Thanks @mikebrisy

Very insightful as always. There Is the obvious comparison with the GLP1 scare and how that’s played out.

First thought for me though is this one looks much riskier. The GLP1 issue was mostly speculation. If this happens then that might happen etc. And it also only would have impacted overweight cpap users.

This one looks head on. And like you I noticed the minimal side effects and significant number that were effectively cured.

Agree that we need some more data about whether it could be used in conjunction with cpap etc.

Theres not much doubt in my mind most patients would rather take a pill if there’s minimal side effects rather than the hassle of cpap so it’s a super close watch now.

I should have added one more important point. Even though the discontinuation rate during the Phase 3 trial was low at 10%-12%, in the case of treatments for chronic conditions (like OSA) the reasons for discontinuation can come more into focus during real world use after commercial launch, where discotninuations tend to be significantly higher.

There are many and varied factors for this, but sometimes the motivation of patient to adhere to trial protocols and the other controls in place in the clinical trial, are absent in the commercial phase, and real life kicks in.

It would not be unprecedented even given the relatively low discontinuation rate during this trial for there to be much higher discontinuation rate in real life. It is entirely possible that after trying AD109 for a year, anything from 20% to 50% or even more could be presenting again at the sleep clinic! This effect is well-studied and documented in a wide range of chronic conditions.

I've only added this point because the list of side effects cited (see below), while none appear serious, look like they could result in a reasonable portion of patients giving up on treatment over time.

To be fair, even on CPAP therapy, some 40%-50% of patients discontinue after one year!

So, while its nice to think taking a pill is easy to treat a condition, taking a pill on an ongoing basis, with the attendant side effects will not be attractive to some proportion of patients. I suspect, in practice, a fair portion of the addressible market are eventually going to try different things over time.

Table: AD109 Most Common Side Effects

Source: Combined analysis from latest Phase 3 SynAIRgy trial and prior Phase 2 MARIPOSA data:

@Karmast @mikebrisy well done guys, i could see RMD FPH lower, no idea why

Spot on @mikebrisy. Wake me up when it is 2027/2028. ResMed will continue leveraging its market leading position as the effective standard of care till then.

@mikebrisy@thunderhead Looks like US investors have followed your lead and not over reacted. I did nothing as well yesterday but off loaded a small residual holding today with an old broker at $38.92.

@OxyBBear the story got some coverage in the markets, including the US. I've included two analyst report summaries, perhaps consistent with what we were posting here yesterday.

Because $RMD has a high level over coverage in the US, I'd expect more update notes to follow. But there really isn't a basis for anyone to reduce their numbers for $RMD's trajectory over a 3-year timeframe which, let's face it, is what dominates recommendations in the market and the flows of most capital.

The way I think about things is that competition is part of most of the businesses in which we invest. While eventually AD109 could be the first of a range of products that materially increases competition for treatment of CPAP, it is way to early to call that yet. But it is certaintly something to momitor.

Another factor is that the market still hasn't fully digested two other items 1) GLP-1s net positive or net negative in mediumm/long term and 2) competition within CPAP, e.g., return of Phillips. With a 2-3 year time horizon in mind, I think the dispersion evident in analysts PTs for $RMD, means the uncertainty - or rather the divergence in views on those factors - swamps any impact we are likely to see from AD109.

So, having slept on this, I do think it is an area to keep monitoring. As my thesis rests on long-term success, changes in the shape of the competitive playing field in the long term should be taken into account in the thesis. So there is work to do on this over the next year or so. For example, once FDA approval for AD109 comes through, and we get firmed up data on the label indication, efficacy and patient experience, the market might well take more notice. So, more news flow in 12 months time might not be brushed aside so quickly. What's interesting is that Mick Farrell and his team will be all over this, and so the Q&A in the next 3-4 $RMD quarertly calls will be interesting.

Here are the news cuttings:

Morgan Stanley sees 'modest' earnings impact to ResMed from Apnimed

135 words

20 May 2025

The Fly

Morgan Stanley analyst David Bailey keeps an Overweight rating on ResMed with a $286 price target after Apnimed provided topline results as part of its Phase 3 trial for AD109, focused on the treatment of obstructive sleep apnea. Participants treated with AD109 recorded a mean Apnea-Hypopnea Index reduction of 55.6% from baseline, the analyst tells investors in a research note. The firm believes AD109 appears to focus on patients who are unable or refuse to tolerate continuous positive airway pressure, or CPAP. Further, patients who record an AHI less than 10 appear to be those with mild to moderate sleep apnea, the analyst tells investors in a research note. On balance, Morgan Stanley sees a "modest" potential earnings impact for ResMed based on current data from Apnimed.

Theflyonthewall.com

Apnimed data brings competitive threat to ResMed, says RBC Capital

20 May 2025

The Fly

RBC Capital says Apnimed released the topline results from its SynAIRgy Phase III trial of AD109, which showed the prospective once-daily oral pill for obstructive sleep apnea met its primary endpoint, with a mean reduction in Apnea-Hypopnea Index 55.6% from baseline. Other secondary and exploratory endpoints included reducing sleep apnea disease severity in 51.2% of participants and 22.3% of participants achieved complete disease control, the analyst tells investors in a research note. RBC expects that successful commercialization of AD109 would likely have a negative impact on ResMed's addressable market as AD109 "could offer a less invasive, more user-friendly and viable alternative" to positive airway pressure therapy. The firm says ResMed "now has a number of competitive threats on the horizon," including the return of Philips in the U.S. if it can satisfy the consent decree requirements as well as the impact of GLP-1s and of AD109. The firm has a Sector Perform rating on ResMed.

The stock morning is down 2% to $248.98.

Theflyonthewall.com

Disc: Held

@mikebrisy i see you are using "flyonthewall' is that worthwhile? i have never heard of it. thanks

@Solvetheriddle I don't know, as it came through via an aggregator, so I've never used it.

One of the summaries also came through on FN Arena (which I also don't pay for!) and I think the "flyonthewall" summaries were a bit more insightful than FNArenas. So, I will have a look into it.

@mikebrisy So, having slept on this, I do think it is an area to keep monitoring. As my thesis rests on long-term success, changes in the shape of the competitive playing field in the long term should be taken into account in the thesis

I agree whole heartedly with your sentiments. I previously disclosed that I am a long term investor that rarely sells as I believe the best returns are made in the holding of high quality stocks rather than buying and selling so as to let the retrurns compound without being interrupted by things such as tax. However I am starting to have a different perspective with stocks like RMD and I think I may have to continually take some profits if the share price continues rising considering it is basically a one product company with many potential competetive threats on the horizon. Hence my decision to take some profits today on the rebound.

While on the topic, in pharma, biotech and medical devices "Endpoints" is probably the go to news service. There are several options in the free service, and while you can only access limited articles via the free subscription, the headlines and summaries are often enough to tip you off that there is news to go after.

Here's their full article on AD109.

A key indicator would be if Big Pharm acquires Apnimed, as the biotech IPO market is currently a basket case. That would send a serious signal, and would be an adverse $RMD price catalyst. Or is it even something that Mick Farrell might consider? A big bet, and of course pharma is a completely different capability set to medical devices and therefore completely outside of $RMD capabilities.

Interesting times, for sure.

-------------------

Apnimed posts first set of Phase 3 sleep apnea results, aims for approval filing in 2026

Kyle LaHucik

Senior Reporter

Apnimed’s oral drug met the efficacy bar in the first of two Phase 3 studies in obstructive sleep apnea, the biotech said Monday morning.

It plans to report results from a second Phase 3 trial of the experimental medicine, named AD109, in mid-July, CEO Larry Miller told Endpoints News.

If the results of the second study pan out well, the drug developer wants to submit its new drug application to the FDA in early 2026, he said.

“You always have to be a little careful because one trial doesn’t predict the results of the other,” Miller said. “On the other hand, the trials are very, very similar, and deliberately so. That’s what FDA asked us to do. I think there is reason to be optimistic.”

Most patients with obstructive sleep apnea (OSA) are treated with a burdensome, decades-old option: the CPAP machine. There’s been little innovation for the disorder despite it impacting about one billion people worldwide, according to Apnimed.

The company aims to assuage those hurdles with an oral treatment that combines atomoxetine, a non-stimulant ADHD medication, and aroxybutynin, a variation on the antimuscarinic oxybutynin, which is approved to treat overactive bladder. By pairing the two medicines, Apnimed believes it can enhance a person’s oxygenation while they sleep. The thinking is that AD109 hits the root neuromuscular issues that lead to the narrowing and closure of the throat and larynx.

In the Phase 3 SynAIRgy results reported Monday, AD109 helped patients reach a mean reduction of 55.6% in the apnea-hypopnea index from baseline at 26 weeks. It achieved the primary endpoint as compared to placebo, coming in at a p-value of 0.001, according to Apnimed. The company reported no serious adverse events.

Late last year, the FDA expanded the label of Eli Lilly’s obesity drug Zepbound to include sleep apnea, marking the first approved medication for obstructive sleep apnea.

Miller said Apnimed believes AD109 could be complementary to GLP-1 medications like Zepbound.

Once Apnimed gets the results from the second trial, codenamed LunAIRo, they could help the company secure additional funding and explore pharmaceutical partnerships for the asset, Miller said.

The company disclosed an $80 million Series C extension in January 2023. Since then, Apnimed has flirted with the idea of joining the public markets, but biopharma companies are not choosing IPOs right now.

“The whole IPO question is moot these days. The bankers say there are no IPOs, so put that aside. The whole financing environment is not great, and we understand that,” Miller said. “But again with strong Phase 3 data, we believe we’ll be in a good position.”

In the meantime, Apnimed is preparing its NDA and building out a commercial team, Miller said.

A broad approach

Apnimed has a few other approaches to OSA in the works.

The 75-employee biotech has a joint venture it formed with Japanese drugmaker Shionogi. The JV, known as Shionogi-Apnimed Sleep Science (SASS), is running a Phase 2 of an oral drug called SASS-001. It’s a combination of the P2X3 receptor antagonist called sivopixant and an undisclosed second compound.

“That trial will probably take about the better part of the year to complete,” Miller said. Apnimed said last month that it anticipates topline Phase 2a data in the first half of 2026.

Meanwhile, the joint venture also in-licensed another oral drug candidate for OSA last month from Desitin Arzneimittel, a Hamburg, Germany-based biopharma company. SASS paid an undisclosed amount of money to get access to sulthiame, a carbonic anhydrase inhibitor that’s been tested in Phase 2 studies in Europe. The JV is meeting in two weeks to hash out a plan to advance the drug, Miller said.

“We’re not naive. We know not every patient will respond to or tolerate AD109, although again our results are very good,” Miller said, “but this will give us another drug that may be useful in patients with a similar degree of efficacy.”

@OxyBBear I need to update my $RMD valuation on Strawman, as my last was 2 years ago at $35, and I am probably closer to $45 for a central case at the moment.

So, I'm not rushing to sell any at the moment, because my valuation assumes that competitive advantage is eroded over the long term (whether due to devices or alternatives).

However, I am going to manage this risk though position size management. My current RL holding is 7.8% of my ASX portfolio, and given the risk profile, I'll probably not let it get too much above that.

Decent article with further background - Sleep apnea pill shows striking success in large clinical trial | Science | AAAS