Respiri (ASX:RSH) has just achieved a huge corporate milestone: its wheeze-detecting device has been approved for sale in the United States, an asthma market that dwarfs any other in the world.

Respiri’s wheezo was granted 510(k) clearance from the US Food and Drug Administration, permitting the company to market and sell the wheeze detector and associated smartphone app as an Over the Counter (OTC) class II medical device allowing it to be sold with or without prescription, opening up the very lucrative physician prescription reimbursement market and also pharmacy/retail/online non-prescription markets as channel opportunities.

Talking to analysts on a Zoom call on Tuesday morning, Respiri chief executive and managing director Marjan Mikel described it as a “momentous occasion for the organisation” that would transform Respiri moving forward.

The FDA approval gives Respiri the opportunity to provide improved asthma care to about 25 million Americans, about half of whom have persistent and severe asthma, including 3.3 million children.

“The opportunity is huge,” Mikel says.

Unlike in Australia, where asthmatics must pay for the $99.50 device and a $9.95 monthly software fee out-of-pocket, in the US health insurance should cover the cost of the device.

“Preliminary target market investigation  suggests that Respiri could charge a monthly product-as-a-service (PaaS) fee of $US30 and $US40 to physicians.” Mikel says.

That’s five times the annual revenue of an Australian patient, he says.

“So that makes the total addressable market now, on children alone, somewhere between $US1.2 billion and $US1.6 billion, and the broader opportunity, including patients that are adults, somewhere between $US5 billion to $US6 billion.

“This is a marketplace that dwarfs any other market in the world.”

 

USA launch set for 2022

Respiri is in negotiation with disease management providers and looking at direct sales via Amazon and retail sales at the 88,000 pharmacies in the country.

Respiri’s partner for the Australian market, Indian pharma giant Cipla, has first right of refusal for pharmacy sales in other markets.

Respiri is looking to launch in the United States in the third quarter of 2022.

The FDA’s approval is “indication agnostic,” meaning the device could in future be marketed and sold to detect wheeze from other respiratory diseases. But for now, the company is focused on asthma, particularly in children.

There’s no other device on the market that does what wheezo does: monitor breathing and changes in wheeze rate.

It’s a small device that’s held to a patient’s chest and connects to a smartphone via Bluetooth. Wheezo’s machine learning algorithms have been clinically proven at least as accurate in detecting wheeze as a physician with a stethoscope.

Respiri says once it is approved for health insurance reimbursements, that could incentivise doctors to adopt the device. Physicians prescribing the wheezo could receive $US1,350 per patient each year for remote patient monitoring, with Respiri billing the physician $US360 to $US480 in product-as-a-service fees.

Beyond the American market being a lucrative opportunity, Mikel believes Respiri will have a material impact on how well 25 million US patients manage their asthma.

On the Zoom call, an analyst asked Mikel where he sees Respiri in a year or two.

“I see the company is a company that has a business model that works, building on the world class team we currently have,” he replied.

“Expanding our footprint internationally, and building the necessary bespoke models with partners, particularly in the US and Europe, to take advantage of the huge market opportunity those two markets provide the company.

“So, my vision for the organisation is to continue what we’ve been doing to be quite honest:  make a commitment on what we’re going to do and then deliver on that commitment.

“And then continuing to do that is a formula for success.”

 

This article was developed in collaboration with Respiri, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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