About Itamar Medical

Itamar Medical Ltd. operates as a medical technology company. The company focuses on the development and commercialization of non-invasive medical devices and solutions to aid in the diagnosis of respiratory sleep disorders. The company uses a digital healthcare platform to facilitate the continuum of care for effective sleep apnea management with a focus on the core sleep and cardiology markets. The company offers its Turnkey program to help physicians provide comprehensive sleep apnea management in a variety of clinical environments to optimize patient care. Its key products, the WatchPAT (portable diagnostic devices that enable HSATs) family of products, are commercially available in major markets, including the United States, Japan, and Europe. The company’s PAT technology (technology that measures the peripheral arterial tone of the peripheral organ, such as the finger, by employing a particular measurement method, consisting of passive (sensing) and active (conditioning) element) is available throughout its prescription WatchPAT family of durable or disposable products. These simple to use, non-invasive watch-like devices utilize finger positioned bio-sensors to measure and record the patient’s PAT signal (the arterial bed's pulse wave amplitude that is provided by the PAT technology, under specific active conditioning by a unified pressure field, from the peripheral organ, such as the finger, reflecting the sympathetic nervous system activation). This signal is transferred to the company’s local software product, zzzPAT, or its cloud-based software product, CloudPAT, for analysis and reporting of sleep apnea diagnosis. These proprietary analyses’ results are automatically populated into an easy to read report that allows physicians to accurately diagnosis sleep apnea. The company keeps developing its base core sleep business, which consists of sleep physicians and practices, including independent diagnostic testing facilities, in order to provide services to patients who are suspected of suffering from sleep apnea. The company’s multiple growth drivers are the shift to home-based care, the core sleep and cardiology markets, as well as international expansion and penetration to the DTC market. Its comprehensive Turnkey marketing program provides a complete, end-to-end solution that combines products and access to services designed to allow any physician that does not specialize in sleep an easy-to use and accessible suite of products and services to aid in the diagnosis, transportation and handling, interpretation of the sleep study data, diagnosis, and access to third-party sleep apnea treatment device compliance data for patients that they suspect suffer from sleep apnea. The company offers Turnkey primarily through its Test as a Service (TaaS) program. The medical practice or physician ordering the TaaS pays a fixed fee per home sleep apnea test (HSAT) that includes all the components associated with the test, including the disposable biosensor, hardware rental fees and access to its CloudPAT platform. Solutions The company’s prescription WatchPAT proprietary product, which reports the PAT signal by utilizing the PAT technology, is designed to enable patients to easily conduct sleep apnea tests in the comfort of their home while delivering the treating physicians with comprehensive, accurate and reliable results to aid in the diagnosis of sleep apnea. In particular, through the company’s WatchPAT-related services, including CloudPAT, its cloud-based IT platform, and its Turnkey program, offers physicians, including those in the cardiology market, an effective solution to manage the entire care pathway for patients suffering from sleep apnea by covering both the screening and diagnosis stage of sleep apnea, using its WatchPAT family of products, as well as, through the resale of devices of its business partners, treatment thereof. Strategy The key elements of the company’s strategy are to expand its market presence and focus on its primary call-points; position its products as the leading sleep apnea solution for cardiologists; commercialize its technology platforms through expansion of its sales force and enhanced strategic relationships; broaden medical insurer coverage; invest in research and development; and pursue strategic acquisitions and investments. Products and Services The WatchPAT Family of Products The company’s prescription WatchPAT sleep apnea test line of products, the first generation of which received its initial United States Food and Drug Administration (FDA) clearance in 2001, is a watch-like wrist-mounted device with one or two (depending on the model of the WatchPAT product) single-use disposable bio-sensors connected to the patient’s fingers, designed to non-invasively record, measure and analyze the Peripheral Arterial Tone through digital pulse volume change, or changes in arterial blood volume using the PAT technology. The product is based on the company’s proprietary, clinically validated PAT technology, which reports the PAT signal, and analyzes it for diagnostic purposes. The PAT signal displays changes in the patient’s peripheral arterial pulse volumes, as well as various parameters of arterial activity. These arterial activity parameters accurately reflect the patient’s sympathetic nervous system (autonomous (involuntary) nervous system) activity. The WatchPAT continuously records and interprets the autonomic or involuntary nervous system activation during sleep, as displayed by the PAT signal reported by its PAT technology. The PAT probe uses optical sensors to non-invasively measure the changes in arterial blood volume while applying sub-diastolic pressure on the distal two thirds of the finger, including the tip. In 2014, the company introduced WatchPAT 200 Unified, which allows its proprietary sleep apnea test to be performed using only a single finger to collect both oximetry and PAT signal data in a unified probe. In 2019, the company introduced the WatchPAT 300, a new generation of the WatchPAT line of products, which among other things, is designed to expedite data transfer and allow the use of a lighter and smaller watch. In June 2019, the company received FDA clearance for its WatchPAT ONE, which to its knowledge, is the first disposable HSAT diagnostic aid on the market, which complies with the American Academy of Sleep Medicine (AASM) guidelines. The WatchPAT ONE collects the same data as the WatchPAT 200 Unified and WatchPAT. WatchPAT 300 In April 2018, the company publicly announced that it submitted its application to the FDA for clearance of the prescription WatchPAT 300, a new generation of the WatchPAT line of products that is designed to expedite data transfer, allow the use of a lighter and smaller watch. The WatchPAT 300 also lays the foundation for possible additional future capabilities, such as wireless communication embedded in the device. In 2018, the company obtained the FDA clearance of the WatchPAT 300 for use with patients suspected to have sleep related breathing disorders as a diagnostic aid for the detection of sleep related breathing disorders, sleep staging, snoring level and body position, and in March 2019, the company announced the commercial launch of the WatchPAT 300. WatchPAT ONE In January 2019, the company publicly announced that it submitted its application to the FDA for clearance of WatchPAT ONE. In 2019, the company received FDA clearance for the prescription WatchPAT ONE for use with patients suspected to have sleep related breathing disorders as a diagnostic aid for the detection of sleep related breathing disorders, sleep staging, snoring level and body position, and commenced with a limited commercial introduction. The WatchPAT ONE uses an app on a smartphone to guide the patient through the set-up, initiation and completion of the sleep study. Through Bluetooth connection, data is transferred from the WatchPAT ONE to the smartphone app and then transferred to a secure server through a WiFi or cellular connection. WatchPAT Related Services and Accessories Trunkey Solution The company’s Turnkey program aims to provide a complete sleep apnea management solution to cardiology customers, either at the cardiology center or through third-party service providers. The key components of the company’s Turnkey program, which is offered only in the United States, include: Screening: The company provides information and best practices that help cardiology clinics to properly implement patients’ systematic screening to identify patients with high pre-test probability into their practice workflow routine by using validated questionnaires, such as STOP-Bang (Snoring, Tired Observed stop breathing, high blood Pressure, BMI, Age, Neck size and Gender). This initial screening is a required documentation step by most insurance companies to qualify for HSAT reimbursement; Diagnostics: Following initial screening, the company aids the diagnostic stage by offering home sleep testing using its WatchPAT family of products; use of its CloudPAT solution to transfer the test results to a board-certified sleep physician for customers who prefer outsourcing the logistics; for those customers who prefer to prescribe for the test only, access to a network of IDTF for patient diagnostic services using the WatchPAT or other HSAT devices; Treatment: Through arrangements between the clinics and durable mobile equipment (DMEs), providers, patients diagnosed with sleep apnea can be provided with sleep apnea therapy devices, such as CPAP (continuous positive airway pressure) or by the clinic referring to dentists specializing in sleep medicine, with prescriptions for mandibular advancement devices (MADs). Those providers may use third-party therapy devices, if the certified sleep physician assigned to interpret the test results prescribes such devices; and Reporting: Using the company’s CloudPAT and SleePath solutions, it facilitates the cardiology customers’ receipt of status reports and to otherwise monitor the patients’ sleep apnea management status and compliance, if their DME providers use devices compatible with its SleePath solutions. WatchPAT Direct: WatchPAT Direct is a set of logistic support services that the company offers from its service center in Atlanta, Georgia. These services follow the prescription orders and include the coordination and delivery of the WatchPAT to the patient and the shipment back to its service center in Atlanta. Once the device is returned the data from the device is downloaded and delivered to an assigned physician for interpretation, WatchPAT Direct is offered only in the United States and UK. Digital Health Platforms and Services CloudPAT: CloudPAT is a cloud-based information technology (IT) platform, designed to allow customers to transfer the WatchPAT test results primarily to board-certified sleep physicians, IDTF and DMEs. The board-certified sleep physicians receive and interpret the test results, make a diagnosis and potentially prescribe therapy. In the United States, the signing off on the diagnostic report by a board-certified sleep physician is required by the reimbursement guidelines of AASM and the Centers for Medicare and Medicaid Services (CMS). The CloudPAT, together with the SleePath will also be used to deploy the company’s direct to consumer digital health model and provide digital health patient pathway management services directly to consumers, including through channel partners. The company plans to facilitate, via its CloudPAT, remote on-line consultations in order to create an on-line market place that will allow demand for clinical services to be met with qualified and certified physicians. The CloudPAT will facilitate patient access to real time consultation, advice and prescriptions throughout the care pathway. SleePath: SleePath is an integrated e-health sleep apnea care pathway monitoring module, included as part of the company’s CloudPAT system that is designed to allow cardiologists to monitor a patient’s sleep apnea management status and compliance with CPAP therapeutic devices on demand. Key features of SleePath include utilizing data from both the CloudPAT and the cloud-based data transmitted and stored by leading CPAP devices manufacturers, including Philips United States and ResMed, to provide a cardio sleep dashboard, which is designed to allow physicians to track the sleep care pathway status of both the physician practice and the individual patient; and the system monitors and reports CPAP device compliance (the number of days and hours on CPAP and residual sleep apnea), with the data being presented in a user-friendly visual format that is designed to show progress or deviation toward specific treatment goals and changes in metrics over time. zzzPAT: zzzPAT is an analysis software used in conjunction with the company’s WatchPAT family of products. This software stores the recorded raw signals and provides a set of both automated, as well as manual scoring and analytical functions for interpretation and reporting purposes used in the diagnosis of sleep apnea. The EndoPAT The EndoPAT device, the first generation of which received FDA clearance in 2003, is designed to diagnose endothelial function by measuring the ability of blood vessels to dilate as a response to shear stress, or other stimuli, in order to accommodate increased blood flow. The endothelium is the inner lining of all blood vessels regulating their function and ability to dilate or constrict. The EndoPAT device uses the company’s PAT technology to measure the ability of blood vessels to dilate after an artificially created CVD. In the United States, EndoPAT has no reimbursement and is sold primarily for research purposes. RPM Solutions - the Loop Device The Loop device (watch-like medical grade and FDA cleared home-based remote patient monitoring device), which received FDA clearance in 2019, is a wrist device measuring and recording physiological parameters, such as SpO2, respiration rate and heart rate that transmits the data to a web server for remote review by a clinician to allow clinician to monitor patient deterioration. Through the combination of the company’s PAT technology and the Loop technology, it intends to bring to market a device for continuous RPM (remote patient monitoring devices, including its Loop) of sleep apnea and related software or digital platforms for the transfer and storage of data. The company plans to commence development of this device during 2021, with an initial market launch anticipated in 2022. Sales and Marketing The company’s WatchPAT family of products and related services are sold and marketed through both direct and indirect channels, including distributors. Its primary customers are hospitals, medical centers (including sleep centers), health management organizations (HMOs), physicians (including sleep specialists), research institutions and cardiology practices and departments. The targeted customers for the company’s WatchPAT technology are primarily cardiologists and electrophysiologists who are interested in integrating sleep medicine into their practice, as well as physicians who specialize in sleep medicine. Sleep specialists represent a variety of medical backgrounds, including pulmonologists (lung specialists), otolaryngologists (ears, nose, and throat), neurologists, primary care physicians and dentists. The company’s physician customers typically practice in office settings, clinics, or hospitals. Its EndoPAT products and related services are sold primarily through indirect channels to research institutions and directly to pharmaceutical companies to support their clinical research. The company offers its WatchPAT family of products to customers in two main business models: TaaS whereby the company’s customers pay a fixed fee per each home sleep test conducted with its product. The fee per test includes all the components associated with the test, including the disposable bio-sensor (one disposable is used once with each WatchPAT test), the hardware (the WatchPAT device itself) and access to its CloudPAT platform; and Capital purchase, whereby the company’s customers purchase and own the hardware (the WatchPAT device itself), the disposables bio-sensor (one disposable is used once with each WatchPAT test) and other related accessories. The company also offers its customers capital purchase through a lease model, whereby the customer leases the product for monthly lease payments, typically over a period of between 18 to 24 months, and becomes the owner of the product at the end of the lease period in consideration for a nominal amount. Direct Sales: The company continues to develop its sales and marketing organization that consists of a dedicated sales team that is complemented by clinical sales specialists team a marketing team, as well as sales and marketing support personnel. Indirect Sales and Strategic Collaborations: The company focuses on developing long- term strategic partnerships with distributors and other business partners, mostly outside the United States, including leading global partners, such as Philips Respironics GK. Distribution Agreement with Philips Respironics GK: In 2014, the company entered into a distribution agreement with Philips Respironics GK, a subsidiary of Koninklijke Philips NV (also known as Royal Philips), or Philips Japan, which was renewed in 2018 for an additional three years’ period until December 2021. Under the distribution agreement, Philips Japan was granted exclusive rights to distribute the company’s WatchPAT family of products, other than its WatchPAT ONE, and ancillary accessories in Japan. Direct to Consumer Market: In this market the company plans to offer through channel partners, who has an off-line and on line consumer market presence, a full digital health sleep apnea solution for the patient, at the comfort of their home. The company plans to address this market mainly with its WatchPAT ONE fully disposable prescription device, combined with the company’s CloudPAT and SleePath digital care continuum management assets. With the support of the company’s operational capabilities, which it has developed in the implantation of its WatchPAT Direct program, it plans to continue providing best in class digital health patient pathway management services on behalf of its customers. To facilitate the clinical oversight of the patients in this journey, the company plans to facilitate remote on-line consultation through its CloudPAT system in order to create an on-line market place that allows demand for clinical services to be met with qualified and certified physicians. While the company views its partnerships with Philips Respironics GK and other business partners as strategic, its direct sales to healthcare providers represented more than 85% of its total revenues in the year ended December 31, 2020. Third-Party Coverage and Reimbursement In the United States and elsewhere, demand for the company’s Products is dependent to a large extent on the availability of coverage and reimbursement from third-party payors, including governmental payors, such as Medicare and Medicaid, and private payors, such as medical insurance providers. WatchPAT is covered by medical insurance to different degrees in Japan, the U.K., the Netherlands, Sweden, Germany, Switzerland, Italy, Israel and few smaller countries. Acquisitions In January 2021, the company announced its acquisition of the technology and assets of Spry Health, Inc. (Spry), a developer of the Loop device, which is FDA-cleared. The Loop device is a wrist device measuring and recording physiological parameters, such as SpO2, respiration rate and heart rate. The company plans to commence development of this device during 2021, with an initial market launch anticipated in 2022. Competition The company competes primarily with international and local vendors of sleep tests, including in the following main categories: PSG Tests: PSG systems are provided by several companies, including Philips United States (part of Philips Medical), Embla, Nihon Kohden, Viasys Healthcare, Puritan Bennett, Cadwell Laboratories, Clevemed, Stellate Healthcare, Grass Technologies (a subsidiary of Astro-Med Inc.); HSATs (PSG at Home): Suppliers of home sleep testing for diagnostic purposes that offer devices that perform full PSG tests at home, such as Embla and Aura-Grass; Level II HSATs: Suppliers of home sleep apnea testing as diagnostic aids or for diagnostic purposes that offer ambulatory systems, such as Embletta MPR (provided by Embla Systems), Apnea Link Air (provided by ResMed Corp.), ARES (provided by SleepMed Inc.), Alice NightOne (provided by Philips United States) and Nox T3 (provided by Nox Medical), which devices typically measure four to five parameters (compared to the seven parameters measured by WatchPAT), and lack measurement of TST when not used with electroencephalograph (EEG) (which to its knowledge, is used only by ARES, which provides total sleep time by a device placed on the forehead with built-in EEG electrodes) and all of which also require nasal cannula. There are few new companies who recently received FDA clearance for HSATs devices, such as Ectosense and Vivos. Pulse Oximetry Devices: Suppliers of pulse oximetry devices, such as Nonin and Masimo. Intellectual Property The company primarily relies on its own research and development efforts to enhance and develop its technology and products although, in some instances that do not involve its core competencies, such as with CloudPAT, it chooses to license customized platforms from third parties. Patents: As of December 31, 2020, the company had been granted a total of 128 (77 current) patents and had five pending national phase applications directly relating to its products. Amongst these, 25 granted patents are potentially applicable, pending ongoing research and development. The families of patents that specifically cover WatchPAT consist of 68 (38 current) granted patents worldwide and five pending patent applications, while EndoPAT is covered by 30 (29 current) granted patents worldwide of which 15 granted patents are potentially applicable pending ongoing research and development. In addition, the company has 30 (ten current) granted patents that relate to features, which are common to both WatchPAT and EndoPAT, amongst which all ten patents are potentially applicable pending ongoing research and development. In addition, the company has five granted patents and 12 pending patents related to the technology acquired by it from Spry Health, Inc. and mainly related to RPM. These patents relate to seven families of noninvasive systems and methods for measuring a variety of physiological parameters. Patents and patent applications covering the company’s WatchPAT and EndoPAT technology, as well technology related to the Loop and RPM, have been issued or are pending in the United States, Japan, Europe and other international markets. Many of the company’s patents and patent applications cover its technology around methods of and related devices for measuring the PAT signal and the application thereof, as well as RPM technology and methods. Absent patent-term extensions and excluding granted patents that are potentially applicable pending ongoing research and development, several patents for the WatchPAT are set to expire between 2021 and 2029 in Europe, Japan, and other foreign jurisdictions and between 2024 and 2030 in the United States; and the EndoPAT are set to expire between 2021 and 2032 in Japan, in 2021 in Europe and other foreign jurisdictions and in 2022 in the United States. Other: The company has obtained trademark registrations in the United States for PAT, EndoPAT, WatchPAT, EndoScore, ITAMAR, CloudPAT and SleePath and some of them are also registered in additional jurisdictions, including Europe, Japan, Canada, China, India, Russia, Mexico, Korea and Singapore. Research and Development For the year ended December 31, 2020, the company’s research and development expenses included $6.0 million. Government Regulations The company is subject to announced and unannounced inspections and audits by such regulatory bodies, primarily of its manufacturing facility in Israel. Its Products and operations are also often subject to the rules or norms of industrial standards bodies, such as the International Standards Organization (ISO) or the rules of associations of healthcare professionals. In the United States the company maintains certifications of a Nationally Recognized Testing Laboratory (NRTL) which is a third-party organization that certifies products for the North American market. NRTLs are recognized by the Occupational Safety and Health Administration (OSHA) under United States deferral regulations to provide product safety testing and certification for products to be used in the United States workplace. In Israel, the United States, Europe and other territories, the company is also subject to environmental regulations governing the use of certain hazardous materials, such as RoHS and RoHS II, EU directives that require products sold in Europe to meet certain design specifications, which exclude the use of hazardous substances; REACH, an EU regulation covering the registration, evaluation, authorizations and restriction of chemicals; and EU Directive 2002/96/EC on Waste Electrical and Electronic Equipment (known as the WEEE Directive), which requires producers of electrical and electronic equipment to register in different European countries and to provide collection and recycling facilities for used products. The company’s Products and its operations are subject to extensive regulation by the FDA, and other federal and state authorities in the United States. Its medical device products are subject to regulation as medical devices in the United States under the Federal Food, Drug, and Cosmetic Act (FDCA), as implemented and enforced by the FDA. The company’s marketed products are Class II devices subject to 510(k) clearance. All of the company’s products (excluding 510(k)-exempt products) are subject to premarket notification and clearance under section 510(k) of the FDCA. To obtain 510(k) clearance, the company must submit to the FDA a premarket notification submission demonstrating that the proposed device is substantially equivalent to a predicate device already on the market. In order to sell the company’s products in member countries of European Economic Area (EEA), its products must comply with the essential requirements of the European Union (EU), Medical Devices Directive (Council Directive 93/42/EEC). Compliance with these requirements is a prerequisite to be able to affix the CE conformity mark (CE mark) to its Products, without which they cannot be sold or marketed in the EEA. In January 2018, the company received a new CE certificate from its new Notified Body, BSI Group, bearing an expiration date of October 10, 2019, the same expiration date as the previous certificate issued for its WatchPAT 200 Unified (including one of its probes) and EndoPAT 2000, to which it refers as the main certificate. The main certificate was renewed by the BSI Group in 2019 with an expiration date of May 26, 2024, and was broadened to also cover EndoPATX. In addition, the company has obtained a CE certificate for its accessories, such as probes and sensors that it sells for use with such products, to which it refers as the accessory certificate, which certificate does not bear any expiration date. The company has a CE mark for its WatchPAT 200 Unified, EndoPAT 2000 and WatchPAT 300 (which, for the WatchPAT 300, was granted in February 2019). In Japan, the Pharmaceutical Medical Devices Authority, or PMDA, is the regulatory body supervising and regulating the marketing and sale of medical devices, such as its Products, similarly to the FDA in the United States. In order to market and sell medical devices, such as its, in Japan, the company must comply with Japan’s Pharmaceuticals and Medical Devices Act, or the PMD Act. Among other requirements, as part of the approval process, medical device manufacturers must comply with the MHLW Ordinance No. 169 related to quality management systems, register design and manufacturing facilities, and appoint an in-country representative, also known as MAH/D-MAH. The company holds PMDA authorizations to market and sell its WatchPAT 200 Unified and EndoPAT 2000 in Japan. Such authorizations are held by the local MAH/D-MAH with whom the company maintains a contractual engagement. Health Canada is the Canadian authority supervising and regulating the marketing and sale of medical devices such as the company’s products, similarly to the FDA in the United States. All of the company’s products are approved for sale and distribution in Israel by the Israeli Ministry of Health. The company’s manufacturing activities in Israel are also subject to regulation by the Israeli Ministry of Health. The company or its partners also must obtain pertinent approvals or permits to perform its clinical trials in the countries in which it performs such trials, such as in compliance with an international guideline for the ethical conduct of clinical research known as the Declaration of Helsinki. In Israel, the company’s clinical trials require a permit for a research plan (protocol) by the Helsinki Committee, operating under the Israeli Public Health Regulations (Clinical Trials in Human Subject Research), 1980. History The company was founded in 1997. It was incorporated under the laws of the state of Israel in 1997. The company was formerly known as Itamar Medical (CM) 1997 Ltd. and changed its name to Itamar Medical Ltd. in 2000.