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Biocurious: Armed with a lucky payment number, Control Bionics plots its US expansion
Health & Biotech
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- The assistive technology group says a new reimbursement code will expand US sales of its flagship device, Neuronode
- The company is focused on fewer activities and a new wholesale-based sales strategy
- Neurostrip will expand the company into broader non-disability sectors
Control Bionics (ASX:CBL) chief Jeremy Steele quips that E2513 is my “favourite new number”.
Why not number 42 – the answer to life, the universe and everything – or the auspicious Chinese lucky number of 888?
The reason is that E2513 is the US Medicare reimbursement code recently attributed to the assistive technology outfit’s key product, Neuronode.
Neuronode is a watch-like device to assist cognitive people with physical disabilities – notably sufferers of cerebral palsy or motor neuron disease – to perform everyday functions.
The US Food & Drug Administration (FDA) approved Neuronode in 2020. But insurance reimbursement is the key to sales and the magic code locks in a rate of US$4300 ($6600) per device.
(Previously the company had been paid, but under a more complex accessories code.)
Steele says the granting of E2513 “surprised everyone in the industry” – notably the makers of well-established eye-gaze cameras that still don’t have their own code.
“They said ‘how to hell did you manage that?’”
Giving voice – and actions – to the disabled
Control Bionics’ platform embodies electromyography (EMG), which interprets the electrical ‘orders’ signalled by the brain.
“A finger movement happens because your brain sends a signal that hits a muscle,” Steele says.
Neuronode detects and measures these neuro-electric signals, which are then codified by an algorithm – the company’s ‘secret sauce’. This enables users to perform functions such as typing, emailing, web browsing or controlling lighting and bed settings.
The device attaches anywhere on the body where the user has intentional control. For instance, a person with deteriorating motor neuron disease might start with the device on their wrist, then a toe or even an eyebrow.
“We can even detect intention without visible muscle movement,” Steele says.
Australian based, US focused
Based in Melbourne’s tech hub of Cremorne, Control Bionics was founded in 2005 by Queenslander Peter Ford, a tech show broadcaster on the US network CNN.
The company intended to tackle the US market first. But having received local ‘angel’ investments locally it listed on the ASX in December 2020, having raised $15 million at 60 cents apiece.
Armed with E2513, Control Bionics can make more serious inroads into the US – a market from which the company already gleans about 80% of its revenue.
Since being appointed in January last year, Steele has focused the company on a smaller number of activities and moved it from direct retail sales to a wholesale-type approach.
“That means partnering with third parties to ensure maximum distribution, rather than our own salespeople selling our own systems.”
Having seen what the insurers are willing to pay, the company next year expects to bed down a US distributor.
“It’s like playing poker,” Steele says. “You know you have a good hand, but until you see what money appears on the table you don’t want to bet too hard.”
Striving for cash breakeven in 2025
Last year, the company sold just over 300 Neuronodes.
“Arguably, the opportunity in the US is at least 10 times or even more,” Steele says. “But we need to find the right partner and get the best economics possible.”
In the year to June 2024, Control Bionics reported revenue of $5.35 million, 5% lower.
The key culprit was delays to funding under the National Disability Insurance Scheme (NDIS), which accounts for 87% of local revenues.
The logjam has since been rectified.
Overall, insurers account for 75% of the revenue directly or indirectly.
The company also lost $5.9 million, but has targeted cash flow breakeven in all geographies next year.
About half the time, the device is packaged up with other aids such as eye gaze cameras and speech generation software.
“The Neuronode gets us the sale because it is a unique device with a superior outcome for many individuals with many different conditions,” Steele says.
Driving wheelchair innovation with Drove
Control Bionics also has developed Drove, the world’s first autonomous wheelchair system that enables users to navigate defined parameters of their house independently.
The local Therapeutic Goods Administration approved Drone in June this year.
“Drove achieves what the NDIS intends to do and that’s to enable people to stay in their own home,” Steele says.
In the US, the company plans a partnered Drove trial and intends to apply to the FDA for breakthrough device designation.
“They don’t [grant] that very often, but if you don’t ask, you don’t get,” Steele says. “I’m confident we will get our first Australian sales in coming months and get our FDA application next year.”
Neurostrip ‘Band-Aid’ opens broader non-disability markets
Control Bionics’ potentially greater fortunes lie with Neurostrip, a miniaturised version of the tech that measures physiological data such as unintentional muscle movements.
Weighing less than a piece of paper, the wearable Neurostrip expands the company’s market from disabilities to the much bigger sports science and occupational health and rehabilitation sectors.
“It’s effectively a Band-Aid that does all of the same things [as Neuronode] but with more granular data,” Steele says.
In Utah, the company is working with a program called Jump, for athletes such as basketballers who need to leap in an explosive manner.
Steele says the results to date have been “breathtaking”.
The company also is working with a Japanese stroke rehabilitation lab.
“The applications are almost endless,” Steel says. “We have discussed 16 specific use cases with a partner, but we won’t do all of them ourselves – or at once.”
Changing people’s lives for the better
While E2513 signals good fortune, Control Bionics’ lowly share price remains a less auspicious number.
After peaking at 90 cents post IPO, the shares have languished and yesterday closed at six cents, ascribing a measly market cap of less than $15 million).
A former investment banker, Steele knows the valuation will improve after the red ink has been banished.
But he hasn’t lost sight of Control Bionics’ ultimate charter of changing people’s lives for the better.
Steele cites a Japanese client with motor neuron disease who had lost his ability to communicate six months previously.
“We connected him to Neuronode and gave him back his voice,” he says.
“He is now able to speak in sentences and interact with his family, which is powerful stuff.”
At Stockhead, we tell it as it is. While Control Bionics is a Stockhead advertiser the company did not sponsor this article
