MEDICAL DEVICE INNOVATION - Medical Device Daily

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Envoy Medical poised to alter
hearing loss device market
By LYNN YOFFEE
Medical Device Daily Staff Writer
Just about anyone with hearing loss will tell you that
hearing aids never restore natural hearing and the only
alternative, cochlear implants, have so far failed to deliver
on the promise of either sound clarity or being a totally
implanted device. Both devices plague users with highpitched
tones, amplified bodily sounds and worse.
Envoy Medical (St. Paul, Minnesota) is poised to alter
the hearing loss device market with a new technology. The
company has just received FDA protocol clearance to submit
a PMA in August for Esteem, an entirely new-concept
hearing restoration device that Envoy claims rivals anything
currently available.
With 278 million people worldwide who have moderate
to profound hearing loss, the potential for Envoy is enormous.
“The entire audiological community will fall out of their
chairs when they see the Esteem,” Envoy CEO Patrick
Spearman told Medical Device Daily, adding this analogy
about the new device, “LASIK is to vision what Esteem will
be to hearing. We’ve spent 14 years and $105 million to get
to where we are today.”
Traditional hearing aid technologies rely on microphones
for amplification. Esteem uses the body’s own
eardrum as a natural microphone.
A totally implanted device similar to pacemaker technology,
Esteem has two transducers – a sensor and a driver
that extend into the middle ear from the sound processor
which is implanted just behind the ear. Sound waves travel
into the ear canal and set the ear drum into motion causing
the bones of the middle ear to vibrate. The device senses
these movements and delivers a dose of energy to the
cochlea, which then transmits the signals to the brain.
A small remote control device allows users to turn the
Esteem on or off at will, adjust volume if needed in different
settings. Spearman said one of the biggest complaints that
traditional hearing aid users have is that they can’t filter out
background noise like a natural ear. So if a TV is running in
the background or if the person is in a noisy crowded room,
it’s difficult to hear a person speak even if they are very
close. Esteem apparently subverts that problem.
There are two types of hearing loss: conductive, which
is a problem in the outer or middle ear, and sensorineural,
which typically involves a problem with the inner ear, and
usually is permanent. Common causes of sensorineural
hearing loss are excessive noise and aging.
Spearman said the Esteem would work for about 80%,
or 24 million, of the 30 million Americans with sensorineural
hearing impairment.
Of data the company will submit with the PMA,
MEDICAL DEVICE INNOVATION 2010
Spearman said, “Our results are so good that when we
apply for FDA approval, our PMA will claim that we are
superior to hearing aids.”
Envoy will use data from two Phase II trials of 150 people
who each received one hearing implant. Of those, only
three needed to be explanted due to complications.
In addition to the clarity of sound, Spearman said
another advantage is a battery that will last for up to nine
years without recharging.
“Cochlear implants were the first devices used that
replaced a human sense,” Spearman said. “But Esteem
brings people back to levels of hearing where they were
before, something that cochlear implants can’t do. It’s really
touching and this really is something that will benefit
society in a big way.”
In addition to the positive data to be presented from
two Phase II trials, what’s impressive about the company
and the potential of the device to impact the market can be
seen in who is backing Envoy. Spearman and his family own
about one-third of the company. Among other supporters
and investors:
The inventor of cochlear implants, William House, sits
on Envoy’s board.
Ken Dahlberg, who developed the first all-in-the-ear
hearing aid, now known as the Miracle-Ear, is a key investor
and sits on the board. His company, Miracle-Ear, is now
owned by Amplifon Group (Milan, Italy), which claims to be
the world leader in the distribution and fitting of personal
hearing solutions.
Billionaire Glen Taylor, who owns the Minnesota
Timberwolves basketball team, is another big investor.
Allen Lenzmeier, former vice chairman of Best Buy
(Minneapolis), also has made a substantial investment.
And, Glen Nelson, MD, former vice-chairman of
Medtronic (Minneapolis), owns about 1% of the company.
In addition to the heavyweight angel investors, Envoy
raised $12.5 million in 2007, closed another $12 million
fundraising just last month and plans to tap the market
again this summer for up to $30 million, despite current
market conditions.
Spearman isn’t daunted by the idea that med-tech firms
saw investments fall 51% from the $972 million for 74 deals
last year to $477 million for 42 deals in the most recent
quarter, according to Dow Jones VentureSource.
“We have a lot of money and keep putting in money
ourselves,” he said. “To raise $25 million to $30 million
should be a slam-dunk. We have such a high value, it makes
raising money easy. We believe the company can be sold,
after FDA approval of Esteem, for over $1 billion.”
But Spearman has no plans to sell the company. The
goal, he said, is to go public and then create a surgical franchise.
“It takes a skilled surgeon to implant the Esteem and
we want to make sure they are properly trained and we
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