Appendix 4D - Half Yearly Report and Accounts
Sydney, Feb 27, 2015 AEST (ABN Newswire) - The first six months of the financial year saw Rhinomed Ltd (
ASX:RNO) consolidate its move into the sport market with its inaugural technology, Turbine, which was launched in January 2014. Our strategy is to use Australia as a test market before taking our branded technology to global markets.
During the first half of FY15, we continued our test marketing program and built on the early learnings from this process.
Test marketing included promotion in the Fitness First health club network. This program sought to test the response of consumers in a health club setting. The program featured sampling in health clubs and promotion on internal media including posters, video screens and door decals, generating valuable feedback that was incorporated into the product development program.
In August, we were thrilled to see that our early efforts in introducing the Turbine to elite cyclists bore fruit with 2013 Tour de France champion and Team Sky captain, Chris Froome, wearing Turbine in the Vuelta a Espana. Chris Froome subsequently trialled and tested the new Turbine design in December 2014. The company is actively seeking to build long-term relationships with a number of leading athletes, globally.
In September, the company's focus moved to securing international distribution through the global Interbike exhibition in Las Vegas. As a leading trade show attended by 24,000 cycling industry representatives, Interbike presented a unique opportunity for the company to showcase the Turbine technology, gather feedback and begin the process of selling into the trade and distributors. Prior to September, we had established distribution in Australia and Israel and, as a result of the reception of the product at Interbike, we were able to secure distribution immediately for Turbine in South Korea, Japan, Taiwan, Hong Kong, Indonesia, Singapore, Malaysia, Thailand and Colombia. Turbine is on the market in 15 countries worldwide and the key focus for FY15 is extending global distribution.
In response to feedback from users, elite athletes and distributors, the company undertook the design, development, prototyping and testing of a new generation Turbine. Tooling of the new design began in December and shipping of new product commenced in February 2015.
Key features that have been enhanced in the new design include greater comfort and a more flexible and improved dilation system for better fit and greater airflow. Importantly the new shape, inspired by the internal anatomy of the nose, greatly reduces the chance of Turbine slipping during percussive sports.
The delay resulting from the introduction of the new Turbine disrupted momentum and led to lower than expected sales in the second quarter. The interest surrounding the new product gives us confidence that this product will gain acceptance quickly and we are much better positioned to grow the business in a sustainable manner.
The sport business is now well placed to expand our global footprint. In the second quarter of FY15, the company began rolling out a new website that more closely reflects the needs of our customers and which positions the business internationally for growth.
At the end of first half FY15, the company commenced an independent trial at the Murdoch University (WA) School of Exercise Science. This trial seeks to demonstrate the impact of the Turbine on athletes during a 20km time trial. The results of this trial are expected at the end of FY15.
In July, the company registered Turbine as Class I medical device with the US FDA. The introduction of a robust quality management system (QMS) was critical in enabling this success. Our QMS will be utilised across all areas of the company's operations and is a critical element of our regulatory strategy.
Sleep
OTC Snoring
Mute offers a solution to a clear and significant unmet need in the global OTC snoring market. This market is currently served by a range of products that have struggled to capture consumers' interest. The company has adopted a disruptive strategy in building a compelling brand. We released Mute online in December. Shareholders are invited to purchase Mute at www.mutesnoring.com.
Mute not only delivers a compelling and elegant solution, but one that delivered outstanding results in an independent in-home user trial carried out in November, the results of which were announced in December. Mute reduced snoring in 75% of participants.
Additionally, during the second quarter, the company commenced and received regulatory registration as a Class I medical device in Europe, the United States and Australia. Registration by the US FDA, Australian TGA and the receipt of a CE Mark is reflective of the strong processes now in place within the company.
The company appointed an Australian pharmacy broking and sales team in late December. This relationship will assist us with gaining distribution for Mute into the Australian pharmacy sector, which is a key focus for the business in the second half of FY15.
Sleep Apnea
The company has identified a significant opportunity within the sleep apnea market. The vast majority of sleep apnea sufferers have mild to moderate sleep apnea. The current solution set of CPAP, APAP and mandibular splints are the gold standard. The compliance rates for these solutions are extremely low with some sleep specialists reporting rates under 40%. The company has identified an opportunity to develop a low invasive, well tolerated solution that targets mild to moderate sleep apnea patients. As a result, development work began during the first half of FY15 for a new nasal technology that will create positive air pressure in the upper airway when patients breathe out. This solution (EPAP) has been shown in other therapies to produce a clinical outcome. The company has now progressed this program and in March 2015 will commence a clinical trial at Monash Medical Centre in Melbourne to demonstrate the efficacy of the technology. Importantly, the trial will also seek to establish that patients tolerate t
he solution. Results are expected in June 2015.
Rhinotriptan Drug Delivery program
The company's drug delivery program, commenced in the first half of FY15, seeks to prove that Rhinomed has a valid platform for delivering drugs intranasally.
The company appointed Melbourne based pharma company IDT to work on drug formulation development and will commence a phase 1 bio-equivalency trial at the Royal Adelaide Hospital CMAX unit in the second half of FY15 to demonstrate the efficacy of the platform to deliver acute migraine drug (sumatriptan). Results will be reported during the 2015 calendar year.
Corporate
The company continues to focus on building a strong balance sheet. In September the company strengthened its cash reserves by undertaking a placement to sophisticated shareholders that raised $3.4 million and a Shareholder Placement program that raised $1.6 million. The company also submitted and received a R&D tax rebate of $570,387 during December.
To assist with the growth of the business and the development of our distribution, the company appointed Matthew Hurle as VP of Global Sales in August. Mr Hurle has extensive experience in the sport sector both within Australia and the US. Previously with Australian company Bike Exchange, Mr Hurle has been instrumental in opening up our global partnerships. We would like to thank Ms Jane Ballantyne for her contribution in the development of the Turbine brand. We wish her well in her future endeavours.
Imugene shareholding.
The company continues to hold 25 million shares in ASX listed technology company Imugene (ASX:IMU) and will continue to monitor this investment.
Vibrovein.
Having now secured a strong intellectual property position for the Vibrovein asset, the company is assessing commercial opportunities for this technology. While being a non-core asset, the company believes there is value in this asset and will be seeking to update investors on the company's plans for this technology in the second half of FY15.
Business strategy and future prospects.
The company's position has strengthened significantly in the last two years. It now has two products on the market with early revenues, two clinical programs underway that are targeting significant unmet clinical needs and strong cash reserves that will enable us to exploit the opportunities we have before us.
The company's strategy is to target the global sport market with a lead adopter group and to leverage our premium branded technology and awareness into the significantly greater global OTC snoring market and then exploit opportunities in the clinical sleep market, and the OTC wellbeing and drug delivery markets.
The Company released its first product only 12 months ago and we believe that the early signs are extremely positive. With continued focus and support, we remain confident that both Turbine and Mute will develop significant franchises in their respective markets.
The company seeks to become a market leader in breathing and sleep. We believe that sleep will increasingly be seen as a critical element in maintaining good health. Rhinomed is well positioned to play a role in this rapidly growing market.
The growth in the number of wearable technologies that track sleep is remarkable. The introduction of products like the forthcoming Apple Watch will only stimulate more interest in this market. Our technology remains a unique and compelling solution for those who wish to reduce their snoring and improve their sleep quality, as evidenced by our user trials. The company will continue to build the data set surrounding the efficacy of our technology throughout FY15.
To view the full report, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-RNO-419885.pdf
About Rhinomed Limited
Rhinomed Limited (ASX:RNO) is a Melbourne based technology firm with a focus on nasal, respiratory and breathing management technologies. The company is seeking to monetise applications of its technology portfolio in the Sport, Sleep, Wellbeing and Drug Delivery markets. For more information, go to www.rhinomed.global
Follow the Turbine on Twitter at @theturbinecom
Follow Mute Snoring on Twitter at @mutesnoring
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