Pulmonx Corp

Invention:	Lung valve
Trademark:	Zephyr® Valve
Patents:	62
NASDAQ:	LUNG

The invention

The Zephyr Valve is a medical device used for treating patients with severe emphysema, a form of Chronic Obstructive Pulmonary Disease (COPD). It works by being placed in the airways of the lungs during a bronchoscopic procedure. These valves allow air to escape from the diseased parts of the lung and prevent air from entering them. This process helps reduce hyperinflation, allowing the healthier parts of the lung to expand and function more effectively, improving breathing and quality of life for the patient. The treatment is minimally invasive and does not require incisions or surgical resection of lung tissue.
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Each of the Zephyr Valves consists of a one-way silicone duckbill valve suspended inside a self-expanding frame made of shape-memory metal, called Nitinol. The Zephyr Valve is designed to be easily and accurately sized and offers controlled and accurate deployment at the target location. The Zephyr Valve is also designed to resist fractures or breakage, adapt to changes in airway size and stay in place following deployment.
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Performance advantage

The Zephyr Valve offers several advantages over incumbent procedures for treating severe emphysema. It's a minimally invasive treatment that improves lung function, exercise capacity, and quality of life for patients. Compared to traditional surgical options, the Zephyr Valve is less invasive, has a lower risk profile, and is applicable to a broader patient population. This innovative approach provides significant clinical benefits with a shorter recovery time, making it a compelling alternative to more invasive emphysema treatments.

The Zephyr Valve from Pulmonx is designed to offer an alternative to existing therapies for severe emphysema. The primary therapies it seeks to replace or provide an alternative to are:

1. Lung Volume Reduction Surgery (LVRS): A surgical procedure to remove diseased parts of the lung, aiming to improve breathing in severe emphysema patients.
2. Lung Transplantation: A complex surgical procedure where a patient's diseased lung is replaced with a healthy lung from a donor.

Additionally, the Zephyr Valve competes with other minimally invasive treatments such as:

1. Spiration Valve System (Olympus Corporation): An endobronchial technology offering a minimally invasive treatment for lung volume reduction by redirecting air away from diseased areas of the lung to healthier tissue. It is indicated for patients with heterogeneous emphysema but is contraindicated for patients with homogeneous emphysema.
   
2. InterVapor System (Broncus Medical Inc.): A system not approved for use in the United States, offering a similar minimally invasive approach for treating severe emphysema.

Over 100 scientific articles have been published regarding the clinical benefits of Zephyr Valves, including multiple meta-analyses, review articles, cost-effectiveness analyses and risk-benefit analyses. The Zephyr Valve showed statistically significant improvements in lung function, exercise capacity and quality of life when compared to medical management alone in multiple randomized controlled clinical trials. Additionally, independent studies have demonstrated that Zephyr Valves deliver increases in the BODE Index (a multi-dimensional health status scoring system for patients with COPD) that have been associated with long-term survival benefits.

Trials and commercial status

Here are the results from the four clinical trials conducted on the valve:

The Zephyr Valve received pre-market approval (PMA) from the U.S. Food and Drug Administration (FDA) in June 2018. The valve is commercially available in more than 25 countries, and over 100,000 valves have been used to treat more than 25,000 patients. ​

Gross margins

Gross margins were 74.3% for the year ending December 2022. 

Intellectual Property

Pulmonx’s technology, including the Zephyr® Valve and associated patient selection tools (StratX® and Chartis® systems), is proprietary and patented. These patents protect their unique approach to diagnosing and treating severe emphysema, ensuring a strong market position and potential competitive advantage.

As of December 31, 2022, the company had 37 patent families in force worldwide. As of December 31, 2022, the company had rights to 62 issued United States patents, 17 pending United States patent applications, 121 issued foreign patents and 13 pending foreign patent applications. 

Addressable market

​Of the approximately 3.2 million severe emphysema patients, the company estimates that approximately 1.2 million may be eligible for treatment with Zephyr® Valves, and an additional number may be able to be treated in the future with other technologies under development. This represents a global market opportunity of approximately $12 billion.

As of 2018, approximately 3.8 million patients in the United States were diagnosed with emphysema, of which roughly 1.5 million have severe emphysema. Of these 1.5 million severe emphysema patients, the company estimates that approximately 500,000 patients would qualify for treatment with Zephyr Valves, and an additional number may be able to be treated in the future with other technologies under development. This represents a U.S. market opportunity of approximately $5 billion.

Upside

As at 29 January 2024, the market cap of the company (USD$513m) is low relative to the company's addressable market. 


Sources

Investor Presentation, Pulmonx October 2023: https://investors.pulmonx.com/static-files/41b9f489-dca6-41af-87b9-696a6886c166