2. TAM
Inspire therapy only suitable for those who
1. Cannot use CPAP (can’t tolerate it)
2. BMI less than 33
Since 2/3 of people with sleep apnea are overweight or obese (http://healthysleep.med.harvard.edu/sleep-apnea/living-with-…… is the still TAM at $10 bn or is it a fraction since a large part of the market might not be qualified for the operation to begin with. Maybe I’m being paranoid. Not sure.
c. STAR trial results in INSP’s 10k indicate that 1 year following the treatment, AHI levels are around 9, which is still a very high AHI level (normal level is less than 5) that might require CPAP.
I didn’t go into much detail on this, but you are right in that the implant is only for those people who cannot use CPAP. In fact, the implants are only approved by the FDA for this use case. But this is already calculated in the TAM of 10 Billion. They arrive at this number by considering the annual rate of prescriptions of CPAP machines, the percentage of people who cannot successfully use them, and the percentage of people whose anatomy is not correct for the device. This is on page 8 of their presentation:
http://d18rn0p25nwr6d.cloudfront.net/CIK-0001609550/25225e5f…
The STAR trial did show AHI around 9 after 1 year, although it was closer to 6 after 5 years. Anyway, again, this is for people who are not successfully using CPAP, so this is still a huge benefit compared to their baseline.
4. Not sure how they recognize revenues; since these are expensive operations (50k+), I would like to know more about how revenue is recognized. The 10k notes that revenue is recognized based on ASC 606 but doesn’t seem to provide further details.
I don’t think I know enough about accounting to answer this.
-lemur