Sleep apnea market attracts new BioElectRx competitors
by JoJo Platt, contributing editor
February 2022 issue, BioElectRx Business Report
The market for treating obstructive sleep apnea represents one of the most lucrative opportunities for vendors of bioelectronic medicine. The early market leader, Inspire Medical, has experienced rapid growth after a very successful IPO. But two other public firms with regulatory approval in Europe are planning to take market share from them once they obtain FDA approval, and a host of startups are getting ready to offer new therapies to clinicians and patients.
Approximately 25% of adults are at risk for sleep apnea. An estimated 25 million Americans have OSA and 8 to 9% of the moderate and severe cases go undiagnosed. Undiagnosed OSA is often linked to heart disease and metabolic issues like diabetes. According to Rand Health Quarterly, annual economic loss in the U.S. due to insufficient sleep is $411 billion.
While a general practitioner can address common concerns about SA, most people are referred to a sleep disorder center for evaluation and treatment. Traditionally, polysomnography evaluations are conducted at a sleep center and evaluate breathing effort and airflow, blood oxygen levels, heart rate and rhythm, duration of sleep phases, body position, and arm and leg movements. The average cost of an in-center sleep study is between $500 and $3,000. Significant data is generated by a sleep study, the most important of which is the patient’s apnea-hypopnea index (AHI). Apnea is classified as cessation of breathing for 10 seconds or longer while hypopnea is a constricted breath—as defined by more than ¼, but less than ¾ breath—that lasts 10 seconds or longer. Mild OSA is scored as an AHI between 5-15, moderate is 15-30, and severe is an AHI of 30 or higher.
The standard treatment for severe OSA is the external CPAP (continuous positive airway pressure) machine. There are few pharmaceutical therapies available, though physicians may prescribe Modafinil in patients who experience residual daytime sleepiness even with proper CPAP use. Protriptyline may also be used in certain circumstances in accordance with American Academy of Sleep Medicine guidelines.
Patient complaints and compliance are a problem with CPAP devices. While they do show positive results, the discomfort, inconvenience, noise, and other contributors lead to high rates of abandonment. In a review of 82 papers published between 1994 and 2015, researchers demonstrated a 34.1% rate of non-compliance as defined by 7-h/night sleep time and at least five nights per week.
Additionally, compliance is a key factor in insurance coverage. Using Medicare guidelines as the standard, compliance is defined as using the machine four hours a day for 70% of the nights. Medicare also requires that patients have a follow up appointment with the prescribing doctor between days 31 and 90 of the initial “trial period.” Because CPAP data is recorded by the device, payers can confirm compliance as measured by the number of hours the device is used, time spent sleeping, AHI, and leak rate. An average CPAP machine retail cost is between $850 and $1,400.
Inspire Medical Systems, the Minneapolis, MN manufacturer of hypoglossal nerve stimulation systems, was the first to offer a neuromodulation treatment alternative for this population in the U.S. However, more than half of those prescribed are non-compliant. The implantable neurostimulation device offered by Inspire Medical is working to fill the unmet need of these non-compliant users.
The Inspire II delivers electrical stimulation to the hypoglossal nerve and incorporates a stimulation lead along with an implantable pulse generator and a pulmonary pressure sensor. The hypoglossal nerve is the 12th cranial nerve, located along the side of the neck, and leads to the tongue. The patented closed-loop system senses the change in the user’s respiratory effort during sleep and activates the stimulation to maintain an open airway that is synchronized with respiration. The implantation is a two-hour outpatient surgery. The system is controlled through a wireless remote; the user can turn the device on and off when needed and the treating physician can control the stimulation parameters to meet the individual physiological needs of each patient.
With an average price tag of $21,000, Inspire has been able to gain more than 80 insurance reimbursements using existing CPT codes, although there is still no national coverage policy decision. In addition, Inspire is a preferred vendor in the VA medical system as well as military hospitals at San Antonio and Walter Reed. The next geographic expansion is into the Japanese market.
The next generation of Inspire Medical technology improvements featured a new patient remote and was approved by the FDA in 2017. Under development is the Inspire IV neurostimulator poised to reduce the device size and gain MRI-compatibility. Growth is not just on the technology improvement end but also from indication expansion. The company recently initiated a multi-center clinical trial for the treatment of pediatric patients with Down Syndrome.
Inspire Medical reported revenue of $233 million in 2021, roughly double their 2020 sales. The company opened 16 new U.S. sales territories in the fourth quarter of 2021. Inspire also announced that new CPT codes are in place for 2022. The average Medicare payment for hospitals is $30,063.
Nyxoah SA, the Mont-Saint-Guibert, Belgium manufacturer of hypoglossal nerve stimulation systems, is quickly emerging as the number two player behind Inspire Medical. Nyxoah’s vision is to create a complete platform of user-centered technologies and digital solutions to diagnose and treat sleep disordered breathing conditions. This applies not only to the OSA patient, but across the treatment paradigm, engaging in all areas related to OSA: from the patients suffering from the condition and their families to the physicians, sleep technicians and surgeons who treat them, as well as patient groups.
The company’s Genio neurostimulator benefits from a simple implantation process, requiring only a single incision under the chin. The stimulator’s electrodes are placed bilaterally, in contact with both branches of the hypoglossal nerve. The leadless and battery free neurostimulator then triggers the tongue muscles to maintain an open upper airway during sleep. Other components of the system include an external activation chip connected to a disposable patch, which is replaced every night.
Early investors in Nyxoah included the Australian firm Cochlear Ltd., which invested €13 million in 2018. ResMed later participated in a €25 million round. The company raised $20 million in a 2016 investment round led by Glide Healthcare.
Nyxoah received CE Mark for Genio in Europe in 2019 and the company is currently pursuing FDA approval. In 2020, the FDA approved its IDE application to allow Nyxoah to commence its pivotal DREAM study. Also in 2020, Nyxoah launched a successful IPO on the Euronext Brussels exchange, raising about $100 million.
In 2021, Nyxoah signed an exclusive license agreement with Vanderbilt University that allows the company to further develop new neurostimulation technologies for treating sleep disordered breathing conditions that were invented by David Kent. New treatments will focus, among others, on stimulating the ansa cervicalis, the efferent fiber of the glossopharyngeal nerve or nerves that innervate the palatoglossus and/or the palatopharyngeus muscle.
Nyxoah founder Robert Taub serves as chairman of the board. He has held management and sales and marketing positions with Monsanto, Baxter Travenol Laboratories, and the Revlon Health Care Group. Prior to Nyxoah he co-founded and co-managed Octapharma for 12 years. He also founded and managed Omrix Biopharmaceuticals throughout an IPO. The company was acquired by Johnson & Johnson in 2008.
Olivier Taelman joined Nyxoah in July 2019 as COO and was appointed CEO in November 2019. Olivier spent seven years in commercial healthcare at Eli Lilly and Sanofi Aventis leading specific business units. He spent 15 years in the neuromodulation industry at Medtronic, managing EMEA at Stryker NeuroVascular, and Nevro where he was responsible for building the European business during their IPO.
In 2020, the German federal joint committee confirmed that the Genio system is entitled to join the existing NUB for HGN stimulation systems at a similar reimbursement level as other neurostimulation-based OSA therapies. As a result, the company generated its first commercial revenue, €69,000 in 2020. In 2021, the reimbursement moved away from NUB into a DRG system which should allow the company to fully ramp up its German commercialization strategy.
Ten implanting centers were activated in Germany last year; 15 more are planned for 2022.
LivaNova plc, the London, U.K. manufacturer of neuromodulation systems, currently operates as two businesses: cardiovascular, left over from the Sorin days, and neuromodulation, the Houston, TX-based operations that began life as Cyberonics. While the company’s VNS epilepsy franchise remains the driving force in neuromodulation, LivaNova company seeks to be a major competitor in the hypoglossal nerve stimulation market. LivaNova acquired ImThera Medical in 2018. The company’s aura6000 device is approved in Europe and awaiting FDA approval.
In 2021 the FDA approved LivaNova’s investigational device exemption clinical study, “Treating Obstructive Sleep Apnea using Targeted Hypoglossal Neurostimulation (OSPREY).” The OSPREY study will seek to demonstrate the safety and effectiveness of the aura6000 system, the implantable hypoglossal neurostimulator intended to treat adult patients with moderate to severe OSA.
The aura6000 system generates stimulation through a programmable, rechargeable, and implantable pulse generator. The IPG is implanted in a subcutaneous pocket near the clavicle of the patient via an outpatient surgery. Mild stimulation pulses from the IPG are delivered via a lead to the hypoglossal nerve to stimulate the tongue during sleep and help keep the patient’s airway open.
Potential New Entrants
At the 2020 DARPA Translational Neurotech Conference, two potential new entrants in the sleep apnea space emerged. Sonosa Medical, a spin-out from the Maryland Development Center, was presented by Stephen Restaino. They have developed a wearable ultrasound platform as a home-use diagnostic tool to replace the in-clinic sleep assessment test and as a home-use therapy to stimulate the hypoglossal nerve.
Robert Rennaker of the University of Texas, Dallas introduced his commercial venture, X-nerve. The ReVive system is an implantable miniaturized IPG and cuff electrode that is externally powered through an RF transmitter. The team plans to begin a phase I clinical trial in 2022 and currently has three FDA issued IDEs as a VNS system.