KarmelSonix (ASX: KSX) has signed a pivotal distribution agreement with OMRON Healthcare, part of OMRON Corporation (TOKYO: 6645; ADR: OMRNY) of Japan.
OMRON, a world leading manufacturer of and distributor of health care products will distribute KarmelSonix’s Clinical and Personal WheezoMeters™ in multiple international territories.
OMRON, an $8 billion company is the world’s largest manufacturer of home blood pressure monitors and blood glucose meters. The new agreement will provide significant distribution and sales capacity of KarmelSonix’s WheezoMeter™.
Omron Healthcare said in a statement: “The WheezoMeter™ will allow Omron to complement our current range of respiratory devices to further strengthen our position as a world leader in the respiratory device sector. ‘’
KarmelSonix managing director, Asia Pacific Paul Eisen said, “Having Omron Healthcare as our partner in these major geographic markets will now provide unlimited access to this unique asthma management technology for physicians, patients and parents of asthmatic children.
"With asthma prevalence rates around 10% globally, we have the opportunity to provide an asthma management tool useful to hundreds of millions of patients worldwide."
"It will soon be possible for physicians to recommend the use of the WheezoMeter™ for use in both the physician’s clinic and in the patient’s home.”
Further background
Karmelsonix has a suite of products for asthma management, from hospital to home devices that allow patients to monitor their conditions at home and send in data for expert analysis if required.
Karmelsonix’s asthma management WheezoMeterTM device is gathering sales momentum on global markets. The product addresses a respiratory market void in the tools for supervised, yet self-led management of asthma and related diseases.
The PulmoTrack device will be used for continuous monitoring of wheeze and cough in the hospital environment. The Wholter will be used in the home environment.
Karmelsonix’s products can be used at a significantly cheaper price than visiting a specialist for a professional spirometry (procedure for respiratory analysis).
Market opportunity
In excess of 500 million people worldwide are estimated to have some form of respiratory condition (with 100 million living in the developed world) and the prevalence rate is continuing to rise.
According to an American Lung Association 2009 report, asthma ranks as one of the country's top 10 prevalent conditions that limit activity and it costs billions to treat.
Asthma and associated pulmonary diseases are linked with significant morbidity, much of which is preventable and/or treatable.
The technology platform known as PulmoTrack™, which is a clinic based device that allows ongoing and continuous monitoring of a variety of respiratory illnesses and allows for the collection of data from personal monitoring devices including WHolter™ and WheezoMeter™.
The importance of this agreement with OMRON is not underestimated as it represents the first major landmark agreement negotiated by KarmelSonix with a global major medical device distributor.
The prevalence of asthma is estimated to be growing in many Asian markets and its severity is often underestimated by both physicians and patients.
Often physicians have not been able to determine whether a patient coughed or wheezed at night.
Royal Melbourne Hospital Sleep Laboratory is the first in Australia to do Acoustic Wheeze Monitoring has discovered that one in seven patients monitored for sleep disturbance, actually has undiagnosed nocturnal asthma.
Global sales have been growing since first commencement in late 2009 and distribution channels are still expanding. Although still in their early growth stages, sales have been showing positive signs.
Sales have been trending upwards with ~$250,000 in revenue generated over the last two quarters. The agreement with OMRON should ensure this momentum continues.
Until now, physicians have not been able to determine whether a patient coughed or wheezed at night, in many cases the patient also did not know.
In 2009, the U.S. Food and Drug Administration gave KarmelSonixthe nod to start marketing its WheezoMeter™, the handheld version of the company's PulmoTrack®, a computerized acoustic respiratory monitor used in health care settings to quantify wheeze and respiratory rates, including during sleep.
KarmelSonix offers a product that nothing else can do for asthma patients what the WheezoMeter™ can: measure one's "WheezeRATE™" a term defined by the company as the proportion of wheezing during a 30-second respiratory cycle.
The technology is used by clinicians in Australia, Europe and Southeast Asia.
Physicians who have treated asthmatics have said other devices on the market might detect lung sounds but nothing has been totally focused on the asthma patient.
KarmelSonix’s device operates using advanced signal processing algorithms that defend against false detection of ambient noise so it can deliver objective readings of wheeze presence and extent.
This is a disease management tool that clinicians have indicated provides them with a new way of assessing the patient in ways that were not possible before. The wheeze rate could not be quantified before. It was virtually impossible.
Standard lung functioning tests for asthmatics, such as spirometry, Require patient effort. The WheezoMeter™, which also has an Auxiliary Infant Sensor, requires no patient effort.
Without a treatment to cure asthma, companies in the respiratory disease arena typically experience consistent demand for their products. All current drugs treat the symptoms but not the underlying cause.
The market is currently dominated by Glaxo Smith Klein with its $5.5 billion blockbuster, Advair/Seretide (an inhaler) which acts to control asthma but not improve or heal the condition of the patient.
No drugs have been able to demonstrate any significant healing effects.
Karmelsonix aims to meet an unmet need for accurate, low cost, easy-to-use devices to identify and quantify the presence of wheeze. Wheeze is an indication of the severity of the patient’s asthma. The only other valid alternative for the analysis and detailed diagnosis of respiratory conditions is through the use of a spirometer. With a basic model clinical spirometer typically costing in excess of A$1,500, accessibility for the great majority of sufferers is limited.
Having a solution that enables the monitoring of respiratory tract disorders that can analyse and detect asthma attacks even with minimal or no cooperation from the patient is a pressing need.
Karmelsonix products are considered the best alternative management tool for patients who cannot perform spirometry.
The Clinical WheezoMeterTM sells for A$1,500 whilst the Personal WheezoMeterTM for approximately A$450. The devices can be used time and time again, conveniently whereas a spirometry requires specialist attention at a clinic or other lab.
For those requiring constant monitoring of their condition, the costs of spirometry tests can mount up. An average spirometry test with a specialist will usually cost upwards of A$75, while a base model spirometer is priced starting at A$1,500, and these machines lack the convenience and practicality of a WheezoMeterTM or WHolterTM.
The price of not monitoring ones condition can potentially be even more costly with an Emergency Room visit leaving a patient ~A$1,500 out of pocket for just one admission, and a asthma hospitalisation in excess of A$7,000.
In 2009 KarmelSonix won the Frost & Sullivan, New Product Innovation Award, in the area of asthma monitoring based on its evolutionary technology platform known as PulmoTrack™, which is a clinic based device that allows ongoing and continuous monitoring of a variety of respiratory illnesses and allows for the collection of data from personal monitoring devices including WHolter™ and WheezoMeter™.
The technology uses patented software and advanced algorithms to detect wheezing based on certain strict criteria, which are defined by computerized respiratory sound analysis guidelines.
The technology functions without requiring any cooperation or effort from the patient. This is especially important when dealing with children, the disabled and the elderly, who cannot be assessed using traditional spirometry, which requires the patient to blow as strongly as possible into a sensor.
Analysis
KarmelSonix has undergone a transformation over the past 12 months with new management, and new approach. A number of the KarmelSonix management team are ex-RedMed (ASX: RMD) executives which has grown to become a $4.5 billion market valued company and a leader in its field of diagnosing sleep disordered breathing.
Clearly, the OMRON agreement is a significant one for KarmelSonix and the distribution agreement with one of the largest healthcare groups – is a significant and pivotal milestone. OMRON would have determined the future growth prospects of KarmelSonix's medical device to assist asthma sufferers or those suffering from other respiratory illnesses and determined it offered the best way forward for sufferers.
KarmelSonix has early stage parallels with RedMed (ASX:RMD), which also had to define a market and develop a product for a condition that had been poorly diagnosed with limited treatment and home treatment options.
KarmelSonix is also forging its products in a market where there is a legacy product for physicians to use that meant patients had to visit for diagnosis of asthma, cough and chronic obstructive pulmonary disease (COPD).
In short, KarmelSonix has turned that paradigm on its head - offering a “from hospital to home devices” that allow patients to monitor their asthma, cough and chronic obstructive pulmonary disease conditions at home.
The Company’s proprietary technology responds to an unmet need for accurate, low cost, easy-to-use devices to identify and quantify the presence of wheezes and cough.
At a market capitalization of just $10.3 million for KarmelSonix , this is very light for a company on the cusp of potential domination of a healthcare diagnostic segment that has similarities to the ascent of ResMed in its particular market.
The OMRON agreement is likely the start of the renaissance of KarmelSonix. However, behind the re-vitalised company with a new senior management underscores the core patented strengths and advantages of the technology vis a vis limited diagnostic options for asthma and respiratory sufferers in the past.
We expect the momentum to continue to for KarmelSonix.