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Wake Up! Don’t get caught sleeping on these three dreamy stocks

Originally featured on Stockhead. 

• Sleep is essential for wellbeing but often overlooked in healthy habits
• Compumedics designs and manufactures technologies for the diagnosis of sleep disorders
• TrivarX is focused on the theory that sleep is the window into mental health with its AI technology

Sleep is often overlooked in the pursuit of health, overshadowed by nutrition and exercise, yet it is a vital foundation for well-being, according to experts working with the Mitchell Institute health policy team at Victoria University.

They say sleep is not just rest but a complex biological process that profoundly impacts our entire body.

“During sleep, our bodies engage in a restorative symphony, repairing and maintaining our cardiovascular health, immune system, metabolism, and brain development,” the experts say.

“Sleep health encompasses three key dimensions – sleep quantity, sleep quality, and sleep consistency.

“When any of these aspects are compromised, our sleep health suffers, increasing our vulnerability to a range of health and well-being issues.”

The Mitchell Institute has been working with the Sleep Health Foundation of Australia to develop policy options for improving sleep health in Australia.

Its health policy team says sleep deprivation can negatively impact mood, mental health, cognitive function, concentration, and productivity.

“It is also a significant risk factor for accidents and injuries, including motor vehicle accidents,” they say.

“The economic costs of poor sleep are staggering, amounting to billions of dollars annually in lost productivity and healthcare expenses.

“This underscores the urgent need for a national strategy to address sleep health.”

So, on the ASX what companies are involved in recognising the importance of sleep and figuring out how to make it a win for investors?

Compumedics (ASX:CMP)

CMP designs and manufactures technologies for the diagnosis of sleep disorders and has a range of products for clinical and research purposes.

Focused on diagnostic technology for sleep, brain, and ultrasonic blood flow monitoring, the company has offices in Germany, USA, France and Australia along with a network of more than 50 distributors world-wide.

Founded in 1987 by executive chairman Dr David Burton, CMP successfully designed and installed the first Australian, fully computerised sleep clinic at the Epworth Hospital in Melbourne in the same year.

Following early success, CMP went on to focus on development of products that sold into the burgeoning international sleep clinic and home monitoring of sleep markets.

Listed on the ASX in 2000, it has clients in prestigious sleep centres globally and counted NASA as a customer, winning two contracts for its first ambulatory sleep monitors for their space shuttle and space station programs.

“This led to us further winning a contract to equip the largest sleep study of its kind with about 14,000 patients,” Burton says.

“We were in competition with more than 30 world-leading sleep monitoring companies and we won the contract to supply both hardware and software for the US National Institute of Health-funded five-year Sleep Heart Health Study.

“The study famously established links between sleep disordered breathing and risks of developing cardiovascular disease.”

Burton says the study contributed to expert knowledge of CMP, its products and team including the injection of that knowledge in its recently launched Somfit SaaS home sleep testing services.

“Somfit is a coin sized, wearable monitor attached as simple as applying a band-aid to the forehead,” Burton says.

“It is interfaced with your mobile phone, and also integrated with Compumedics’ secure cloud Nexus360 enterprise clinical management platform.”

He says Nexus360 is fully integrated with CMP’s validated artificial intelligent sleep and respiratory analytics, with its multi-centre 110 patient study peer reviewed and recently published in the Nature and Science of Sleep online journal.

CMP announced record sales orders received of ~$52m for FY24, up 22% on FY23.

Sales orders for Somfit were $2.1m in FY24, a 133% improvement over FY23. The company says this was without material contribution from the US, where the device was only cleared for marketing by the FDA in December 2023.

Including Nexus 360 lab management enterprise SaaS revenue, total SaaS revenues (from Somfit and Nexus 360) for FY24 was $4.2m, 140% higher than FY23.

CMP’s marketing strategy is targeting the existing obstructive sleep apnoea (OSA) and home sleep apnoea testing market.

“In an age of mental health and wellbeing awareness, Somfit provides the world first of its kind brain-based HST monitoring covering the traditional sleep respiratory disorders such as apnoea but also providing it in the context of a brain and body based monitoring, or polysomnography as the clinical term,” Burton says.

The emerging and expanding consumer-accessible sleep-health monitoring sector is expected to drive future growth for the company.

“In Australia, Philips exclusively provides the Amcal pharmacy group with Somfit home sleep testing SAAS,” Burton adds.

TrivarX (ASX:TRI)

TRI is focused on the theory that sleep is the window into mental health. The company’s AI-driven screening and diagnostic tools – the Stager sleep software and the MEB-001 device – assist in the screening and long-term monitoring of mental illness and mood disorders.

Chief operating officer Kai Sun tells Stockhead 75% of people with diagnosed depression suffer from disruptive sleep patterns and more than one in five people undergoing a sleep study have confirmed depression.

“However, there is no mental health screening conducted in sleep clinics in the US or globally and less than 1.5% of people are actually screened for depression at the primary care level,” he says.

Sun says the key areas of sleep related to its analysis on mental health are rapid eye movement (REM) and N3 (slow-wave or delta) sleep.

“These are two of the stages within a standard sleep cycle and people with depression typically have shortened N3 sleep cycles and their REM sleep cycles get longer,” he says.

“People with depression will normally dream heavier earlier in the night because their N3 sleep stage in the first part of the night is shorter than people without depression.

“We identify the appearance and duration of REM and N3 during sleep cycles at night and complete a deep spectral analysis of HRV and EEG bands as well.”

Sun says that TRI’s technology looks at more than 60 biomarkers during REM and N3 sleep stages as well as heart rate variability (HRV) to learn variables that turn into predictors of what typically happens with depression sufferers.

“That is how we are able to build out our model,” he says.

According to Sun, there are ways to treat both sleep cycles and mood disorders such as psychology, sleep therapy, cognitive behavioural therapy and medication.

“The problem with medication for say depression though, is it can actually change your REM cycles so if a clinician doesn’t choose the right medication then quite often they might suppress the depressive symptoms which affects their patient’s sleep for worse,” he says.

TRI announced positive results from its recently completed Phase 2 Sleep Signal Analysis for current Major Depressive Episode (SAMDE) study using MEB-001.

The positive results from its SAMDE study leaves TRI well positioned to start a pivotal trial for FDA approval, the final step towards a submission and potential FDA approval, which its hoping to get underway before the end of CY24.

ResMed (ASX:RMD)

Short for Respiratory Medicine, ResMed can trace its origins back to 1981, where Professor Colin Sullivan and his team at the University of Sydney developed the first successful non-invasive treatment for OSA using a continuous positive airway pressure (CPAP) device.

After publishing his findings in The Lancet, Sullivan sought a partner to commercialise the technology.

In 1986, Sullivan approached Chris Lynch, the managing director of the Baxter Centre for Medical Research and vice president of R&D for Baxter Healthcare, who in turn reached out to his Baxter co-worker Dr Peter Farrell.

In 1987 Farrell, on behalf of Baxter Healthcare, invested in advancing the CPAP prototype and conducting clinical trials on patients with severe sleep apnoea.

In 1989, after Baxter opted out of the sleep apnoea market, Farrell founded ResMed to acquire and scale Sullivan’s CPAP technology for global use.

The company has manufacturing facilities in Australia, Singapore, France, and the US.

With both R&D and manufacturing co-located at its headquarters Bella Vista in New South Wales, RMD has become one Australia’s largest exporters of medical devices.

RMP is considered a leading player in the sleep apnoea devices market, which according to Markets and Markets is valued at an estimated US$6.5bn in 2024 and is projected to reach US$9.3bn by 2029 at a CAGR of 7.3% during the forecast period.