FREE

Water Tower Hour Recap

We recently hosted Envoy Medical CEO Brent Lucas and CFO David Wells on the Water Tower Hour podcast. We discussed the company’s new Acclaim fully implantable cochlear implant. Those interested can listen to the episode on Apple Podcasts, Spotify, or on our website. Links accessible in our full report. Hearing loss is a massive issue, affecting about 10% of the US population. A subset of this population, 2.8 million individuals, suffers from severe hearing loss, which can be addressed by a cochlear implant. Of this subset, only about 150K individuals have actually received cochlear implants due in part to the user inconvenience of partially implanted devices. Standard cochlear implants currently on the market have a large outside sound processor. The outside processor has many inconveniences and limitations for the user, and it also captures sound behind the ear, which can have a disorienting effect. The Acclaim uses the ear to capture sound and is fully implantable, which should make it a preferable solution for patients. The device has received the breakthrough device designation from the FDA. Envoy has already received approval for a fully implanted hearing implant, the Esteem. However, the Esteem was classified as a hearing aid by the FDA and thus did not qualify for Medicare reimbursement, which has greatly limited its adoption (only about 1,000 devices successfully implanted). Part of the Acclaim device is implanted in the cochlea and Envoy is purposefully positioning the device so that it would qualify for Medicare reimbursement, like the partially implanted cochlear implants already on the market. Following a successful early feasibility study, we anticipate the company to start conducting a full-fledged pivotal study with about 100 patients in early 2025. The study should take about 18 months, followed by about six months of reviews and exchanges with the FDA, and therefore with commercialization anticipated to start by the end of 2026 (assuming the pivotal study will be successful). While the company has not provided pricing guidance, based on partially implanted cochlear implants on the market, the price for the Acclaim could range between $25K and $40K. The $25K is based on the price of existing partially implanted devices, while the higher figure includes a premium the device could command because of its breakthrough designation. There are about 150 neurotologists in the US that provide cochlear implant procedures. Envoy has already significant contacts and relations with the leading neurotologists, which should facilitate the marketing of the implant if and when approved by the FDA. The company estimates it will need to raise about $20 million per year over the next two years to conduct the necessary studies and prepare for commercialization. Envoy has already secured a $10 million financing commitment from board member and largest investor Glen Taylor.