NovaResp, the Halifax developer of technology for treating sleep apnea, has raised a $3 million seed extension round that CEO Hamed Hanafi expects to fund the company through completion of its clinical trials.

The deal builds on a $2 million round NovaResp closed in Dec. 2022 and is led by board member Dr. Neil Smith, along with returning investors Concrete Ventures and  Invest Nova Scotia. Another board member, Raj Sodhi, joined alongside several new backers, including the government-backed Ontario-based Centre for Aging + Brain Health Innovation.

NovaResp is testing artificial intelligence software compatible with any continuous positive airway pressure, or CPAP machine — the medical equipment used to treat sleep apnea by forcing air into the user’s lungs. Hanafi’s system aims to predict sleep apnea events, during which a person stops breathing, and add air pressure proactively instead of reactively. The more targeted approach means the system can use less pressure, making patients more comfortable and more likely to actually use their machines.

“If our value is proven on a high number of patients, then all of a sudden our valuation would be much, much, much bigger,” said Hanafi in an interview Wednesday. “So we thought, ‘Okay, we do need to test it properly on a high number of patients … and to do so we needed more cash.'"

Hanafi raised the latest tranche of funding on the advice of Dr. Smith, a surgeon who specializes in treating sleep problems and runs a national chain of private sleep clinics. NovaResp still had plenty of runway when Smith approached Hanafi last year, but Smith wanted the company to aim for about two years of cash in the bank.

“Dr. Smith called me as our board member and said, ‘Listen, the patient results from home (testing) look good...Instead of you spending the next year in a state of running out of money, why don’t we raise the amount you need to last another two years and finish the studies?’” recalled Hanafi.

By the time the new funds are close to running out, he added, he hopes to be in talks with CPAP manufacturers to license the software.

NovaResp’s clinical trials will be run out of the QEII Health Sciences Centre in Halifax, including a 50-person trial for which several people have already signed up, along with a larger, 200-person trial.

“The point of these clinical trials is to prove the value,” Hanafi said. 

The company has 11 full-time staff, Hanafi added, and four or five interns, depending upon the time of year.