Inspira Technologies (NASDAQ: IINN) has seen its share price jump by more than 10% on Thursday morning after the company confirmed the signing of a new distribution agreement.
The three-year deal with US-based Glo-Med Networks concerns distribution of Inspira’s HYLA blood sensor device and disposable units across Texas, New Jersey, New York, Florida, North Carlina and South Carolina.
Pursuant to the agreement, and in order to maintain exclusivity in the territory, Glo-Med has committed to purchase a minimum order of 3,889 HYLA blood sensors and 264,873 disposable units for deployment at hospitals and medical centers, subject to regulatory approvals for the sale and marketing of the HYLA device within the United States.
What is Inspira Technologies?
Inspira Technologies is an Israeli a specialty medical device company. The business engages in the research, development, manufacture, and marketing of respiratory support technology to provide an alternative to invasive mechanical ventilation (MV) for the treatment of respiratory failure.
Its lead product is the augmented respiration technology system (ART), a respiratory support system comprising minimally invasive, portable dual lumen cannula, which is inserted into the jugular vein and utilizes extra-corporeal direct blood oxygenation to elevate and stabilize declining oxygen saturation levels.
The company was formerly known as Insense Medical Ltd. and changed its name to Inspira Technologies Oxy B.H.N. Ltd. in July 2020.
How Does Inspira Make Money?
While today’s announcement concerned a new deal in the US, it’s not the first that the business has secured. Inspira has additional distribution agreements internationally, targeting a total of $189m in Israel and Europe.
Across all of its signed deals combined, the company is targeting up to $386m over a 7-year period. All agreements for the ART system are over a 7-year period and are subject to the completion of product development and regulatory approvals.
Inspira Growth Potential
Around 633,000 people are acute respiratory failure patients in the US each year, according to data provided by the company’s website. Inspira says its technology will allow these patients to avoid intubation and medically induced comas that might come with what it terms as “highly invasive, risky, and costly mechanical ventilation systems”.
While this represents a significant base of patients who might benefit from Inspira’s technology, the company has also noted that the increasing age of the US population and the potential for COVID-19 related health problems could further enhance demand.
It also claims that global mechanical ventilators market size was valued at $7.24bn in 2020 and is expected to record a CAGR of 4.9% from 2022 to 2028.
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Inspira Investment Risks
The first risk to note is that there are a significant number of mechanical ventilator manufacturers already serving the market in North America and beyond. These include large companies like MedTronic, Drager and Hamilton Medical.
As such, Inspira’s products will need to be cost effective and high performance if the company is going to make an impact on this crowded marketplace.
Additionally, the HYLA blood sensor and ART system have not been tested or used in humans and are subject to completion of development and regulatory approvals.
This of course means that there is a risk that the products may not gain approval which would damage both previously agreed distribution agreements and future commercial prospects.
Additionally, there is still some way to go before the company’s products will be approved even if everything proceeds according to plan. Inspira’s website is targeting FDA IDE submission, an important part of the approval process, in the second half of 2023. As such, potential investors should be aware that it will be some time before products hit the market.
This obviously raises concerns about funding and the company’s viability in the meantime. It’s most recent earnings noted that the company had cash of $21.7m on 31 March 2022, while total current liabilities stood at $2.7m and total comprehensive loss for the period stood at $1.8m.
Is Inspira a Good Investment?
Inspira’s potentially lucrative distribution deals depend on its product receiving regulatory approvals that could be far off in the future. This is somewhat counterbalanced by the business’ healthy looking balance sheet.
With several distribution deals already under its belt and a significant addressable market, the future could be bright for Inspira, though the business has a lot of regulatory hoops to jump through before its flagship product can hit the market.
Additionally, the company faces a great deal of competition from larger medical device companies, which could see it fail to gain a significant market share. The company’s viability as an investment largely rests on its ability to develop a product which achieves its aims of ensuring improved patient comfort while working effectively.
If the company can achieve this then it could be successful, though this is unlikely to be an investment suited to those looking for speedy returns.