Sleep apnea and snoring affect one and three people. If not addressed, obstructed sleep apnea can lead to serious health issues including diabetes, heart attack, hypertension, and glaucoma. Most therapy to address sleep apnea has been centered around invasive CPAP machines. Signifier Medical Technologies is a med-tech startup focused on non-invasive solutions for sleep-disordered breathing conditions. In February, the company received FDA approval for eXciteOSA, a medical device that provides neuromuscular stimulation to the tongue to address the conditions causing sleep apnea. Unlike other treatments, the device is used during the day and not while the patient is sleeping, resulting in increased comfort and convenience. 2- minute treatments have been shown to drastically improve the quality of sleep and reduce obstructive sleep apnea and snoring. There is a connected app for the device that encourages patient adherence and also provides valuable data to clinicians.
London TechWatch caught up with CFO Alastair Maxwell to learn more about the company’s groundbreaking treatment, strategic plans, latest round of funding, which brings the total funding raised to $58M, and much, much more.
Who were your investors and how much did you raise?
The lead investors in the financing were Segulah Medical Acceleration, Angelus Venture Fund I L.P., Alan Howard (cofounder of Brevan Howard Asset Management), and Pioneer Healthcare Partners LP. This was a series D capital raise.
Tell us about your product or service.
Signifier Medical Technologies is a medical technology company focused on the development and commercialization of innovative, non-invasive solutions for patients with snoring and sleep-disordered breathing conditions.
eXciteOSA is a revolutionary daytime therapy device for sleep-disordered breathing. Clinically proven to target a common root cause of OSA and snoring, eXciteOSA helps to improve sleep quality and give patients better health and a better quality of life.
A major underlying cause of snoring and OSA is that patients, due to age, lifestyle, or comorbidities, may experience a weakening in upper airway muscle function, where the tongue lacks endurance in holding its position during sleep and falls back, blocking the upper airway. eXciteOSA works by using neuromuscular electrical stimulation (NMES) to exercise those muscles, using safe, low-intensity impulses to stimulate the intrinsic and extrinsic pharyngeal and tongue muscles directly to improve muscle tone, strength, and endurance.
What inspired the start of Signifier Medical Technologies?
Signifier cofounder Prof. Dr. Anshul Sama worked in a multidisciplinary sleep team and saw that many of his patients were struggling with conventional treatment options that have not changed since their inception over 20 years ago.
Teaming up with the medical device entrepreneur, Akhil Tripathi, Professor Sama, and Mr. Tripathi recognized the unmet need for products that did not have to be worn during sleep and launched the initiative into developing the world’s first daytime therapy for sleep-disordered breathing – eXciteOSA.
How is it different?
Unlike other devices which are used while patients sleep, eXciteOSA is the first device that is used exclusively while awake. The device rests on the tongue and stimulates the tongue, pharyngeal, and connected upper airway muscles to improve their endurance, much like going to the gym would improve any other muscle. Sleep apnea is a progressive disease often starting with primary snoring. eXciteOSA treats a wide range of patients with mild obstructive sleep apnea and primary snoring to address this chronic disease early.
What market you are targeting and how big is it?
Snoring is the most common cause of sleep deprivation, affecting around 42% of people, while nearly 1 billion adults aged 30 to 69 years are estimated to have OSA globally.
In the UK, there is a vast unmet therapeutic need in snoring, with up to nine million adults suffering, while a 2014 study estimated that 1.5m adults have OSA.4, 5 However, only 330k are diagnosed with an estimated 80% of cases of OSA in the UK going undiagnosed and untreated.6
What’s your business model?
Signifier is in the business of treating patients and significantly improving their health and quality of life as a result. Today, patients purchase our device for less than the cost of an iPhone. The mouthpiece has a useful life of 90 days and must be replaced after this time for a price equivalent to approximately 10% of the initial purchase cost of the eXciteOSA device. We outsource the production of our device and mouthpiece to manufacturing partners in Spain and Germany. We are primarily marketing the device through the HCP channel, especially in the US where a prescription is required.
In the future, we expect that public and private healthcare providers and insurers will cover the cost of all or part of the cost of our device and therapy for their patients. In addition, we are seeking partnerships with self-insured employers and value-based care providers for whom our device would offer a significant benefit for their employees and patients, and for whom our therapy is expected to deliver significant healthcare cost savings over time.
How has COVID-19 impacted your business?
COVID has accelerated the adoption of telemedicine and given low-touch, virtually supportable technologies like eXciteOSA a boost. Unlike other technologies that circulate air, eXciteOSA is a welcome alternative. Naturally, when COVID-19 makes access to sleep specialists a challenge, all companies in the space are affected.
What was the funding process like?
Signifier contacted a wide range of potential new investors as well as its existing shareholder base. The process was launched following the receipt of FDA approval for eXcite OSA in February 2021 and concluded in June 2021. All the investors contacted were intrigued by Signifier’s novel and innovative device and therapy and excited by the size of the total addressable market for our product. In the end, the fundraise was co-led by Segulah Medical Acceleration, a new investor, and received strong support from existing shareholders such as Pioneer Healthcare Partners, Angelus Ventures, and Alan Howard.
What are the biggest challenges that you faced while raising capital?
The biggest challenge was related to the de novo nature of our device. Investors needed to get comfortable with the underlying root cause of obstructive sleep apnea, the functionality and efficacy of our treatment as demonstrated by the extensive clinical trials which we have conducted, and the Company’s commercial strategy.
In addition, for the management team, the fundraise was being carried out at exactly the same time that we were scaling up manufacturing for the first time and launching the commercialization of the device in all our core target markets of the US, Canada, the UK, and Germany.
What factors about your business led your investors to write the check?
Once investors got themselves comfortable with the factors mentioned above (root cause, clinical efficacy, and commercial strategy), I think that they were most excited by the size of the potential addressable market which represents almost one billion people globally. Investors also clearly understood the potential for Signifier to collect and utilize significant data through our proprietary App and physician portal. We also heard many references to the quality of the Board and the management team.
Once investors got themselves comfortable with the factors mentioned above (root cause, clinical efficacy, and commercial strategy), I think that they were most excited by the size of the potential addressable market which represents almost one billion people globally. Investors also clearly understood the potential for Signifier to collect and utilize significant data through our proprietary App and physician portal. We also heard many references to the quality of the Board and the management team.
What are the milestones you plan to achieve in the next six months?
Signifier has hired a best-in-class team and is in the midst of commercializing eXciteOSA in the US, Canada, Germany, and the UK. New features are being released, including a snore tracking algorithm incorporated into the App. Alongside efforts in pursuing reimbursement, the company is busy generating clinical data and should publish new evidence in the next 6 months.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Make sure to identify carefully the right target investors for your company in terms of your stage of development and your risk profile. Also, think carefully about how much capital you need to raise in order to deliver your next value creation milestones.
Where do you see the company going now over the near term?
We are very focused on the execution of our commercial strategy in our core target markets, as well as the carrying out of further clinical trials with the aim of demonstrating the efficacy of our therapy for Moderate OSA patients as well as Mild OSA patients. We are also working on enhancing the functionality of our App to improve our patient experience and data collection and processing.
