Nov 2018 Australian Financial Review

Cochlear is invading the territory of a fellow ASX-listed medical device company, backing a start-up that offers a sleep apnoea treatment for sufferers unaided by traditional therapies like those on offer by ResMed. The hearing device maker has invested $21 million in European company Nyxoah, as the business dips its toe in the water of start-up investing. Cochlear chief executive Dig Howitt told The Australian Financial Review the company had set aside a small pool of money to invest in innovative new companies, but would not disclose how much capital was in its fund. "We're making a small number of investments with a small amount of money in companies that use an implantable electronic stimulator in a field we understand, working in a channel that is close to ours," he said. "That means head and neck surgery so that it's surgeons we know and technology we understand."

Dig Howitt

Cochlear CEO Dig Howitt says its main focus is still on the hearing market.

 Nyxoah has developed the world's first battery-free, leadless and minimally invasive neurostimulator, which can deliver nerve stimulation to moderate and severe sleep apnoea patients. ResMed's core product ranges are masks and ventilation machines that help sufferers breathe. Nyxoah's neurostimulation-based therapy is designed for people who failed to find success with such devices. "There's a market need there... as it's for people that are not getting benefits from traditional positive airway pressure therapy," Mr Howitt said. The Nyxoah investment comes after Cochlear also backed epilepsy monitoring device company Epi-Minder (a collaboration between Bionics Institute, St. Vincent's Hospital in Melbourne and The University of Melbourne) in June with a $3.65 million investment. 

Mr Howitt said the company's primary focus was still very much on the hearing market. "We'll do a handful of these investments and we monitor the market for opportunities, but we are very cautious and very focused on hearing and our solutions for people with hearing loss because that's such a big opportunity," he said. "We've been around for 36 years and our products are well accepted in children, but the big opportunities are in adults and seniors in the developed world where the penetration of our technology is only 3 per cent... as well as children in emerging countries."

Cochlear has reached about 60 per cent of its original target market of profoundly deaf children in developed countries, with that rate increasing to 95 per cent in Australia and 80 per cent across most of Europe. As it goes after new growth markets, Mr Howitt has been endeavouring to spread the message that healthy hearing is an essential part of healthy ageing.

In October it also announced that it was beginning clinical trials of a fully implantable hearing device that would let wearers hear 24 hours a day, whether they were sleeping, swimming or gardening. "Our goal is to grow consistently over a very long run. Driving that growth is difficult, but we're aiming to create a clinical pathway for seniors with progressive hearing loss and that pathway has not [previously] been well established," Mr Howitt said. "It takes time and money to do that, but that's why we've been clear that we're investing for future growth."

Cochlear is often held up as the medical device success story to aspire to for emerging Australian medtech companies and Mr Howitt said it would be possible for more Cochlears to emerge, but the conditions needed to be right. "We have a lot of things going for us with highly educated, creative people, but I think we can do more," he said.

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