Inspire Medical Systems Stock

Inspire Medical Systems, Inc. operates as a medical technology company.

The company focuses on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea (OSA). The company’s proprietary Inspire system is the first and only United States (U.S.) Food and Drug Administration (FDA) approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. The company has developed a novel, closed-loop solution that continuously monitors a patient’s breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. A significant body of clinical data, which includes a publication in the New England Journal of Medicine, multiple publications in leading respiratory, ear, nose and throat (ENT) and sleep medicine journals, and more than 280 peer-reviewed publications, supports the safety and efficacy of Inspire therapy. Inspire therapy received premarket approval (PMA) from the FDA in 2014 and has been commercially available in certain European markets since 2011. Japan's Ministry of Health, Labour and Welfare (MLHW) approved Inspire therapy to treat moderate to severe OSA in 2018. Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level. In addition, patients in the United States (U.S.), Japan, and Singapore must have been confirmed to fail or be unable to tolerate positive airway pressure (PAP) treatments, such as continuous positive airway pressure (CPAP), and be 18 years of age or older, though there are no similar requirements for patients in Europe. Physicians have treated more than 60,000 patients with Inspire therapy at over 1,300 medical centers across the U.S., Europe, and Asia.

The company’s pivotal STAR trial was designed to demonstrate longitudinal therapy efficacy and included a randomized controlled therapy withdrawal study.

The company sells its Inspire system to hospitals and ambulatory surgery centers (ASCs) in the U.S. and in select countries in Europe through a direct sales organization, and it sells its Inspire system in Japan and Singapore through distributors. As of December 31, 2023, the company had 287 sales territories in the U.S. and 19 outside of the U.S. The company’s direct sales force engages in sales efforts and promotional activities focused on ENT physicians, and sleep centers.

The company has secured positive coverage policies with many U.S. commercial payors, including virtually all large national commercial insurers, encompassing approximately 260 million covered lives in the U.S. The company is in active discussions with regional commercial insurers to establish additional positive coverage policies, as well as modify existing positive coverage policies to support reimbursement of Inspire therapy. In parallel, a subset of its 28-person reimbursement team, which its refer to as the company’s market access team, focuses on assisting patients and physicians in obtaining prior authorization approvals from commercial payors on a case-by-case basis in advance of treatment with its Inspire therapy. In addition, all seven Medicare Administrative Contractors (MACs) provide coverage of Inspire therapy when certain coverage criteria are met. The company also has a U.S. government contract for patients who are treated by the Veterans Health Administration.

Strategy

The key elements of the company’s strategy are to foster strong and consistent patient outcomes; promote awareness among patients, ENT physicians, sleep centers, and referring physicians; expand its sales and marketing organization to facilitate adoption of its Inspire therapy; invest in research and development to drive innovation and expand indications; and further penetrate and expand into existing and new international markets.

Solution for OSA

Inspire Therapy

The company’s proprietary Inspire system is the first and only FDA-approved closed-loop neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. The company’s Inspire system consists of a remote control and three implantable components:

a pressure sensing lead, which detects when the patient is attempting to breathe;

a neurostimulator, which houses the electronics and battery power for the device; and

a stimulation lead, which delivers electrical stimulation to the hypoglossal nerve.

The company’s proprietary algorithm tracks breathing patterns and the neurostimulator delivers electrical stimulation at the start of inspiration. This electrical stimulation of the hypoglossal nerve causes a slight forward movement of the back of the tongue that helps maintain an open airway, thereby preventing obstructive events and enabling the patient to inhale freely.

Commercialization of Inspire Therapy

In the U.S., before the company can market a new medical device, or a new use of, new claim for or significant modification to an existing product, it must first receive FDA clearance or approval. The company obtained PMA for its Inspire system in 2014. Additionally, the company received a certificate of conformity for commercialization of its Inspire system in the European Union (EU) in 2010 which allowed it to affix the CE mark on its device. Japan's MLHW approved Inspire therapy to treat moderate to severe OSA in 2018 and was formally added to the Japan National Health Insurance Payment Listing in 2021.

To commercialize its Inspire system, in the U.S., Europe, and Japan, the company focuses on physician and patient awareness and adoption of its Inspire therapy. The company’s commercialization strategy primarily consists of its direct sales force engaging in sales efforts and promotional activities focused on ENT physicians and sleep centers and highlighting its compelling clinical data and value proposition. The company’s direct sales force utilizes strong direct-to-consumer marketing initiatives to create awareness of the benefits of its Inspire system. The company intends to make significant investments building its sales and marketing organization by increasing the number of U.S. sales representatives and continuing its direct-to-consumer marketing efforts in existing and new markets throughout the U.S. and Europe.

In Singapore and Hong Kong, the company’s commercialization approach is through exclusive distribution partners, who are responsible for local sales and promotional activities focused on ENT physicians, sleep centers, and community awareness. The company works closely with the distributors to ensure a globally consistent approach and effective employee and customer training are in place.

In addition, a significant part of its commercialization effort consists of supporting the company’s customers through the reimbursement process. Most commercial U.S. insurers cover Inspire therapy. For those payors that do not have a positive policy, Inspire provides assistance to patients and physicians in obtaining appropriate prior authorization approvals in advance of treatment. Medicare also has positive coverage for all states, and the company has a U.S. government contract for patients who are treated by the Veterans Health Administration.

Sales and Marketing

The company has established a methodical approach to market development which centers on active engagement across three key stakeholders in the OSA treatment paradigm: patients, physicians, and sleep centers.

The company sells its Inspire system through a direct sales force that primarily targets ENT physicians and sleep centers in the U.S., Europe, and Japan, and through distributors in Singapore and Hong Kong. The implant procedure for the company’s Inspire therapy is typically performed by an ENT physician or in some cases by a neurosurgeon. The company also focuses on sleep centers because they diagnose and manage large volumes of patients with sleep apnea and are often an important referral base for ENT physicians. In addition, because OSA is sometimes diagnosed during other procedures, the company has developed programs to help educate general practitioners and specialists in other fields, such as cardiovascular surgeons, electrophysiologists, and dentists, regarding the company’s Inspire therapy.

The company has 287 sales territories in the U.S. and 19 outside of the U.S. The company also utilizes direct communication channels to inform and educate patients about Inspire therapy and to enable them to connect with active clinical sites that offer its Inspire systems. The company’s primary methods of patient outreach are Facebook, Google ad placements, radio advertisements (either local or satellite), and television advertisements (either local or national).

During 2023, the company had nearly 13.4 million visits to its website, which generated approximately 65,000 contacts with physicians throughout the year.

In 2020, the company launched the Inspire Sleep app for patients' smartphones. This app is an educational tool for patients and also interfaces with its SleepSync platform to allow physicians to collect clinical data from patients directly.

Commercial Activities Outside of the U.S.

The company’s general practice is to limit commercial investments in countries until such time as there is a determined reimbursement pathway. The company has 19 sales territories in Europe and Japan, and it sells its products through distributors in Singapore and Hong Kong. The company provides consistent training in geographies outside of the U.S. as is conducted in the U.S. and has established a support team in Europe and Japan for patient outreach and education, implant support, and device programming. In Singapore and Hong Kong, the company assists its distribution partners with patient outreach and education initiatives. The company continues to work on the reimbursement process in Australia and hope to commercialize Inspire therapy there.

Intellectual Property

As of December 31, 2023, the company had rights to 80 issued U.S. patents, which will expire between 2029 and 2041 assuming all required fees are paid, 81 pending U.S. patent applications, 55 issued foreign patents, and 79 pending foreign patent applications. The company’s patents cover aspects of its current Inspire system and future product concepts. Some of the issued foreign patents and pending foreign patent applications preserve an opportunity to pursue patent rights in multiple countries.

As of December 31, 2023, the company had 175 pending and registered trademark filings worldwide, some of which may apply to multiple countries.

Research and Development Expenses

The company’s research and development expenses included $116.5 million for the year ended December 31, 2023.

Government Regulation

The company’s products and its operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the European Economic Area (EEA) and Japan, and in Australia. In the U.S., the company’s products are subject to regulation as medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA) as implemented and enforced by the FDA.

In addition to the U.S. regulations, the company is subject to a variety of regulations in the EEA governing clinical trials and the commercial sales and distribution of its products. In addition to FDA restrictions on marketing and promotion of drugs and devices, other federal, state, and foreign laws restrict the company’s business practices. These laws include without limitation, foreign, federal, and state anti-kickback and false claims laws, as well as transparency laws regarding payments or other items of value provided to healthcare providers.

History

Inspire Medical Systems, Inc. was founded in 2007. The company was incorporated in Delaware in 2007.