Control Bionics Limited (ASX:CBL) CEO Jeremy Steele provides an overview of the company, discussing its suite of augmentative and alternative communication products.
Paul Sanger: I’m Paul Sanger for the Finance News Network, and today I’m talking with Control Bionics (ASX:CBL). Control Bionics, trading under the ASX code “CBL” with a market capitalisation of approximately $19m, is a cutting-edge medical device company dedicated to helping individuals with severe speech and motor impairments caused by conditions such as motor neurone disease and ALS. Their flagship product, the NeuroNode, is a revolutionary wireless wearable device that detects minute signals from the brain to muscles, allowing users to control a personal computer to perform actions like speech, emailing and texting. With me today is Jeremy Steele, CEO of Control Bionics. Jeremy, welcome to the network.
Jeremy Steele: Thanks for having me.
Paul Sanger: So, Jeremy, can you start by giving us a brief overview of Control Bionics and the core mission behind your technology?
Jeremy Steele: Sure. So, Control Bionics has been around for almost 20 years now. In fact, Stephen Hawking was one of our original beta customers, who helped perfect and refine our technology. But today we’re about using our core intellectual property, which is electromyography or EMG, to expand the ways in which the data that comes from muscles and muscular activity, whether intentional or unintentional, can be used to connect with technology, diagnose conditions, treat or improve sports performance.
Paul Sanger: So, Jeremy, I’d like to get into some of that technology. Let’s start with… The NeuroNode is a highly innovative product. Could you explain how it works and what sets it apart from other assistive communication devices that are currently on the market?
Jeremy Steele: Sure. So, the NeuroNode is an electromyography device, so EMG as we call it, as it’s short for. We all love acronyms. It’s a scientific term. So, electromyography is the detection and measurement of the electrical activity in your muscles. So, if you think about moving a finger, to move a finger, you create a thought to move a finger. And in moving your finger, an electrical signal is created in that muscle, which actually causes the finger to move. And so our device detects that signal and transfers it into a device that allows you to control technology.
Our NeuroNode combines that technology with spatial. People understand spatial, which is movement in space. And that allows people who are unable to communicate using voice to connect into their technology. There is nothing else like this in the world. We have patents protecting our technology. And so, in fact, and in many respects, and I’m sure we’ll get into that, what we’ve done in the US and the UK with our recent announcements, the reason why we’ve been so successful is there is no competing technology. We make a difference to people in ways that you cannot imagine.
Paul Sanger: In fact, I lost a very good friend to motor neurone disease just over a year ago, and in the last six months of his life the biggest stress with his wife was trying to communicate with him, where the brain was active. And so I can actually resonate with what you’re doing and how it could have changed those last three or four months before Graham passed.
Jeremy Steele: That’s right. That’s right. I mean, I was in Japan a little while ago and with one of our customers there who has MND. He, before we gave him the NeuroNode, he could not communicate with his wife. The only movement he had was moving his eyes. We put the NeuroNode above his eyebrow. He still had the ability to lift an eyebrow. Opened up communication to him. I sat with him and his wife. He was crying, the wife was crying, I started crying because all of a sudden he could communicate with his family again. It’s quite extraordinary.
Paul Sanger: Absolutely. And you recently launched the DROVE autonomous wheelchair module. Can you tell us a bit more about the DROVE and how it fits into your overall product suite?
Jeremy Steele: Sure. So, powered wheelchairs obviously require a joystick to control.
Paul Sanger: Yep.
Jeremy Steele: There are many people who use powered wheelchairs who are unable to either control it independently or control it consistently. And so DROVE is… We’ve created a world first, which allows you to design, effectively, a route map inside your house, and allows the individual who’s in the wheelchair to choose a location in their house independently of a carer or a loved one, and a wheelchair will automatically go from one room to the next — which you should imagine, or I certainly imagined before I saw this product, surely that exists, but actually no one’s been able to crack the nut of how can you do that and make it cost-effective to the user and to the health system? And so we spent many years. We worked with Deakin Institute, their AI unit, to come up with a smart way in which we could do this. And we were delighted to get TGA approval earlier this year and we’re now commercialising it. And, in fact, I’ve just got a grant in the US to fund FDA approval in the US as well.
Paul Sanger: Oh, that’s fantastic news. And with the launch of the NeuroStrip, how do you envision Control Bionics expanding beyond assistive technology into areas like health diagnostics and sports performance?
Jeremy Steele: Yeah. Look, it’s one of the key elements I’ve been really focusing the business on since I joined 18 months ago, which is we’re a world-class leader in EMG technology. We’ve been doing this for longer than almost anyone else. And if you think about the conditions with which we, of the people that use our EMG, people who are completely locked in, who you cannot see them move a muscle, but we can detect the signal. If we can do that, we can do anything. And so we’ve kind of come into our core intellectual property and our experience in EMG and have now developed a miniaturisation of the NeuroNode. It looks like a band-aid, it feels like a band-aid. It weighs two grams, which is less than the piece of paper that you’re holding. And so you don’t feel that it’s in your body, but it can detect such minute muscular movement, which has such a broad range of applications.
And the first of which, and a great example is we’ve got a client in Utah called NeuroBounce. They run jump clinics for basketballers and volleyballers.
Paul Sanger: I’ve heard about this.
Jeremy Steele: Yeah, it’s amazing. And I’ve been to the clinic and I’ve been through their program, not that I’m the ideal target client. But Steve, who runs that, has a track record in increasing jump height for basketballers. And he was saying to me, when I saw him in June, his best-performing athlete increased their jump height by eight inches, which is extraordinary. If you’re a basketballer and you get an extra eight inches, man, you’re going to the NBA. So, that’s just one of… we’ve got about 16 different applications of the NeuroStrip that we’re investigating. And we won’t do them all ourselves, but sports science and rehab, that’s our core pedigree. So, we’re really excited and I think we’ll be making some announcements about first customer and first revenue in that space very soon.
Paul Sanger: I’ll watch that space very closely. And your recent partnership with Smart Box for distribution in the UK and Ireland is obviously an exciting step. What made Smart Box the right partner for expanding NeuroNode’s reach into these markets?
Jeremy Steele: Yeah. Well, so first and foremost, they’re about 70 per cent of the UK market. So, I mean, it makes sense, they’re the biggest player. I think, more importantly, we have a really strong relationship with Smart Box. We use some of their product in some of our solutions, so we’ve known them for a long time. We’re of a like mind when it comes to business operations. And so market share, plus that we know our technology works well together, it made a lot of sense for us to partner with them.
Paul Sanger: No, totally understand. And what opportunities do you see in the European assistive technology market, and how important is this market for the growth of Control Bionics?
Jeremy Steele: Let’s call it broadly, not every country is the same, but Europe generally has very good funding for assistive technology — like Australia, like the US. There is a kind of social understanding that supporting individuals who have these conditions is something that we should do as a society. So, there’s definitely opportunity there I think. I’ve got a team there at the moment in Germany who are working on some opportunities there.
Look, I think the great thing about Smart Box is they’ve got a strong market position. The UK is a really interesting market. It’s a very kind of concentrated market. So, there’s 15 spots in the UK, NHS centres, where assistive technology is trialled and delivered to end customers. So, it’s a very great market for us to enter. But, as I said, there are other parts in Europe, Germany, Netherlands, Belgium, Scandinavia, where there is equally good opportunity. And, obviously, some of those markets are bigger populations, Germany, some are smaller, but I think there’s a really strong opportunity for us in Europe.
Paul Sanger: Now, Control Bionics recently secured an I think $525,000 investment from NorthStar Impact Funds. Can you elaborate on how this strategic partnership with NorthStar, known for its focus on positive impact investments, aligns with Control Bionics’ mission and growth trajectory?
Jeremy Steele: Yeah. So, Kerry and the team there are wonderfully astute investors. They’ve got a really good track record in combining putting investment into businesses where not only is that business going to make a difference but they can make a difference as an investor. And so I was just with Kerry this morning talking about some of the ways in which he and his network can work with us to assist in delivering on our strategic objectives. So, they’re a meaningful investor. I think it sends a lot of the right signals to the market that smart institutional money that understands impact investing can see not only the good that Control Bionics does, but the great returns it can deliver to shareholders as well.
Paul Sanger: Yeah. I mean, it’s a huge endorsement on the work that you’re doing. Nothing bigger than an investment of that size.
Jeremy Steele: That’s right.
Paul Sanger: And other news — you also recently received approval for a new HCPCS code marking the NeuroNode as a reimbursable medical device in the US. How do you perceive this impacting the accessibility of the NeuroNode to patients with speech and motor impairments? And what does this mean for the company’s growth in the US market?
Jeremy Steele: Yeah. Look, I think the size of the opportunity and the opportunity for us in the US on the back of this code is significant. A Medicare code, so HCPCS – “Hicpics” code, as it’s called — is effectively the equivalent of an Australian Medicare code. So, Medicare in the US have said for any Medicare- or Medicaid-covered individual in the US, the government will reimburse US$4,300 for the NeuroNode as part of their system. There’s very few devices that have access to that, their own specific code. And so the win for us is massive. It now opens up a whole market, whereas perhaps third parties weren’t willing to buy the device from us because they couldn’t get it funded, now they can get it funded. Now we go through the process of getting private insurers to cover it as well. As we said in the release, just on our existing business, if you were to take that code and look backwards, it’s about an extra $400,000 worth of EBITDA for us over FY24. Looking forward, the size of the prize is even bigger. I mean, if we, and I’m confident we can execute on that, this is millions of dollars of additional revenue…
Paul Sanger: Yeah.
Jeremy Steele: ..for us in the US market because it’s now specific funding for our device in the US market, which, you know, has taken many, many years to get to. And so I’m glad the market recognised the value of that. I think the opportunity is massive.
Paul Sanger: Yeah. And just to highlight on that point, whatever business you’re in, breaking into the US market is not easy. And, as you just said, it’s taking you a number of years to get there, but that really is a game-changer announcement.
Jeremy Steele: Absolutely. Yeah.
Paul Sanger: And, lastly, with all the advancement Control Bionics is making, what are your long-term goals for the company, and how do you plan to stay at the forefront of assistive technology?
Jeremy Steele: Yeah. What’s important to me is we’re consistent in how we talk to the shareholders and the market about the opportunities we have. Our core business continues to grow, and we’re looking to expand in our key markets of Japan, Australia and the US. But, beyond that, NeuroNode only, which I’ve talked about, you can see the first success we’ve had there in the UK and Ireland, and we expect further success in continental Europe. We’ve got the HCPCS code that’s going to further drive growth, as we’ve just talked about. And then we have DROVE as well, both in Australia and the US.
So, I think, for us, execution, unsurprisingly, is really important over the next 12 or 24 months. I think we have plenty of opportunity. The NeuroStrip is almost endless in terms of its opportunities. And so what I’ve said to my team back in the office and what I say to the market is the focus for the next 12 to 24 months is execute on some of these significant milestones we’ve hit over the last six months, deliver the revenue growth, and that will continue to build capacity for us to do more as we look forward.
Paul Sanger: Jeremy, it’s been an absolute pleasure having you here today. Clearly, some of the stuff you’re doing is life-changing for individuals, so please continue doing what you are doing. We’ll watch the story very, very closely. But thanks for taking the time to share those thoughts and views with us today.
Jeremy Steele: Thanks for having me in.
Ends