Thank you for standing by, welcome to the Respiri Investor Webinar and Q&A today. All participants are in a listen-only mode. There'll be a short speech starting in a moment, followed by a Q&A based on questions that have been submitted via email, as well as using the Q&A panel below. Appearing on behalf of Respiri today, we have the CEO, Marjan Mikel. Initial presentation will last for approximately 10 minutes, we'll allow for as many questions as possible thereafter, with a view to ending the session after 30 minutes in total. I will now hand over to Marjan. Please go ahead.
Thanks very much, and good morning, ladies and gentlemen, and thank you for joining us on this momentous occasion for the organization. I will be going through the details around our successful FDA approval and how that will impact the business and transform Respiri moving forward. Sorry, the slide's not moving. Sorry. As I said, with the FDA approval, we now have the opportunity to provide improved asthma management care to about 25 million U.S. citizens. That's a huge opportunity for us to continue our journey towards ridding the world of the challenges of asthma. We're very excited about this, and it's a huge opportunity, which I will go through in more detail with this presentation. Okay. I might go out of this mode. It's not doing what I want it to. Sorry, ladies and gentlemen. Reminding us all what wheezo is.
This is what we submitted as part of the approval process. As you know, we have wheeze detection with wheezo, where the breath recordings are interrogated by our algorithms, and a wheeze rate is calculated based on that. We know from the data of studies that we've undertaken, that wheezo is at least as good as a physician with a stethoscope in determining wheeze. We also allow for continuous monitoring, so where there's an ability for us to capture other events that might be leading to exacerbations. Things like weather, pollen count, medication usage, other symptoms, air quality, et cetera. Importantly also, the app also contains the asthma action plan that was developed by the patient's doctor. It's a sync one-stop repository for a patient and their asthma plan.
Importantly, the data's captured and can be shared with the patient, obviously in real time, but importantly shared with the patient's treating physician, pharmacist, and care team. It's also very important to note that the indicated patient population for wheezo and the app is for all children above the age of two and all other adult populations. We're not restricted in any shape or form in anyone that's over the age of two years of age. I'm pleased to be able to announce that we achieved an OTC, over-the-counter Class II FDA approval for wheezo. This is a big win for us because this allows Respiri to target more channels in the U.S. These include things like the fact that it's a Class II medical device opens up reimbursement possibilities.
I've spoken in the past about the CPT reimbursement codes for remote patient monitoring, which we are currently investigating and pursuing. The OTC Class II FDA approval also allows us to provide channels with wheezo without prescription, so pharmacy and retail, also online and Amazon. It gives us a great level of flexibility and options to target in the U.S. marketplace, which a lot of medical devices don't have. The other really great thing is that the approval was indication agnostic. Although we remain focused on asthma, it wasn't restricted to asthma as a disease state. As I said, the indication approval was also for children of two years or older and all other adult populations. This opens up a much broader marketplace for us, and I'll go into what the opportunity there is. The U.S. market opportunity.
There are approximately 3.3 million children with persistent and severe asthma, and a total of about 12.5 million patients with persistent severe asthma that are adults and children. The opportunity is huge. Important to note, we know that asthma is still not optimally managed in most places around the world. In the U.S., almost 10 million physician visits per annum are attributed to patients turning up to discuss asthma. There are 1.6 million emergency department visits per annum because of asthma. As I said, there's a huge population of patients with persistent and severe asthma who are our target market. Work that we've done to date suggests that we can command a product as a service fee, monthly fee from the physicians of between $30 and $40 per month.
That makes the total addressable market now, if we focus on children alone, somewhere between $1.2 billion and $1.6 billion. The broader opportunity, including the patients that are adults, somewhere between $4.5 billion and $6 billion. This is a huge marketplace and dwarfs any other market in the world, and certainly dwarfs the opportunity here in Australia. That's why this is so important for us as an organization. As I said, the indication is one that allows us to target many different channels, both prescription for CPT reimbursement and non-prescription for things like online pharmacy, et cetera. The pharmacy opportunity is still a large one. There are 88,000+ pharmacies in the U.S., 22,000 of those are independent pharmacies and 66,000 are parts of large pharmacy chains.
The total pharmacy market in the U.S. is worth about $320 billion per annum and growing at about 3.3%. Interesting to note that 30% of volumes and value of sales are online with pharmacy players. Major players include people like Walmart, Walgreens, and Costco. They are the major players in that area that would be significant customers for us and our partner. Reminding everyone that Cipla is our current partner in Australia and does have first right of refusals in other marketplaces, and does have a presence in the U.S. As I said, that's first right of refusal. Should we find other pharma or medical device companies that have a better reach and a better deal for Respiri, we're certainly going to entertain the idea of working with them as a potential alternative to Cipla. The reimbursement opportunity.
It's important to note here that a U.S. patient will generate up to five times the annual revenue of an Australian patient. Important to note also that unlike Australia, there is little or no out-of-pocket expense for the U.S. patient because of reimbursement systems put in place. You'll see on the left-hand side, there are a number of different CPT codes that the doctor can claim for setting up a patient on wheezo. There's a one-off bill for setting up the patient on the platform and system. Another one for setting or capturing and recording data, which we do in the form of our portal. That's a monthly fee. Then another for the data being sent in real time to clinical staff to review the remote patient monitoring data and interact with the patient.
If you add up all of that, the physician's billable amount per patient per year is in excess of $1,350 U.S. Our product as a service fee billed to the patient will be somewhere between $360 U.S. to $480 U.S. per annum, which as I said, is significantly more than what we find in Australia with our SaaS, that is software as a service monthly fees. The new channel is the one that we're currently pursuing and certainly in discussions with various partners. These partners are disease management providers. As I said, that's under negotiation. As mentioned, if we take those other numbers and turn them into Australian dollars, you can see that the U.S. marketplace is significantly more attractive to us per patient, than Australia.
As I said, we will be charging the doctor per patient, per device, per month, and that's a significant amount of revenues for Respiri and certainly a lot more than we charge in Australia. The other channels are existing and are still options for us in the U.S., and we're actively pursuing those as I speak at the moment. Those don't change too much, but they do offer us options in the USA. Commercialization timelines. By quarter three this year, we will have developed and tested a physician-driven model here in Australia that we will be rolling out in the U.S. as a model for the CPT codes, and we will determine our qualification for the CPT codes that I've just outlined. By quarter one next year, calendar year, we will commence our key hires. We'll have our key hires for the Respiri US.
We will have a new disease management provider commercial direction put in place, pharmacy distributions agreed and finalized, depending on what we decide we want to do there, and commence our inventory build for the expected demand that we will experience in the U.S. with our launch. We will also explore opportunities in the hospital environment, that being moving care to a low-cost care at home, as opposed to the high-cost institutional cares from secondary healthcare delivery. We hope to get all that done by calendar year sorry, quarter one, calendar year 2022.
Second quarter of 2022, our partners will be trained and ready to rock and roll with regards to the promotion, to promote wheezo to both the CMOs, so things like Medicare and Medicaid, which is the first step, and then to the various HMOs, which are the private health insurers, to ensure that people understand that we qualify for the CPT codes that are available today. We will start stocking of the various channels that we will undertake promotions in, be that pharmacy and certainly the disease management partners, with the view of launching, as we've said from day dot, in quarter three 2022. It's a very exciting time for us. It's been a long time coming. I take the credit for something I had very little to do, but our team has delivered on time again with regards to the FDA approvals.
Those FDA approvals are very broad and they cover all children above the age of two and all adults. They are indication agnostic, even though, as I've said previously, we will remain doggedly focused on asthma. The OTC allows us to pursue more than simply the CPT code reimbursement models, which opens up a whole new set of channels for us in the U.S. that some of our competitors don't have. With that was a whirlwind presentation about something that's very exciting for the organization, and what I might do now is throw over to yourselves and see if we have any questions that I need to answer.
Thank you, Marjan. We'll now move on to the Q&A session, as you've suggested. As mentioned earlier, these are based on questions submitted both via email already. As a reminder, if you want to submit one now, use the Q&A panel at the bottom of your screen. The first question, Marjan, is: With U.S. and Europe launches imminent, how do you see the competitive landscape in those markets in terms of competing devices/apps? How will wheezo compare on price?
Yeah. A couple. First and foremost, what wheezo does is very unique as a device. In the U.S., for instance, the product as-a-service fees that are charged to doctors are relatively standard. With the $30-$40 that I mentioned previously, are the sort of numbers that other providers of medical equipment that doctors use for remote patient monitoring that would be charged. As I said, with regards to what wheezo does, there is no other device that monitors breathing and changes in wheeze rate the way that we do. It is a marketing challenge.
We need to change behaviors. We need doctors to recommend wheezo to their patients from a CPT code perspective, and we're very comfortable and confident that we will do that, particularly given the work that we're doing with the patient experience program here in Australia, which we hope will demonstrate the improvement in the way that asthma patients are managed from the real world. We'll be able to use that from a promotional setting with physicians in the U.S. and also in the U.K. We're currently under discussions and negotiations with quite a number of universities in the U.K. that want to work with us in a real-world setting and set up a technology-based real-world trial to demonstrate how well wheezo can improve patients' management of their asthma from the real world. From a competitive perspective, there is nothing like wheezo.
From a pricing perspective, particularly in the U.S. and in fact, the U.K., we are cheaper than some other devices there when it comes to the actual device price. We are competitive. The challenge for us, as is the challenge everywhere in the world when you relaunch an innovation, you need to change behavior, and that takes time. We need the right partners to be able to do that, and we believe that we are in discussions with those right partners, and we'll be ready to launch when we say that we're ready to launch as per our timelines.
Thanks, Marjan. I'm gonna roll a couple of questions into one here because they're related. Can you please update the market on wheezo sales? Related to that is, what is the average number of months that customers have remained as subscribers of the app after purchasing wheezo? What's your expectation for that number in the future?
Yeah. Thank you for that. It's rather difficult to give you a quantification of the number of months that a patient will stay on the app with wheezo, given that we've just recently launched. I really don't have any data to be able to share with you in that regard. Remembering that the software as a service model is not relevant for a large proportion of the opportunity in the reimbursed market in the U.S. The software as a service model here in Australia is out of pocket. The product as a service is we charge the physician for that, and the patient has little, if any, out-of-pocket expense. It's not really apples and apples that we're comparing. The models that we built for the Australian marketplace assumed a three-year lifespan for a patient on wheezo and the app.
That translates to an 11% churn rate with the patients in Australia. That was what the models are. It's too early to say whether they're correct, but we certainly are keeping a very close eye on those things.
Thank you. Next question is: Does the FDA approval change the outlook on current cash burn over the next 12 months as you move into the U.S. market?
At the moment, the last raise of $12.5 million was what we needed to get to cash positive as an organization. Now, there may be opportunities for us to accelerate our launch into the U.S. marketplace, given the wonderful addition of the FDA approval and the broad indications that we've been given and the OTC indications. We will investigate what we need to do to get to market quickly and effectively. At this moment in time, looking at what if anything, that would cost us to move forward in an accelerated mode. At this stage, there is no additional cash burn that we anticipate.
For those of you that remember, part of the funds that we raised in the $12.5 million, there was about $1 million put aside for us to get ready for the launch of wheezo in the U.S. in the coming 12 to 18 months. Really at this moment, we don't anticipate any greater cash burn unless, of course, we see an opportunity to accelerate our U.S. launch.
Thanks for that. Next question is: Will the U.S. HMOs need to see more study/trial data to gain confidence in the quality of wheezo's physiological measure?
No, the answer to that is no, because the CPT code is for remote patient monitoring. Wheezo doesn't need to get a separate CPT code per se. What we need to demonstrate is that we measure a physiological parameter, and that's a yes/no. That's not how effectively you do it, although we know we're very effective in doing it. That's basically saying, is what wheezo measures considered a physiological parameter? There is no need for any further trials there. The trials that we did last year and the additional work which we hope to get published, and reported at the ERS, that's the European Respiratory Society meeting later in the year, were done to provide the additional data that was required to get the FDA approval based on more specialists' review of the data that we had.
That's already in the FDA packaging, was used as part of our submission. In short, we do not need to do any further trials to justify our physiological parameters. It's a yes/no. In saying that, it is obviously beneficial to the organization for us to be able to demonstrate a material improvement in patients' health outcomes when wheezo is added into their treatment or, sorry, management guidelines. That's certainly what we've been working on since October last year, and will continue to do so with the likes of the patient experience program and the work we hope to undertake in the U.K. soon.
Thanks, Marjan. Next question is, you stated that severe asthmatic children are the initial focus, but do you expect this to expand to adults over time?
We do. Kids and the frail are an obvious sweet spot for wheezo for obvious reasons that we've discussed many times. It's very difficult to get spirometric readings from them. It's very difficult to understand their symptomology. Remembering that doctors don't measure a physiological parameter when it comes to determining asthma severity. They basically use a questionnaire and rely on patient recall and patient self-assessment. Kids are [hypocellular] . In fact, everyone's [hypocellular] , but kids in particular and the elderly are [hypocellular] . That's our sweet spot. In saying that, I've mentioned this in the past, if you look at the demographics of the asthma patients that enrolled in the patient experience program, more than 50% of the patients are in the adult population. There is an appeal for this particular service that wheezo provides beyond children and parents.
There is a sizable proportion of adults that appear to like to include wheezo as part of their asthma management plan for everything that it does. Not just measuring its wheeze, which is very important, but also sharing that information with their physicians in real time, and also capturing all the other potential triggers for exacerbations. We'll watch this space, but we're getting more and more information of the types of people that are using wheezo as we progress with our launch.
Thanks. The next question is, what are the steps involved in terms of integrating with the disease management service platform?
The first thing is to negotiate a deal with people who have an infrastructure set up in selling these sorts of services to physicians, and that's what we're currently undertaking in the U.S. It would be wrong to say they're advanced discussions, but there's certainly discussions that have commenced. The interest in what it is that wheezo does and how it can impact the portfolio of these companies, there's a high level of interest there. The first step is to get the partner on board. The second step, of course, is or concurrently getting notification that we qualify for the CPT as a physiological measure for remote patient monitoring. We're currently in the process of finalizing that as well.
It's basically utilizing the footprint and established relationships that the providers have to go out there and promote wheezo and what it does to the doctors who will be prescribing it to their patients as a remote patient monitoring tool. We will use the established IT infrastructure these people have got to bill these doctors in the appropriate manner. It's not a complicated process, it's an involved process, and we're well underway to moving that along to ensure that we've got everything in place for our launch in the second half of calendar year 2022.
Thanks for that. The next question is, what does indication agnostic mean?
The FDA gave us a broad indication which went along the lines of it isn't disease state specific. They don't single out asthma or COPD or anything else like that. What they've said is any respiratory disorder where wheeze is a symptom and a problem, wheezo qualifies for use in that disease state. The U.S., for those of you that don't know, is a lot more stringent about what you can and can't do and what you can and can't say promotionally, than Australia. Fundamentally with that broad indication, it opens up a plethora of opportunities moving forward that we might investigate at some point in the future. From our perspective, we remain doggedly focused on asthma and those kids, those 3.3 million kids, that $1.5 billion opportunity that the U.S. market presents to us right now.
Thank you. Next question is, "Marjan, are any institutions buying into Respiri yet?
Well, there were four institutional investors that jumped on board when we had our capital raise in October last year. To be honest, that was very pleasing. Prior to that, really, as we were getting our house in order, the stock really wasn't institutional grade, we believe now that it is. The proof's in the pudding, people have jumped on board. We will be undertaking a roadshow next week to go and spruik the wares of Respiri and also the recent developments with FDA. We hope to be able to announce that there will be more institutional investors putting their hands in their pockets and investing in this huge opportunity.
Thank you. The next question is, are there any technical considerations around IT architecture?
Not my area of expertise, we are building a portal that'll act as a platform for more than just what wheezo captures. Our objective is to create a platform that will act as a central repository for many of the other parameters that a patient needs or a doctor needs to capture about patients with respiratory disorders, asthma in particular, and have that as a one-stop shop for everyone. That, to us, is competitive advantage. What we hope to do is own that space, because today nobody does. Nobody owns that particular space in respiratory medicine. Our objective is to build an organization that is more than a one-trick pony and provides options for patients and doctors to objectively measure from the real world how well patients' asthma is being managed. We do that with wheeze now and breathing.
There are many other parameters that we are looking at at the moment. R&D doesn't stop just because we're selling a product in the marketplace now. We are a MedTech company. Our bread and butter is research and development, and we will continue to do that and bring to market wheezo next generation and the like.
Another one is, "Is the doctor incentivization offered via reimbursement codes in the U.S. available in other markets such as U.K., Europe for remote monitoring?
It is not. The reimbursement markets inside the U.K., the NHS reimburses the provider of a technical service like we would for every patient that takes it on board. The only incentive a doctor has in the U.K., for instance, is for the consultation fee they get for seeing the patient. Germany in particular is a huge opportunity, but again, they provide reimbursement to the provider of the service, not the doctor. The beauty of the German marketplace is they have a really generous reimbursement system that basically allows you to try before you buy. You would get a reimbursement upfront once you have agreed to certain health outcomes that your service would provide. Should you provide those outcomes in a measurable format, the reimbursement continues after 12 months. If you do not, then it is either a renegotiation of the reimbursement level or you lose reimbursement.
The U.S. is one of the few markets in the world that we've got registration for, where doctors are incentivized by remote patient monitoring reimbursement codes. To my knowledge, the Japanese markets are a little similar, but we're not even looking at that market at this particular juncture. The U.S. and Europe, U.K. are our sole focuses moving forward for the foreseeable future. There's enough work to be done there, and there's certainly enough patients and market opportunity.
Marjan, where do you see the company in the next one to two years? is the next question.
I see the company as a company that has a business model that works, building on the world-class team we currently have. Expanding our footprint internationally and building the necessary bespoke models with partners, particularly in the U.S. and Europe, to take advantage of the huge market opportunities that those two markets provide the company. My vision for the organization is to continue what we've been doing, to be quite honest. Make a commitment to the shareholders in the marketplace of what it is we're going to do, and then basically deliver on that commitment. Continue to do that is a formula for success for me. Having a business model that we can demonstrate is a sustainable business model moving forward is also very, very important. As I said, our goal is not to be a one-trick pony.
We do see an opportunity for an organization to take hold of the eHealth MedTech mantle in respiratory medicine, because nobody owns that at the moment, and we believe that we're extremely well-placed to take advantage of that and own that piece of investor real estate. That's basically it. Good team, deliver on what we say we're going to do, have a viable business model with an international footprint in the U.K., and the U.S. A series of product options that provide patients with an opportunity and doctors with an opportunity to better objectively measure how well patients are being managed from the real world.
Thanks, Marjan. We'll wind up the Q&A there. I'm conscious that there has been a huge number of questions come in. Any that have been unanswered, we have those on record and someone from the team will come back separately. Marjan, I'll hand back to you for final comments before we close off.
Fantastic. Once again, ladies and gentlemen, thank you very much for joining us on this watershed moment for Respiri. The U.S. marketplace is easily the largest healthcare marketplace in the world. We have the opportunity now to provide a very valuable service and medical device to almost 25 million U.S. patients with asthma. We do believe that we'll have a material impact on how well their asthma is being managed from the real world. Importantly, when we're successful in doing that, every patient in the U.S. is worth five times what a patient is worth here in Australia. It is a very lucrative market. Although our initial opportunity, children with persistent and severe asthma, and there's 3.3 million of those, reminding you that marketplace is worth $1.5 billion.
The opportunity with adults is almost 12.5 million patients, much larger, up to $6 billion in value. Remembering we've been very successful in securing an OTC, over the counter, Class II medical device indication with a patient population of children above two and all adults. What this does is it opens up both prescription and non-prescription channels for Respiri and wheezo, luxuries that other medical device manufacturers don't necessarily have. We're well on the way of preparing ourselves for the launch of the U.S. We've delivered on everything we said we would do in the past, the same team's going to continue to do that moving forward.
It's with great excitement that I look forward to the future. It's with greater excitement that I look forward to keeping you all abreast of our progress, not just in the U.S., but here in Australia as well, where we have some milestones that we need to continue to hit and our work to expand into U.K. and Europe. Thank you very much, and that's it from me.
Thanks, Marjan. That does conclude the session for today. Thanks to everyone for participating, and you can now disconnect.