A N N U A L R E P O R T 2 0 0 7
Visiting address:
Sundbybergsvägen 9 171 73 Solna
Post address:
Box 1024
171 21 Solna, Sweden Phone: +46 8 - 629 07 80 Fax: +46 8 - 629 07 81 E-mail: info@aerocrine.com www.aerocrine.com
AEROCRINEANNUALREPORT2007
EMD-000290-00
II n their laboratories in the same building of the Karolinska Insti- tute, in Stockholm, two researchers, Lars Gustafsson and Kjell Alving, were busy examining and analyzing exhaled air. Little did they imagine what their joint discovery would soon lead to…
Lars Gustafsson had previously published his findings that nitric oxide (NO) was present in exhaled air. Kjell Alving knew that NO could be formed by the body, and had features including a tendency to dilate blood vessels. When Kjell Alving read Lars Gustafsson’s paper, he decided to investigate the amount of NO in his own exhaled air and his colleagues’. The depart- ment had several allergy sufferers who had a go at breathing into the analysis device he hastily cobbled together.
The differences were striking – allergy sufferers had increased NO levels in exhaled air. After several tests, it proved possible to verify this data, and the thesis was soon corroborated – NO levels in exhaled air are higher in people suffering from allergies or inflamed bronchi. Lars Gustafsson and Kjell Alving decided to join forces to develop the discovery, and incorpo- rated a company. The rest, as the saying goes, is history.
24 November 2007 was the tenth anniversary of Aerocrine.
In ten years, the company has progressed from incorporation to a stock market flotation. The company’s products for moni- toring exhaled air, NIOX® and its successor NIOX MINO®, are approved in many countries around the world. A test that originally was of scientific interest only, became a unique discovery that helps physicians worldwide to provide more accurate diagnoses and administer the right drugs when treating inflammatory diseases of the airways.
Contents Aerocrine in Brief __________________________________________________ 1 Highlights of the Year ___________________________________________ 2 Aerocrine’s History _______________________________________________ 3 CEO’s Statement _____________________________________________________ 4 Dramatic Improvements in Sight __________________ 6 The Right Treatment is Just a Breath Away _ 8 NO Measures Provide Vital Answers ____________ 10 German Lung Specialists Measure NO _______ 11 Global expansion __________________________________________________ 12 Health Economics and Reimbursement ______ 14 Sports Results Improved _____________________________________ 15 A Clinic in-house to Expand Knowledge ____ 16
Product Development and Technology ______ 17 Patents and Proprietary Brands _______________________ 17 Competitors _____________________________________________________________ 18 Organization, Staff, Skills _________________________________ 19 Risk Factors _______________________________________________________________ 20 The Aerocrine Share _____________________________________________ 22 Report of the Directors ________________________________________ 24 Consolidated Income Statement _____________________ 28 Consolidated Balance Sheet _____________________________ 29 Consolidated Statement
of Changes in Equity _________________________________________ 30 Consolidated Cash Flow Statement _______________ 31
Six-year Summary _________________ 32 Key Figures _______________________________ 33 Board of Directors ________________ 34 Senior Executives ___________________ 35 Glossary _____________________________________ 36
This is a condensed version of the Aerocrine Group’s Annual Report. For further information please visit Aerocrine’s website at: www.aerocrine.com or contact CFO Michael Colérus at:
michael.colerus@aerocrine.com
Aerocrine in Brief
Aerocrine AB (publ) is a medical technology group focused on improved therapy and monitoring of patients with inflamed airways.
The company markets two products
• NIOX® Flex, globally
• NIOX MINO®, a new generation of hand-held products, in Europe.
The parent company is located in Solna, near Stockholm, Sweden. Aerocrine has sales enterprises in New Providence outside New York, US, Bad Homburg near Frankfurt, Germany, and one outside London, UK. Aerocrine sells its products through distribution partners in other countries.
The company was incorporated in 1997 and has a total of 64 employees.
Aerocrine’s share was floated on the Stockholm Stock Exchange on 15 June 2007.
Vision
Aerocrine will dramatically enhance the quality of life, care and treatment of people suffering from inflammatory airway diseases.
oBJECTiVE
Aerocrine’s objective is to build an internationally successful corporation selling the company’s products on all the world’s major markets, and maintaining and enhancing the company’s position as a market leader in measuring exhaled NO.
JAnUARY CPT Code comes into effect in the US. Physicians treating asthma patients linked to the Medicare system are paid for each exhaled NO test they conduct.
6 JAnUARY Aerocrine Inc. opens new premises in New Providence outside New York.
FEBRUARY Aerocrine appoints a new CEO, Paul de Potocki, who succeeds Thomas Almesjö.
3 M ARCH Anders Williamsson elected to the company’s Board as Chairman.
20 M AY Aerocrine presents NIOX® Flex for the first time at the ATS (American Thoracic Society) Congress in San Francisco.
29 M AY Aerocrine successfully conducts SEK 225 m new share issue.
3 M AY Aerocrine wins SwedenBIO Award for 2007.
JUnE Aerocrine opens the Aerocrine Technical Centre (ATC) in Uppsala, Sweden, for servicing and maintaining NIOX®.
5 JUnE Aerocrine listed on the Stockholm Stock Exchange.
Highlights of the Year
20 JUnE Swedish Medical Products Agency pub- lishes new recommendations for treating asthma, stating that specialist asthma clinics should have access to the exhaled NO method as standard practice.
28 AUGUsT New US guidelines for asthma treatment published. These involve exhaled NO as a forthcoming method for measuring the risk of asthma attacks.
24 AUGUsT Aerocrine strengthens its manage- ment by appointing Professor Kjell Alving as Direc- tor of Scientific and Medical Affairs.
7 sEP TEMBER Aerocrine strengthens its management by appointing Anna Malm Bernsten as COO and Vice President of Global Sales.
2 oCToBER Aerocrine files 510 (k) application for NIOX MINO® with US regulator the FDA (Food & Drug Administration).
7 DECEMBER NIOX approved in China, Aero- crine signs distribution agreement with BIOSON for NIOX and NIOX MINO in China.
20 DECEMBER Aerocrine signs distribution agreement with Phadia France for NIOX MINO in France.
Aerocrine’s History
997 Aerocrine AB incorporated by two world-leading research teams at the prestigious Karolinska Institute, Stockholm, Sweden.
998 Louis Ignarro, Robert Furchgott and Ferid Murad awarded the Nobel Prize for their work on nitric oxide (NO) as a signalling molecule. At this time, Louis Ignarro is a member of Aerocrine’s Scientific Advisory Board.
999 Standard recommendations for NO measurement published by the American Thoracic Society (ATS) alongside the European Respiratory Society (ERS).
Aerocrine’s first NO analysis device secures CE certified conforming to MDD; sales begin.
2000 NIOX® CE certified conforming to MDD and presented for the first time at the ATS Congress, Toronto, Canada, in May.
Aerocrine signs its first distribution agreement.
Three first NIOX systems sold.
200 Development of the next generation of devices, NIOX MINO®, begins.
European launch of NIOX through a rapidly accumulated distributor network.
Collaboration with US Army on using NIOX begins.
2002 Subsidiary Aerocrine Inc. incorporated in the US.
Continued expansion of NIOX distributor network.
Aerocrine receives a milestone order from an NIH (National institute of Health) sponsored clinic network in the US.
2003 NO measurement included in Dutch clinical guidelines for treating childhood asthma.
Results from Aerocrine’s first clinical study on NIOX are published in March and demonstrate very good reproducibility.
May: US regulator the FDA clears NIOX for marketing in the US.
Aerocrine Ltd. incorporated in the UK.
The company signs a license agreement with Ionics Business Group in the US, which receives non-exclusive rights to produce and commercialize its products for analyzing exhaled NO during Aerocrine’s patent lifetimes.
2004 NIOX MINO secures CE certification conforming to MDD; pilot launch in Finland.
First sales of NIOX MINO in Germany.
Marketing approval for NIOX in Canada.
Licensing agreement with Eco Medics AG in Switzerland, on similar terms to the previous licensing agreement with Ionics.
2005 Launch of NIOX MINO begins on selected European markets.
First presentation of NIOX MINO at the major WAC (World Allergy Congress) in Munich.
May: a respected periodical, the New England Journal of Medicine, publishes a clinical study demonstrating that inflammation measurement with NIOX can result in drug consumption reducing by up to half without compromising disease control.
Aerocrine GmbH incorporated in Germany.
2006 Reimbursement received in Portugal, the first market in Europe.
January: the Journal of Allergy and Clinical Immunology publishes a study conducted by the US clinic network that acquired a number of NIOX in 2002. The study demonstrates the value of using measurement of inflammation to monitor asthma and predict therapy responses to asthma treatment.
September: the journal Thorax publishes a guide to interpreting the results of NO measurement.
This guide is important for the accurate day-to-day treatment and diagnosis of asthma patients based on their measured NO values.
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CEO’s Statement
Inflammatory airway diseases like asthma and chronic obstructive pulmonary disease (COPD) are among the world’s most widespread and fastest- growing diseases. Over half a billion people suffer from these chronic disorders, which generate enormous costs for society and national healthcare systems.
Asthma is chronic lung disease characterized by an inflammation of the airways. People with asthma have inflamed airways that react to aller- gens, irritants or infections, thereby causing asthma episodes or attacks. Today, the main causes of asthma morbidity and mortality are under-diagnosis and inappropriate treatment.
Historically, the patient’s symptoms together with lung function tests have formed the basis of asthma diagnosis and continuous disease control. However, the underlying cause of symptoms and reduced lung function is the airway inflammation. The ability to measure and control this inflammation, rather than its consequences, can dramatically improve diag- nosis, treatment and asthma control.
Aerocrine’s founders made the discovery that nitric oxide, NO, in exhaled air is a biomarker for airway inflammation. Since then, Aerocrine has led the way in developing products that now help care practitioners and patients worldwide improve asthma treatment by monitoring the root cause of the illness. In doing so, Aerocrine is providing a unique solution to a well-defined patient and therapy need in one of the world’s largest and fastest growing diseases.
PRoDUCTs
Aerocrine’s first product, NIOX®, has been extensi- vely used mainly in clinical research and drug testing for several years. NIOX was further develo- ped to become NIOX® Flex in the year. Sales of NIOX and NIOX Flex have been, and will remain, important for establishing this new method of inflammation monitoring among researchers and opinion leaders. However, to extend the usage of Aerocrine’s products and method outside of acade- mic research, an equally reliable but smaller hand- held device is required. For this purpose, Aerocrine has developed NIOX MINO®, a compact, hand-held instrument tailored for small hospitals, primary care and potentially for patient home use.
Inflammation measurements with Aerocrine’s products is fast, easy and patient friendly. With a single monitored exhaled breath, the physician and patient gain an accurate, objective measure of the airway inflammation in just a few minutes. This information is valuable for accurate diagnosis and choice of appropriate medication.
In addition, Aerocrine’s method of measuring airway inflammation is a large scale application in the continuous monitoring of asthma. Asthma is a chronic disease in which airway inflammation peri- odically deteriorates, causing symptoms, breathing difficulties and sometimes, life-threatening attacks.
By measuring and controlling the underlying inflammation, serious symptoms can be predicted and prevented proactively. The advantaged are obvious compared to controlling asthma on the basis of symptoms, and being forced to treat the potentially compromised lung function resulting from aggravated inflammation.
Insulin-dependent diabetes, and the introduc- tion of blood glucose monitors, offers an interest-
Aerocrine’s objective is to dramatically improve care and treatment in one of the world’s most widespread therapy areas – inflammatory airway diseases.
GoALs ACHiEVED in 2007
• Sales of repeat tests increased by over 125%
• New office opened in New Jersey, consolidation and expansion of US organization
• CPT Code and reimburse- ment from Medicare in the US implemented
• 510 (k) filing submitted to the FDA for marketing clearance of NIOX MINO in the US
• Successful sales expansion of NIOX MINO and tests in Germany
• NIOX approved, strong distributor of NIOX and NIOX MINO on location in China
• Distribution agreement signed in France
• NIOX Flex launched in Europe and the US
• In-house servicing unit started in Uppsala
• Successful new share issue and IPO (initial public offer- ing) conducted
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ing comparison. Before the advent of these devices, diabetes patients self-injected insulin doses largely based on how they felt and what they’d eaten.
Modern blood glucose monitors offer diabetes suf- ferers a simple, reliable and personal tool to treat and monitor their disease based on an objective measurement. Blood glucose monitors have devel- oped into a multi-billion dollar business.
THE CHALLEnGEs
Healthcare around the world is generally funded by various national and private healthcare insurance systems. In addition to new medical technology products requiring approval from regulatory authorities, before sales can start healthcare insur- ance systems must choose to fund them. Moreover, the treatment of many diseases is determined by national clinical guidelines, where the authorities or scientific bodies compile recommendations on diagnostic methods and medication alternatives.
To secure a widespread international breakthrough, a new product must be included in these guidelines and be funded by these insurance systems, which can sometimes involve long decision-making processes.
CoMPETiTion
Aerocrine is conducting development in a segment where we made a major discovery ourselves, that nitric oxide in exhaled air can measure inflamma- tion of the airways. We currently have patents divided between three business segments and 14 separate patent families. Continued technological progress with our patents in focus is an important part of the company’s long-term strategy. Until now, we have successfully defended out patents and market leadership.
We welcome new companies that want to par- ticipate and increase accessibility to our method of monitoring airway inflammation, but we will defend our patents resolutely. In March 2008 Aerocrine filed a patent infingement suit aganist the Belgian company Medisoft in Germany.
nEw M ARkETs
We are entering a new expansive phase and releas- ing our products on some of the world’s biggest markets. In 2007, NIOX® secured clearance for sale in China, and we signed a distribution agreement with a strong partner there. We also signed a distri- bution agreement on NIOX MINO® in France, and
in January of 2008 we signed an agreement with a Japanese distributor that is now working towards getting NIOX MINO approved for broad sales in Japan. In the US, we submitted a 510 (k) filling for marketing clearence of NIOX MINO, and in March of 2008 we received FDA clearance to start selling the product in the US. We are currently in the ini- tial phase of the launch of our key product in the US, where we have also expanded our commercial organization. Our method is included in a growing number of countries’ national guidelines for treating asthma, and in 2007, the introduction of healthcare system funding for NO measurement started in sev- eral countries including the US.
sToCk M ARkET FLoTATion
Our stock market flotation in 2007 was a milestone in our corporate development. We successfully conducted a new share issue in May, and the com- pany was listed on 15 June. As a medical technol- ogy company, taking our own, highly significant discovery all the way from the laboratory to listed company status feels very special.
oUR FUTURE
The past year largely centred on paving the way for the more commercial phase now awaiting Aerocrine. We have a unique, patented product that provides a simple solution to a clear, unmet care need in one of the world’s largest therapy areas. We create patient benefit and can generate socio-economic savings. Our core business – sell- ing repeat tests for our main product NIOX MINO – achieved growth of over 125% in 2007. And this despite the fact that we haven’t actually started selling the product on any of the world’s largest markets yet, apart from Germany. In this country, with our own resources, we quickly achieved 70%
penetration with our initial target group, specialist asthma practitioners.
Now we’re concentrating on international expansion – Aerocrine has its best years ahead of it!
Paul de Potocki CEO, Aerocrine
Solna, Sweden, April 2008
FoCUsEs in 2008 Sales Growth
• Expand sales resources and launch NIOX MINO in the US
• Start sales to research mar- kets in Japan and China;
create the right prospects for broad-based sales through strong distributors in these countries
• Start sales through an established distributor in France
• Extend target groups from specialists to general prac- titioners
• Extend health economic data to include exhaled NO in more national reimbursement systems
• Get the NO method included as a standard test in national and interna- tional clinical guidelines
Product Development
• Introduce a new version of NIOX MINO and PC- based patient database
• Initiate development of the next generation of devices for patient use alongside a strong production partner
• Further strengthen the company’s patent portfolio
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Dramatic Improvements in Sight
When patients visit their doctor with vague symptoms like coughing, difficulty breathing and pressure in the chest, there has, until now, been no simple way of discovering the cause. Measuring the airway inflammation enables such vague symptoms to be interpreted, so physicians can make more accurate diagnoses.
Lower values, below 25 ppb in adults and 20 ppb in children, indicate another disorder that cannot be prevented with steroids, which is just as impor- tant information for doctors. Measuring the airway inflammation is the only way the doctor can gain this type of information.
An asthma patient taking regular medication should have NO values below 50 ppb if their med- ication is working. If the value is higher, this may indicate that the patient has not been taking medi- cation as prescribed, or for example, has acquired a pet that has exacerbated the allergy, or is using the wrong inhalation technique. However, most commonly the NO value has declined at check up confirming that the patient is receiving the right drugs. The effect is demonstrated by NO levels dropping after just a few days or up to a week after treatment starts.
The objective is to keep inflammation under control so that patients remain symptom free at the lowest dose possible. An NO measurement after dose reduction provides a quick answer to whether the new, lower dose is working. If the dosage change was inappropriate, NO values rise quickly.
With the aid of exhaled NO, the whole care process benefits from a deeper understanding of the disease.
Monitoring patients and symptoms is improved, offering a range of benefits for everyone involved.
BEnEFiTs FoR PHYsiCiAns
The method offers physicians better insight into, and control over, the causes of patient symptoms, and which medication is appropriate. The doctor gains an objective measure of the patient’s condi- tion over and above the patient’s own, more subjective impressions. If airway inflammation is measured before spirometry, then on occasion, there is no need for spirometry. If the value is towards 100 ppb, it is clear that the patient The goal of inflammation measurement is for
patients to live normal lives, exercise and remain active without being troubled by their disease.
Aerocrine’s business concept is based on improv- ing the care of patients with unspecified airway symptoms.
Both high and low NO values in exhaled air are of interest, because they help doctors differentiate which patients should receive anti-inflammatory drugs and which should not.
When a patient comes to their doctor with vague airway symptoms, physicians often conduct a thorough examination. Lung function tests and various types of allergy tests such as blood and scratch tests are conducted. The results then enable the doctor to diagnose the disease and recommend appropriate treatment. If the patient has asthma, he or she may need inhalation steroids. If there is a chronic cough, other medicines may be necessary, or the symptoms may have an altogether different cause, such as a problem with the vocal cords.
A METHoD THAT inCREAsEs know-How
Doctors often prescribe steroids as cortisone sprays that alleviate swelling in the airways and ease breathing, without being certain that they will be effective against the symptoms. Patients will then have a repeat visit after 14 days to verify whether their therapy is having any effect.
For this type of patient, measuring exhaled NO can dramatically improve care. Measurements are simple and provide quick answers to whether the patient has inflamed airways, which can be coun- tered by steroids. Measured values of 50 ppb or above in adults and 35 ppb or above in children are abnormally high, and indicate that the patient has an airway inflammation that could be pre- vented with the aid of steroids.
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will need treatment, regardless of the results of spirometry. Nor is its unusual for patients to have normal spirometry, close to 100% of normal val- ues, but still have a high NO value.
BEnEFiTs FoR nUR sEs
Inflammation measurements are easy and quick to take – only really young children and patients severely affected by COPD are unable to blow into the device. Measurements are easier to perform than spirometry and do not affect the body in any way. Often, nurses take a measurement before the patient meets the physician. Clinics often have specially trained nurses who also train patients on taking their medication.
BEnEFiTs FoR THE PATiEnT
Measured values are clear and can be explained to patients easily, they can see the results themselves.
It is also easy to understand how the symptoms are caused by inflammation that has caused the air-
ways to redden and swell, and that anti-inflamma- tory drugs are necessary to ease the redness and swelling. The NO value measures the inflammation and its seriousness. Lung function tests measure the spasms that occur when airways swell, and determine the level of obstruction. Doctors can easily motivate patients to take their medication and avoid the risk of attacks – motivated patients take their medication.
BEnEFiTs FoR HEALTH AUTHoRiTiEs AnD oTHER FUnDinG BoDiEs
One benefit of exhaled NO measurements is that patients medicated with steroids can be treated more optimally. For some patients, dosages can be reduced, which cuts costs. Others may need a higher dose to keep their symptoms under control, which also reduces costs because with better con- trol, patients remain more healthy. Patients with their disease under control and getting the right treatment can avoid asthma attacks and A&E visits.
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Aerocrine’s products are simple, effective and fast aids for an increasing number of practitioners and patients in more countries. The patient benefits are substantial. The fact that one breath out into a mouthpiece can provide quick and informative answers, and is easier to conduct than spirometry, reversibility tests or tests on coughed-up phlegm, for example, is highly significant to patient percep- tions. Measured values then offer accurate informa- tion on the treatment patients need. Measuring exhaled NO values can give patients a completely new quality of life.
Unlike spirometry and other lung function tests, NO is a marker of inflammation. NO values provide an indication of the current status of inflammation in the lungs. Because, by definition, asthma is chronic lung inflammation, the ability to measure it is impor- tant and valuable.
Aerocrine currently markets two products that measure the level of nitric oxide (NO) in patient exhalations, NIOX® Flex and NIOX MINO®. NIOX Flex is the successor to the company’s first device, NIOX.
These devices have contributed to simplifying the monitoring of inflammatory airway diseases, and offer healthcare professionals tools that physi- cians, nurses and patients appreciate their simplic- ity and ability to provide accurate information on the state of diseases.
The Right Treatment is Just a Breath Away
Over 300 million people worldwide are affected by asthma.
Giving them the right treatment tailored to their needs can dramatically enhance their quality of life.
NIOX MINO is ergonomically designed, with clean and simple lines. It has attracted several design experts, winning several prestigious design awards since 2005, two being the Medical Design Excellence Awards 2005 and the Industrial Design Excellence Awards 2005.
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An intuitive touch screen means NIOX MINO is user friendly. The screen displays simple, clear symbols, inclu- ding a cloud that blows when the device is ready for testing.
The test starts with the patient taking a deep breath in through the mouthpiece. The screen displays a cloud getting larger.
Then the patient exhales.
A built-in flow control and special audible tone, plus a light on the top of the device, help the patient to blow at the right pressure during exhala- tion. A ten-second exhalation is enough to obtain reliable NO values. The mouthpiece is hygienic and exchanged for each patient.
It takes about a minute before the patient’s NO value appears on the screen.
no MEAsURED wiTH nioX Mino® nioX®
When NIOX was launched on the European market in 2001, it meant a real boost to asthma care. It was a globally unique device based on a tried-and-tested analysis method – chemiluminescence. A sample of exhaled air is pumped into a reaction chamber, where photons are formed that are measured through a light-sensitive photomultiplicator tube.
By compiling the signals from the tube in a computer system that calculates the amount of nitric oxide in exhaled air, extremely low levels of NO can be measured. NIOX quickly secured market leadership, and many researchers worldwide have conducted clinical studies using it. The device is still on the market, and was during 2007 replaced by its suc- cessor when NIOX Flex was launched.
nioX® Flex
NIOX’s functionality was upgraded by NIOX Flex.
This new device has a new operating system, an enhanced patient data system and can communi- cate via USB ports. Moreover, a new application, NIOX Flex Flow, that can determine whether lung inflammation is located centrally or more periphe- rally, which can be highly significant to therapy choices, was launched as an add-on to other research applications.
All NIOX users can upgrade their devices to NIOX Flex when they are serviced. Many have already ordered this upgrade.
nioX Mino®
NIOX MINO is a more compact hand-held device that makes measuring exhaled NO accessible to more users. NIOX MINO, Aerocrine’s big seller, has been on the market since 2005, and thanks to its lower pricing, is attractive to smaller clinics and healthcare centres.
Patients hold the NIOX MINO and breathe into the mouthpiece. A special audible tone helps patients maintain the right flow during exhalation, whereupon results are quickly displayed on the front of the device. NIOX MINO is mainly intended for routine measurements and doctors can buy sensors with 100 or 300 measurements, paying per correctly exhaled NO test.
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Measuring Inflammation Provide Vital Answers
Measuring NO values helps doctors differentiate asthma from similar conditions, and differentiate various forms of asthma from other airway diseases.
no MEAsUREMEnT
siGnALLED A HiGHER DosE
Despite the fact that Eva, 21, used an inhaler when affected by allergy symptoms, she still didn’t feel well. The condition worsened during exertion, cold weather, exposure to strong odours, or if anyone nearby was smoking. Measuring her airway inflam- mation during an examination revealed that her NO value was abnormally high. She was prescribed a higher dose, which her doctor increased again after a follow-up.
A new measure was taken on her third visit, which showed that her NO value was normal.
By monitoring her NO level, Eva gained better control of her disease, and was also able to accept that she was suffering from asthma. A higher dose and regular inhalation of
steroids was necessary, but she is now free of symp- toms during exertion and feels better.
An EXHAL ATion TEsT wiTH GEnUinE BEnEFiTs
Sebastian had been receiving regular treatment with steroids for asthma diagnosed when he was five. When he was ten, he had severe airway prob-
lems, and visited his doctor.
A measure of exhaled NO revealed completely normal levels of nitric oxide in his exhaled air, showing that his problem was not caused by inflammation. Treating this with steroids would not have had any benefit, and accordingly, his regular treatment was interrupted as a test. A follow-up visit indicated that his NO value had not increased during the period without steroids. There was no recurrence of his asthma, and Sebastian recovered without medication. An ear inflammation, which could be treated quickly, proved to be the underlying cause of his severe breathing difficulties.
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German Lung Specialists Measure NO
Some 70% of lung specialists in Germany’s primary care system use NIOX MINO® to measure NO in exhaled air when diagnosing and treating patients.
“We really value this method for measuring inflam- mation of the airways,” commented Professor Dr. H. Magnussen of Hamburg, who is one of the main advocates of measuring exhaled NO among German specialists. He is one of few physicians in the world that has the experience of using this method as clinical routine for over eight years.
“About 1,000 of my patients have had NO measurements, and several hundred regularly measure their NO to monitor their disease,”
continued Professor Magnussen.
There are some 700 primary-care clinics special- izing in lung diseases in Germany. These specialist units are independent, and not linked to particular hospitals. They are responsible for most of the diagnosis and treatment of patients with airway diseases in the country.
“We’ve got a good contact network and share experience and know-how with each other at yearly lung specialist conferences. When I tell people about my experiences of this simple, non-invasive method, more of them become interested in meas- uring NO in exhaled air. The units and tests are not particularly costly, and despite patients having to fund the tests themselves, they want to test on an ongoing basis so they can control their care and manage their disease.”
nioX Mino siMPLiFiEs DiAGnosis AnD TREATMEnT
In a survey of 97 German lung specialists, 85 responded that they benefit often or very often from test values when making an accurate diag- nosis. For determining treatment methods, 86 of respondents said they are helped by NO values
often or very often.
A total of some 5.5 million people in Germany suffer from asthma. The country’s national
guidelines for diagnosing and treating asthma will be updated in 2008. The authors will
then recommend that physicians consider the method for measuring exhaled NO to
measure inflammation of the airways.
P R o F E s s o R D R . H . M AG n U s s E n
Expanding into new markets requires thorough preparation, structure and clear routines. Aerocrine has a proprietary method – The Aerocrine Way – that follows the same procedure for each new market.
“If you want a successful launch, you have to take one step at a time, and take them in the right order.
More haste less speed,” says Anna Malm Bernsten, Aerocrine’s Vice President of Global Sales.
Aerocrine has a good reputation, its method is accepted by international opinion leaders and in 1,500 published articles on exhaled NO.
“There are different ways of working on differ- ent markets. You need a lot of experience and knowledge to get the right approach. We’ve endeavoured to define this structure. By utilizing the experience we have accumulated so far, we’ve been able to determine what works best. The result is “The Aerocrine Way”, a methodology we always use when addressing new markets.
One key building-block is to initiate contacts with the leading international, national and regional opinion leaders.
“When they’ve seen the clinical benefit, and sometimes actually researched the method them- selves, they can help mature the market. Many national and regional opinion leaders also act as advisers to the authorities. Their activities play an important role in preparing guidelines for the clinical treatment of patients with airway diseases in various regions.”
GUiDELinEs AnD REiMBUR sEMEnT Widespread usage of our products in the daily routine of clinics cannot start until our method for measuring NO is incorporated in clinical guidelines.
“No large-scale routine use can start before we gain acceptance from the reimbursement system in each country. When this is achieved, very wide- spread usage becomes possible, by general practi- tioners and in primary care. However, getting there takes time, which you have to be conscious of; there
can be no shortcuts. Getting onto a new market necessitates first building trust in the company and acceptance of our method,” continues Anna Malm Bernsten.
M ARkETs AnD sALEs CHAnnELs
Aerocrine’s most mature market is Germany, where the company has its own sales team.
“Here, a dominant share of private lung special- ists use our method in daily clinical practice. We participate in creating standards, and have consid- erable influence thanks to factors including results from published studies involving our products.”
Sweden is another mature market, just behind Germany in terms of the acceptance and under- standing of the method. It has been incorporated in guidelines governing Swedish specialists’ treatment of asthma since 2007.
“We’re confident about progress on the Swedish market, and have noticed growing interest from the primary care sector.”
On those markets where Aerocrine is unable to open proprietary sales offices, the company enjoys fruitful collaborations with distributors in many European and Nordic countries.
The next big challenge is the US, where Aerocrine has had regulatory approval for NIOX® since 2003.
The company filed a 510 (k) application with the FDA for marketing clearance of NIOX MINO®, and approval was received on 8 March 2008.
“We’re now established on one of the biggest markets – there are 23 million asthma sufferers in the US. In 2007, we started to prepare the launch and strengthened our commercial organization.
Many opinion leaders are already very familiar with our method, and we rolled out a training package for physicians in the US.”
Global Expansion
In Germany, a dominant share of private lung specialists use our method in daily clinical practice.
“
A n n A M A L M B E R n s T E n
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nEw M ARkETs in THE PiPELinE
Aerocrine is at differing stages on different markets.
In Australia and New Zealand, the company has been working alongside opinion leaders and distributors for a few years. In other countries, like strategically significant Japan, we just signed distri- bution agreement.
“Obviously, China is a big and important market.
During 2007, we secured regulatory approval for NIOX® thanks largely to our distributor and its way of working methodically on regulatory issues. Our distributor has operated very professionally, ena- bling us to extend our agreement with them, so that they also gained the rights for the future distri- bution of NIOX MINO®. In Europe, we passed a milestone by signing an agreement in France with the distributor Phadia, which now means we are established on Europe’s five biggest markets,” con- tinued Anna Malm Bernsten.
Aerocrine has in-house sales channels in the US, Germany, Sweden and the UK, and operates through distributors in various parts of Europe and Asia.
“Getting sales underway in a new country takes time, and the first phase focuses on marketing.
That’s why it’s important to select sales collabora- tions with a partner that has the patience to work for the long term and understands Aerocrine’s working method in this segment.
“We have to demonstrate the difference our method makes, both to how patients are treated and how they feel, as well as the type of treatment that is relevant, and at what dose. Our sales goals relate to our overall goal – that patients with airway inflammation should feel as well as possible. If they’ve received satisfactory treatment with the right medication, the right dose and also had good follow-ups, they will enjoy a better quality of life than at present. Their everyday lives will be the same as any other child or adult, without any absence from day-care centre, school or work.
There is a big socio-economic pay-off from patients feeling as well as possible.”
We’re now established on one of the biggest markets – there are 23 million asthma sufferers in the US.
National opinion
leaders opininonKey
leaders International
opinion leaders Specialist use Routine
Clinical use GPs
Home use
Strategic marketing
Sales
Reimbursement Payer acceptance
Clinical guidelines Clinical acceptance
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Health Economics and Reimbursement
Despite the massive socio-economic cost of inflammatory airway diseases, patients are often undertreated and suffer from their diseases unnecessarily. The method of quick and easy airway inflammation measurement can improve the situation dramatically, while also slashing the socio-economic costs.
“It’s important to put money into those initiatives that have the greatest benefit in relation to cost.
People like us that sell pharmaceuticals or tests must be able to demonstrate the cost savings or more healthy patients thanks to an improved clini- cal benefit,” says Lena Kajland-Wilén, Aerocrine’s Marketing Director.
Healthcare managers responsible for a budget covering the care of a certain patient population must find cost-efficient therapies that can help reduce the burden on A&E apartments, reduce drug costs and keep patients healthy longer.
“Initially, Aerocrine’s tests for determining air- way inflammation cost more than traditional meth- ods, but you have to weigh the clinical benefit of more accurate diagnosis and treatment into poten- tial costings.”
“LisTEninG” To YoUR own siGnALs Asthma is caused by chronic inflammation of the airways. The body has its own signalling system to indicate when airways are inflamed, and this occurs through an increase in the volume of nitric oxide (NO) in exhaled air.
“If you measure NO values, you immediately get a measure of the inflammation, and doctors can quickly prescribe an anti-inflammatory drug to reduce it. By monitoring values regularly, the dis- ease can be kept under control, care costs reduce and the patient’s daily life and quality of life improve significantly.”
THE PAYER M AkEs THE DECisions Although marketing a product that offers a clear patient benefit and better socio-economics might appear simple, the method has to be incorporated into reimbursement systems in every country before doctors and hospitals can be reimbursed for the tests they conduct. In countries with socialistic governments, health authorities or central govern- ments fund healthcare. In other countries, the indi- vidual must take out health insurance. In the US, many corporations offer health insurance for their employees and families. People without jobs or funding have a safety net in the Medicaid and Medicare programs.
“In Germany, the amount of free state-funded healthcare has reduced. People who want some- thing extra have to self-fund. This works well and patients pay for various tests and special examina- tions themselves.”
BEinG PART oF GUiDELinEs
Incorporating a method into prevailing treatment guidelines is a decisive factor for the authorities’
attitude to reimbursement. Aerocrine’s tests are already part of the reimbursement systems of seve- ral countries around the world including Finland, the Netherlands, Portugal, South Africa and the US, and the Rome region in Italy. More are in the pipeline.
“In Sweden, each health authority makes its own decision on reimbursement. More health authorities showed an interest once the method was incorporated into Swedish guidelines in mid- 2007. Since Sweden is our domestic market, it feels good that patients are also gaining access to our method here,” concludes Lena Kajland-Wilén.
By monitoring the air- way inflammation regu- larly, the disease can be kept under control, care costs reduce and the patient’s daily life and quality of life improve significantly.
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L E n A
k A J L A n D -w i L é n
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Sports Results Improved after Changing Treatment
The first encounter with NIOX® was a revelation for Richard Kolozsi, a member of Slovakia’s national mod- ern pentathlon team. “I’ve had asthma since I was four and had been treated with beta 2 agonists that don’t have any effect on the inflammation of the lungs. It was only two or three years ago when I tested with NIOX that I realized that this treatment had been anything but effective.”
Richard Kolozsi lives in Bratislava, the Slovakian capital. He is 25 and a member of Slovakia’s natio- nal modern pentathlon team. This is a strenuous sport, where competitors start with target shooting, 20 shots of 40 seconds each. This is followed by fencing and then a 200 m freestyle race. There is then an equestrian round, where each competitor has 20 minutes to get to know the horse he will be riding. The final part is a 3,000 m cross country race. The starting order in this race is determined by the results from previous events, and the first across the line after the run wins the whole competition.
“Actually, it’s thanks to my asthma that I took up sport. I started swimming when I was seven for fun, but also to improve lung capacity. When I was 15, I switched to modern pentathlon and started to compete more. Horses are involved in one modern pentathlon event, and it was quite difficult to start with. Although I’m not allergic to horses, it was quite hard to breathe properly during the first five or ten training sessions. Sometimes it was difficult, but apart from that I felt good, and actually never felt that my asthma was a problem.
Sport helped revealed the reality. The lung function measurement Richard produced was very positive, with parameters of around 100% or more, although his doctor at The National Institute for Tuberculosis and Respiratory Diseases in Bratislava wasn’t satisfied. She expected better lung function results from a sportsman like Richard, and referred him to the only clinic in the country with a NIOX for an examination.
“I felt good when I came to the clinic, but immediately after the examination I had to spend five minutes convincing the doctor that I’d really been taking my medication. My ‘peak’ was an NO value of 180 ppb, and for the first time in 20 years of medicating my asthma, I was treated for the actual inflammation rather than the symptoms.
NIOX is still fairly un-recognized in Slovakia, and there is still only one unit at the clinic.
“The tests were also expensive. I’m thankful that my doctor persuaded me to go and take a NIOX examination. Now I medicate twice a day, and have nothing to worry about. I test with NIOX MINO® six times a year, and adjust my dosage according to the seasons. The change I’ve under- gone has really brought a dramatic improve- ment in my quality of life.
In the year after Richard’s first test with the NIOX, he improved his personal best in the 3,000 metres by 15 seconds from 9:45 to 9:30, and in a sport where every hundredth of a second counts, that’s a fantastic result.
A Clinic in-house to Expand Knowledge
“We will be preparing algorithms and models to help doctors use the results of our measurements better clinically,” commented Professor Alving, who together with research colleague Lars Gustafsson, is behind the method of measuring exhaled NO.
The advantage of measuring NO is clear if a parallel is drawn with diabetes.
“Diabetics are treated with insulin, asthmatics with anti-inflammatory drugs. Diabetes is an insulin disease, asthma an inflammatory one. Diabetes treat- ment is controlled by measuring blood glucose, so the treatment of asthmatics should be controlled by measuring inflammation levels. No physician would reduce the insulin dose of a diabetes patient with- out measuring blood glucose levels. Nor should anyone reduce the doses of an asthma patient without having measured inflammation levels. But this type of thinking isn’t self-evident. We know support and guidelines on interpreting exhaled NO in clinical use are needed, and that’s what we’re focusing on now.”
The clinical unit will also devote some of its time on conducting in-house clinical studies focusing on health economics.
“We want to prove that our tests are economi- cally viable, and have started to build a data and reference bank to expand our knowledge. We took our first step when publishing the first health economic study that demonstrated the cost savings of implementing exhaled NO testing in clinical routine in Germany. This lends our argument weight and motivates the funding bodies in various countries to bear the cost of testing.”
Aerocrine is also involved in a number of studies where the researcher or clinic takes responsibility for the study itself, but with Aerocrine’s support.
In these circumstances, the clinical unit operates as the professional counterparty.
“We do this by setting standards, offering expert advice on the clinical usage of exhaled NO, taking a view on costs and participating in the dialogue and planning process. A number of such large- scale studies are underway in Europe and Sweden, and another two are starting up. It’s an advantage that the exhaled NO method will be thoroughly evaluated so that it can be incorporated more quickly into clinical guidelines in more countries,”
concludes Professor Alving.
In 2007, Aerocrine effected a strategic division between scientific and medical affairs, providing the company with an in-house scientific and medical unit led by the company’s co-founder Professor Kjell Alving.
k J E L L A LV i n G
Schematic view of the bronchial wall epithelial cells.
Minimal release of NO.
Red and inflamed bronchial wall.
Increased production of NO.
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Product Development and Technology
PRoDUCT DEVELoPMEnT
Aerocrine’s development program includes conti- nuous functionality enhancements of existing pro- ducts and the creation of new products that support its overall product offering to primary care and the customer groups the company addresses. Aerocrine completed the development of the successor to NIOX, Aerocrine’s larger product, in the year, and this product, NIOX Flex, was demonstrated for the first time on the US market in May.
“We work proactively on the quality control and maintenance of our products,” commented Mats Carlson, Aerocrine’s Vice President and Director of Technical Development and Operations.
The longer-term ambition is for patients to be able to measure NO at home. This will enable the number of measurements to increase, reducing the risk of asthma attacks. A number of tests for home use are in hand, and progress is heading towards the perception of asthma treatment as comparable to diabetes, a disease where at present, patients conduct most of the monitoring and measurement themselves.
AERoCRinE’s nEw TECHniCAL CEnTRE In summer 2007, Aerocrine expanded its techno- logy operations further when it opened the new Aerocrine Technical Centre (ATC) in Uppsala, near Stockholm.
”We wanted to bring the servicing and mainte- nance of NIOX and NIOX Flex products in-house and to accumulate our own after-market support skills on NIOX MINO®, which we’d previously out- sourced. We now have four staff working at the ATC in Uppsala. Enhancing our technical skills and capacity is an important step towards our objective of being more commercial.”
Aerocrine’s technical centre in the US served as a model for its unit at Uppsala.
“We have very valuable experience in the US, and in tandem with our efforts to increase accessi- bility and service to customers, the US centre is now taking on integrated servicing and support responsibility for NIOX and NIOX Flex in North America, while the Swedish ATC is responsible for servicing for the rest of the world.”
Aerocrine takes a proactive approach to product development and technology matters.
Development of NIOX® Flex concluded in the year. The company also opened the Aerocrine Technical Centre (ATC) for development and maintenance in Uppsala, near Stockholm, Sweden.
M AT s C A R L s s o n
In 2007, Aerocrine secured US approval for the first patent in a completely new patent family. The patent protects a method of measuring whether patients that have undergone polyp surgery have improved nasal flow. Aerocrine’s broad patent portfolio has 128 patents divided between three business segments and 14 separate patent families.
Of the 14 patents issued in the US, 11 also cover Europe and five cover Japan. Aerocrine’s funda- mental and central knowledge of measuring in NO in airways, the intestine and urinary tracts is pro-
tected on the company’s priority markets. The company files new patent applications continu- ously, which is a key element of its development strategy. Aerocrine defends its patents and its mar- ket leadership, collaborating with leading patent experts and patent bureaus on these matters.
The company’s proprietary trademarks and products are Aerocrine, NIOX, NIOX MINO, MINO, ONNO and INARGO, which are registered brands in their relevant classes across most of the world.
Patents and Proprietary Brands
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