iSonea clinches transformative agreement with Fortune 500 Healthcare Company

iSonea (ASX:ISN) has signed a memorandum of agreement with an as yet undisclosed Fortune 500 Healthcare Company to forge a foothold into the U.S. market for the monitoring and management of asthma and other related respiratory diseases.

The deal represents a significant endorsement of the company’s flagship Wheezometer™ product for the management of asthma by one of the world’s leading healthcare companies.

The agreement came after a year of negotiations with one of the leading global companies in this disease management space.

Initially the agreement limits the partner’s market development and product distribution rights to the US market only. The parties expect to expand partnership beyond the U.S. market soon.

The company’s Clinical and Personal WheezoMeters™ are a next generation suite of products for the asthma and other related respiratory diseases.

In May, the company signed a deal with OMRON Healthcare in Japan, an $8 billion company, and a world leading manufacturer of and distributor of health care products - to  distribute iSonea’s Clinical and Personal WheezoMeters™ in multiple international territories

The new MOU in the US market, provides iSonea with access to the clinical, business development and commercial expertise of two key global players.

Executive chairman of iSonea Ross Haghighat said of the agreement, “This relationship supports the company’s stated objective of partnering with market channel leaders in Japan and in the US, which together account for nearly 60% of the global expenditure in respiratory disease diagnostic and disease management, with an annual expenditure that exceeds $20B.

"We have a real opportunity to define a new standard of care based on our revolutionary wheeze rate analysis.”

Mike Thomas, the company’s newly appointed CEO said, “The relationship defined in this MOU is the culmination of nearly a year of careful negotiations with one of the leading global players in this disease management space worldwide and complements our strategy for creating a foothold in the US.

"Entering this relationship is an important endorsement of the innovative product solutions that KSX brings to the monitoring and management of asthma and other related respiratory diseases.”

In Japan, the Company expects to secure relevant approvals in calendar year 2012 that enables initial sales to commence, while in the US, it expects to launch a joint effort with its new partner to accelerate the Company’s market seeding exercise of its flagship Wheezometer® product already started in 2011. 

Background

At present there is no patient-friendly, accurate, reliable device to help measure the severity of asthma when the patient needs it most. The cost to diagnose and manage asthma in the US alone was $15 billion, according to a July 2011 Wall Street Journal report.

However, despite the GINA standards, there is no patient-friendly, accurate, reliable device to help measure the severity of asthma when the patient needs it most.

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 is a growing global malaise.  Between 8 and 12 percent of the population in the developed world suffer from asthma.  In the US market alone, the number of asthmatics has grown from 21 million to nearly 25 million in the past 9 years.

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.

Opportunity for iSonea

iSonea has developed 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.

The product addresses a respiratory market void in the tools for supervised, yet self-led management of asthma and related diseases.

iSonea's flagship Wheezometer® product is the first such product approved by the FDA as a portable handheld and inexpensive device that provides an objective measurement of wheeze (commonly exhibited by asthmatics) in less than a minute.

The technology platform known as PulmoTrack™, 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 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.

iSonea’s products can be used at a significantly cheaper price than visiting a specialist for a professional spirometry (procedure for respiratory analysis).

iSonea’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.

iSonea is aiming for new gold standard in asthma management

iSonea 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.

Analysis

The importance of the previous agreement with OMRON was perhaps underestimated in the market as it represented a validation of the technology and the first major landmark agreement negotiated by iSonea with a global major medical device distributor.

The new MOU agreement with the Fortune 500 Healthcare Company is even more pivotal for iSonea as it leverages the key U.S. market, and has potential to completely transform iSonea's operational future as well as add to intrinsic market valuation of the Company.

OMRON and the Fortune 500 Company would have closely examined the ISonea's suite of products.  Clearly, for them to execute the agreements with iSonea, the companies must believe that the next generation products and wheeze rate analysis define a new standard of care for asthma sufferers or those suffering from other respiratory illnesses.

At a market capitalization of just $10.3 million for iSonea, this is very light for a company on the cusp of a new gold standard for a healthcare diagnostic segment that has similarities to the ascent of ResMed in its particular market.  At current pace of growth, the valuation on offer is akin to bargain basement prices on a 6-12 months view.

iSonea 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.

The new agreement continues the renaissance of iSonea, formerly KarmelSonix. The new senior management underscores the core patented strengths and advantages of the technology vis a vis limited legacy diagnostic options for asthma and respiratory sufferers in the past.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19084/isonea-clinches-transformative-agreement-with-fortune-500-healthcare-company-19084.html