Next Safety, Inc. develops pulmonary drug delivery devices and pulmonary respirators. The Company has developed a remarkable new method of delivering medicines through the lungs. Next Safety has built a variety of devices that translate the discovery into a simple pulmonary drug delivery platform. The premiere pharmaceutical executives at NSI’s investment bankers, Peter J Solomon Company and Raymond James & Associates Healthcare Investment Banking, are leading this work. Alan Mendelson at Latham and Watkins in Palo Alto, former General Counsel of Amgen Inc., is the attorney working for Next Safety on this transaction.
The Company team is comprised of managers and advisors with proven expertise and overwhelming success in the fields of technology, medicine, engineering, volume manufacturing, and finance.
Next Safety believes that the global revenue stream generated by its pulmonary delivery platform will be large. For example, in 2006 over 46 million adults and children in the U.S. suffered from asthma or chronic obstructive pulmonary disease (COPD); the worldwide revenue generated from treating these conditions was $18.5 billion. The primary technologies that produced this revenue—nebulizers, metered-dose inhalers and dry powder inhalers—are expensive, inefficient, inconsistent, and difficult for people to use. Furthermore, it is widely understood that the lung deposition efficiency for nebulizers and meter-dosed inhalers is very poor. Only 10% to 30% of the droplets produced by nebulizers and inhalers are within the optimal diameter.
In contrast, independent third party tests confirmed more than 80% of manufactured albuterol droplets by the Next Safety pulmonary delivery platform are the optimal diameter for deposition in the tracheo-bronchial tree. The Company believes that the platform will provide far higher, safety, efficacy, and dose confidence than any other method for the delivery of drugs to treat asthma and COPD. Next Safety believes that the new drug delivery platform is expected to allow large-market but off-patent drugs, such as albuterol, to be sold as new and more effective proprietary medications.
For example, there are currently 38 million users of albuterol in the US. Approximately 510 million people in emerging economies have asthma and COPD, making them candidates for albuterol. The Company estimates the sale of albuterol would easily exceed $4 billion in the US annually using its novel, safe, high efficacy, and high confidence method. Most people in emerging economies are located where air quality conditions are very poor (e.g. China and India); therefore the number of people having asthma and COPD are growing at a rapid rate.
Next Safety has particularly shown that its pulmonary devices deliver nicotine with a far greater efficacy than other nicotine replacement products. While previous nicotine replacement products, such as nicotine gum and patches (a $1.6 billion global market), have helped millions of smokers worldwide, they cannot equal the power of nicotine that is delivered through an actual smoked cigarette. The result is that most smokers succumb to the need for a ‘nicotine hit’ by smoking again.
The ultimate solution in nicotine replacement treatment would therefore be the rapid delivery of nicotine directly to the lungs and brain in the same manner as a cigarette, but without the 4,000 harmful chemicals that exist in tobacco particles.
Cigarette sales in 2006 exceeded $200 billion in developed countries where strong trends to eliminate smoking inside work establishments and all public areas are firmly entrenched. Moreover, Next Safety projects that the cost of nicotine delivered by its pulmonary devices will be between 5% to 10% of the price currently paid by smokers in the United States for an equivalent blood nicotine dose.
Next Safety’s ongoing applied research program is currently focused on the pulmonary delivery of nicotine, albuterol and tobramycin. Yale University and the Company’s tobacco addiction/cessation expert, Matthew Bars (MS, CTTS), director of Smoking Cessation for the New York Fire Department, are currently engaged in the development of a research protocol aimed at demonstrating the lung and brain uptake of nicotine from Next Safety’s pulmonary drug delivery platform. In addition, the Veterans Administration has asked Next Safety to participate in a study that includes the evaluation of inhaled nicotine utilizing the Company’s devices. This research will use various analytical techniques including certain brain imaging technology to study the effects of “clean” nicotine delivery via the Company’s pulmonary drug delivery platform.
Next Safety believes the sale of the business to a leading pharmaceutical company will accelerate the deployment of this new technology. Large pharmaceutical firms possess the necessary expertise and development, manufacturing and distribution capabilities required to optimize current present value of Next Safety technology, while bringing lifesaving technology to market in a rapid and worldwide manner.
Based on the business value of its pulmonary drug delivery device, and the already demonstrated interest by major pharmaceutical companies, Next Safety believes that the proceeds from the sale of the pulmonary drug delivery business will be substantial. The majority of the sale proceeds will be returned to shareholders via a special dividend.
In 2007, Next Safety made the decision to postpone the startup of its respirator business: to focus on the sale of its pulmonary drug delivery assets. Recently, the Company began to query major potential customers in China. Tentatively, there appears to be significant immediate demand for its respirator products. As Next Safety is completing the sale of its pulmonary drug delivery assets, the Company will begin the startup of manufacturing its respirator products. Consistent with its previous plans, Next Safety will focus its sales efforts on establishing a network of stocking distributors in China and certain other countries along the Pacific Rim.