Spotlight-The Race to Better Sleep-June 2011

Spotlight-The Race to Better Sleep-June 2011

Meet three Minnesota med-tech firms pursuing the obstructive sleep market. What opportunity do they see?

Every night, 35 times an hour, Rik Krohn would stop breathing. The Burnsville resident’s obstructive sleep apnea would cause his tongue muscle to grow slack and fall back toward his throat, blocking his airway. After a period of time with no airflow—typically 10 to 60 seconds—his brain would stimulate his tongue muscle to tighten so he could resume breathing. 

To combat his condition, Krohn first tried sleep medicine’s state-of-the-art treatment, continuous positive airway pressure (CPAP). A CPAP machine consists of an air pump and hose connected to a mask, which fits over the nose and mouth. The mask is then strapped to the head so that a continuous stream of air pressure can keep the airway open. The contraption woke Krohn at least 10 to 15 times a night. “I absolutely hated it,” he recalls.

Krohn is one of an estimated 15 million Americans suffering from obstructive sleep apnea and still searching for an alternative to CPAP. Three Minnesota medical device companies are working to develop such a solution. Inspire Medical Systems, in Maple Grove, and Apnex Medical, in Roseville, are working on implantable devices patterned after the cardiac pacemaker, while Shoreview-based Dymedix Corporation is developing a nonimplantable device that borrows from hearing aid technology. 


A Growing Market

Sleep medicine is still a relatively new discipline. But several studies, including the National Institutes of Health’s 14-year Sleep Heart Health Study (which concluded in 2008), have demonstrated a direct correlation between untreated obstructive sleep apnea and comorbidities. People like Krohn with moderate to severe obstructive sleep apnea don’t simply suffer from a lack of restful deep sleep. The condition also can lead to increased risk for heart disease, stroke, and diabetes. (Not surprisingly, it also can make a person more prone to car accidents.) 

Atul Malhotra, associate professor of medicine at Harvard Medical School, associate physician at the Division of Sleep Medicine at Brigham and Women’s Hospital in Boston, and one of the physicians investigating the Apnex device, cites an aging, heavier population as one reason for the increasing prevalence in sleep apnea. Malhotra says that there’s currently no official measurement of the market. There was a 1993 University of Wisconsin School of Medicine study, published in the New England Journal of Medicine, that showed 4 percent of men and 2 percent of women in North America had symptomatic sleep apnea. 

“But that study focused only on people . . . who were feeling tired,” Malhotra says. “Now physicians are detecting [sleep apnea] through comorbidities.” He estimates that “5 to 10 percent of the adult population is affected [by the condition].  And it’s getting worse with the obesity epidemic.”


Night Messages

Though both Inspire and Apnex were founded in 2007, their implantable devices are based on patents that expired years ago. The companies’ products have some technological differences, but both fundamentally work the same way: by preventing the tongue from blocking the patient’s airway. 

The devices do this by stimulating the hypoglossal nerve, which controls the tongue. In each case, a pacemaker-like unit called a generator is implanted under the skin near the collarbone. The generator is connected to a sensor located just under the skin in the chest. While a person is sleeping, the system stimulates the hypoglossal nerve on every breath throughout the night. This causes the base of the tongue to regain muscle tone and allows air into the lungs, thus preventing an apnea episode. 

Inspire is the furthest along in the development process. Spun off from Medtronic in 2007, the company had the advantage of 10 years of device development under one of the world’s leading medical technology companies. “The model to develop an implantable device is a long and expensive proposition,” says Tim Herbert, Inspire’s CEO and president, who was also in charge of the project inside Medtronic. Medtronic still retains part ownership and manufactures the device, but private investors are now funding development. 


One of those investors is former surgeon Glen Nelson, chair of GDN Holdings, a health care investment, management, and business firm in Minnetonka. When the product was being developed inside Medtronic, Nelson was vice chair of the Medtronic board of that business unit. When he retired in 2002, the project was put on hold. 

“I had always felt the technology had so much promise,” Nelson says. “I was disappointed when I heard they were not going to continue to work on it.” Herbert approached him to assist in spinning the technology out of Medtronic, obtaining financing, and recruiting a board of directors. Nelson has served as chairman since Inspire’s inception. “I was convinced it was a good solution for people with obstructive sleep apnea and it needed to get to the market,” he says. 

Inspire Medical has U.S. Food and Drug Administration approval to conduct its pivotal trial and began implanting patients this year. Patient follow-up will last a year, and the FDA’s review could take another year. “We expect to have approval in late 2013,” Herbert says. “That’s about as short as you can make the process.” Inspire’s device has earned the European Union’s CE mark, which means the product complies with European health, safety, and environmental legislation. This allows Inspire to market its treatment in Europe.

Like Inspire, Apnex has a well-known med-tech investor behind it—in this case, Michael Berman, former president of the cardiology business unit of Boston Scientific and current chair of Apnex. The company sprouted from an incubator that Berman started with medical device industry veteran Bob Atkinson, who’s now Apnex’s executive director. “We had a few dozen ideas we were working on in a dozen or so fields,” Berman recalls. After talking with doctors and patients, the team was convinced to pursue an implantable sleep apnea device. 

Apnex recently completed enrollment for feasibility studies in Australia and the United States. “In 2011, we expect to initiate a pivotal trial and receive our CE mark,” says Apnex President and CEO Chas McKhann, a former worldwide vice president of marketing for Boston Scientific. FDA approval for Apnex’s device is expected to come in 2013 or 2014. To date, Apnex has raised $30 million to fund device development.  

Both Apnex and Inspire expect their devices and the implant procedures to cost approximately $30,000. Both also are betting that Medicare and private insurers will cover both the devices and the procedures about a year after the devices hit the market.

An External Device from Dymedix

Meanwhile, Dymedix is taking a different approach. It’s developing a nonimplantable device designed to detect the onset of a sleep apnea episode just before it occurs. Dymedix’s device uses airflow sensors, which are worn above the lip in a small peel-and-stick unit. The sensors are connected to another unit that can be clipped onto pajamas or worn as a fob around the neck. Small wires connect the fob to ear buds that fit into the ear canal. When the sensors detect a person has stopped breathing, they send an audio signal to the ear that stimulates the brain stem to restart breathing. 

“It does not wake the person up or change the sleep state,” Dymedix President Evan Johnston says. “By sending the right type of audio signal, we can cause the airway muscles that have relaxed and obstructed breathing to regain their muscle tone.”

Founded in 1998, Dymedix now has five diagnostic product families for the sleep apnea market. Its new device is its first to combine detection of sleep apnea with treatment.  

Dymedix’s sleep apnea treatment device has trials underway at the Mayo Clinic and Connecticut-based Gaylord Specialty Healthcare’s sleep medicine center. One concern the trials are addressing is whether the brain will learn to ignore the stimulation. The Dymedix device is being designed so that it randomizes the stimulus to prevent this. Assuming that the device clears the trials, Johnston says that it could be available in Europe at the end of 2012 and in the U.S. in early 2013. Johnston expects Medicare and private insurers to cover Dymedix’s sleep apnea treatment after it hits the market, estimating the patient’s cost at about $1,400.

Risk and Opportunity

There are at least three other companies in the U.S. and Canada that are working on obstructive sleep apnea treatment devices, but apparently none is as far along as the Minnesota firms. While there is a race between the companies developing implantables, both Inspire and Apnex say that the competition will be good for consumers, and that like the pacemaker market, there will be room for more than one product. 

According to Berman, if Apnex succeeds, investors could reap “a very good return” on their investment. He also acknowledges that the vast majority of medical device start-ups fail. Still, Berman adds, “obstructive sleep apnea is a problem begging for a solution.” 

If Rik Krohn’s experience is any indication, early results look promising, at least for implantables. Krohn was the first person in the U.S. to receive an implantable device—in this case, Inspire Medical’s. When he goes to bed, he uses a remote control to activate it. Nine to 10 hours later, the device automatically turns off; Krohn also can shut it off manually. 

“I’m able to get a good night’s sleep,” Krohn says.“I’m alert at work, and I haven’t fallen asleep in front of the TV for a year.”

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