Dive Brief:

• Analysts at Leerink have predicted sleep apnea player Inspire Medical Systems will clear a long-standing reimbursement bottleneck and grow quickly in the years to come.

• Inspire won FDA approval for its neurostimulation implant in 2014 but has struggled to gain traction commercially, resulting in it generating sales of $28.6 million last year.

• Leerink predicts Inspire will grow that figure by 30% to 40% a year through to 2023 as insurers follow Aetna’s lead and start covering the device.

Dive Insight:

Inspire is targeting a major market. Obstructive sleep apnea affects around 20 million Americans. The upper airways of these people become blocked while they sleep, limiting or stopping airflow. Sleep apnea patients become tired and have a higher risk of cardiovascular diseases and other conditions.

Continuous positive air pressure (CPAP) machines, such as those sold by ResMed and Philips Respironics, improve sleep quality and reduce daytime sleepiness. However, they require patients to sleep wearing a mask hooked up to a flow generator. As some patients find the mask uncomfortable or are otherwise unable to consistently, correctly use CPAP, the rate of nonadherence is high. A literature review found the rate is 34% and has not improved significantly over the past 20 years.

Inspire thinks its neurostimulation implant offers an option for patient who cannot comply with CPAP. The implant monitors the patient's breathing patterns. If the device detects an blockage, it tries to clear it by stimulating the hypoglossal nerve that controls muscles in the tongue and airway.

Clinical trials suggest the device works as advertised. A Phase 3 study linked the device to significant improvements in the number of blockages and drops in blood oxygen levels patients suffered every hour. Inspire published data from the trial and won FDA approval in 2014, seven years after it spun out of Medtronic and three years after it got clearance to sell the device in Europe.

The device is yet to become a big commercial success, though. While Leerink values the CPAP market opportunity at $11 billion, Inspire's sales were $28.6 million last year. Sales are growing quickly — they were up 75% in 2017 and rose 85% over the first half of 2018 — but for now Inspire remains a minor commercial player in the CPAP market.

Leerink thinks that will start to change in the years to come. The analysts expect Inspire to achieve annual growth of 29% to 55% every year through to 2022. The forecast is underpinned by Leerink’s discussions with reimbursement specialists and physicians. The reimbursement specialists said Blue Cross Blue Shield or Anthem could follow Aetna’s lead and cover Inspire’s device within the next 18 months. In the 18 months after that, multiple other insurers could make reimbursement decisions.

The forecast wave of coverage decisions would eliminate a major barrier to use of the implant. As Leerink’s research suggests patients want the device and physicians are convinced of its efficacy, there may be pent up demand that is unleashed by the coverage decisions.

Leerink is more optimistic than many of its peers, resulting in its 2022 sales forecast coming in 11% above the consensus. To hit Leerink’s forecast, Inspire will need to win additional reimbursement coverage, effectively build out its commercial team and persuade physicians to perform a procedure that offers them limited profits. Failure to deliver on any of these fronts could cause Inspire to fall short of Leerink’s forecasts.

Inspire has competitive threats on the horizon, too. While Inspire's implant is the only FDA-approved device of its kind, LivaNova already competes with the company in Europe and Nyxoah is developing an implant with possible advantages over the incumbents. Leerink thinks LivaNova is at least three years from getting its device to market in the U.S.