| Small & Micro Cap project: discover signs of moat

Vapotherm: Signs of moat

by | Oct 7, 2019


M.Cap: $205 million

Vapotherm is a medical technology company focused on treating patients suffering from respiratory distress.

What is the traditional standard?

NIPPV (non-invasive positive pressure ventilation) is the traditional standard of care for respiratory distress, and technology that is roughly 35 years old. NIPPV uses pressure to drive gas in and out of a patient’s lungs. It is typically administered by fitting an air-tight mask over the patient’s nose and mouth, and tightening a strap around the patient’s head to secure the mask in place.

Drawbacks of NIPPV

  • According to a study, 30% of patients are intolerant of NIPPV masks. Moreover, NIPPV masks cause discomfort (since the patient cannot eat, talk or drink), and can cause facial skin ulceration and trauma to the lungs.
  • Patients who cannot tolerate NIPPV are often sedated and potentially intubated in preparation for mechanical ventilation.
  • Patients treated with NIPPV are often transferred to the ICU because NIPPV typically requires intensive monitoring.

Vapotherm’s edge

  • The device is mask free. As such, while using the company’s products, patients can eat, drink and talk.
  • As per the company’s 10-K, Precision Flow systems are more easily tolerated by patients, the monitoring requirements may be lower, which may increase the likelihood that a patient can be admitted to a general care floor, step-down unit, or discharged from the emergency department.

Signs of moat

  • The only mask free product: The company’s technology is the only mask-free, clinically validated alternative to the current standard of care for the treatment of respiratory distress.
  • De nova: The FDA recently granted the company’s de novo request for an expanded indication for the Precision Flow Hi-VNI system, which incorporates its proprietary Hi-VNI technology. De nova means the device is “novel” with no existing classification or predicate device on the market.
  • Recurring revenue: Vapotherm generated roughly 67% of its total revenue for FY 2018 from the sale of single-use disposables, nasal interfaces, cannulas, and adaptors used in conjunction with the Precision Flow capital units.
  • Huge installed base + treated patients: As of December 31, 2018, more than 1.7 million patients have been treated with the Precision Flow systems, and the company has a global installed base of over 14,000 capital units.


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