part of the law that there is an obligation to do these screening procedures, to continue to evaluate them. I do think that Congress is keenly observing and watching how the VA implements this, and that is their role in oversight. I think the VA has prioritized this as an issue. This is the largest expansion of benefits that we've seen since World War II. So the VA is seeing a huge influx of people with this type of need and request, and this is their mission to do this. I think that they are more than willing to look at and to use whatever technologies are going to help them fulfill that job. Terrific. I think we've run out of our time, so I'll, I might just hand back to Andreas quickly. But thank you very much... Sure ... for your insights. It's been delightful to meet you, and appreciate your time. Thank you. Yeah. Thank you, everyone. Thank you very much, David and Dr. Shulkin. You know, 4DMedical has a keen mission to improve the healthcare of veterans and to provide our technology to everyone who needs it. It's very exciting. We're in an incredibly exciting position right now, and of course, we're, you know, very pleased to be able to have input and advice from Dr. Shulkin, in order to help us achieve that mission. So, thank you very much. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.