Here's why Somnomed Limited shares are soaring higher today

Somnomed Limited (ASX:SOM) still appears to be an attractive investment proposition at $2.84 per share.

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Somnomed Limited (ASX: SOM) has received approval from the US Food and Drug Administration to commercialise its wearable SomnoDent devices fitted with a micro-recorder. It becomes the first and only company to receive FDA clearance to offer the recording feature.

Somnomed specialises in continuous open airway therapy (COAT) for the treatment of various sleep-related breathing disorders, including obstructive sleep apnea (OSA). While it competes against big-name companies such as ResMed Inc. (CHESS) (ASX: RMD) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), it is winning market share due to its products being cheaper and somewhat less invasive for the end user.

Indeed, the lower level of invasiveness is one of the key selling points for Somnomed's flagship SomnoDent mouthguard-like product. The recording device, known as DentiTrac, will capture and store compliance data – that is how often the patient is actually wearing the device.

The company said: "Until now, compliance data for COAT was only available by way of patients self-reporting their use of the oral device. SomnoDent with a DentiTrac micro-recorder objectively captures patients' usage of the device on a minute by minute basis."

This is a smart move by Somnomed as the data the DentiTrac will provide will empower medical professionals to better monitor their patients' progress and treatment. As noted by Somnomed, it is also an important development for the transportation industry where transportation employees in the United States are increasingly being forced to demonstrate their compliance with OSA treatment.

Although Somnomed's shares skyrocketed more than 10% after the announcement was made, I believe the stock still represents a solid bet for long-term investors at $2.84 per share. Notably, that is still 11% below their 52-week high ($3.20) and with a market capitalisation of just over $140 million.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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