Tracey Kruger

Cedric Navarro

_________________________________________________________________________

Howard Samuels:  What do you enjoy most about working at Advanced Bionics?

Cedric Navarro:  The patients.  I’ve been involved in the medical device industry for the past 20 years.  Before that I worked in aerospace, in defense, at a missile company!  I changed my life from designing things that have the potential to harm people to things that help people. Really there is nothing more profound than knowing that all of the time you spend and devote makes people hear.  I’ve worked on devices for neurostimulation and pain management and other areas and it just doesn’t have the emotional payback that you get from working with our patients.

Tracey Kruger:  Definitely the people. I am an audiologist by background, and spent several years working with cochlear implants in a clinical setting before coming to Advanced Bionics in 2000.  As you know, we have an active program at AB where recipients come in on a regular basis to help us to develop new products.  They provide input regarding products that we are working on to tell us how well they work and what needs to be improved.  I am always amazed at the altruism that drive most of these individuals to help in this manner.  Most just want to give back and assist others who will receive a cochlear implant.

Although I don’t get to spend as much time participating in these activities as I would like, it is really rewarding to see the impact new products can have on recipients of our technology.  It is this positive impact on real lives that keeps so many employees at AB long-term and why we are so passionate about what we do.

One great example is a 2-year old girl who visited us with her family a couple of weeks ago.  She was implanted at a very young age and has age-appropriate language already at the age of two years.  I saw her running around playing with her brothers, one of whom also has a CI and is doing extremely well, and she has a totally different life than she would have had, in terms of her ability to verbally express herself and to hear those around her.  Her situation is totally different than if she hadn’t received a cochlear implant.

Another wonderful aspect of working at AB is the people who work here – most don’t consider what we do just a job.  It is very inspiring to work alongside so many talented and caring individuals who work in our company because they care about making a difference.

It’s an incredible feeling you get when you contribute to something that helps other people, and having a chance to make the technology better.  Everybody within these walls has an opportunity to make the cochlear implant better and that is really motivating!

CN:  One of the other things that really set Advanced Bionics apart in terms of drive for the quality of our products and our systems, is an internal program that we call ‘Connect To Patient’. It’s a unique program where we bring recipients of our cochlear implants into the company on a regular basis and they talk to employees about the experiences they have with the products and services provided by AB.  It’s open to all employees from manufacturing personnel to design engineers and customer service employees.

We don’t only bring in those individuals who are our highest success stories, we also bring in people and families who have had issues for one reason or another. Their stories really resonate with employees and remind them about the importance of what it is we do and why we are here.

HS:  Thank you for taking the time to talk with us today.  We appreciate your honest and open responses.

This interview and subsequent transcription from the recording was conducted entirely using Advanced Bionics cochlear implants.

Tracey Kruger

Cedric Navarro

_________________________________________________________________________

Howard Samuels: The effects of rapid product development are already beginning to manifest themselves with the recent introduction of the Neptune processor, the T-Comm accessory, and the upcoming next-generation BTE processor.  Cochlear implant candidates often wonder whether to move forward with their implant, or to wait for the Next Big Thing.  Do you think candidates should wait?

Tracey Kruger: Generally speaking, no, I don’t think they should wait.  However, this decision must be made in consultation with the candidate’s audiologist and surgeon since they are the ones who have the best understanding of the individual’s specific situation and expectations.   In the case of young children, research has shown that early implantation has a positive benefit on outcomes.  For adults, often this decision depends on the level of need of the candidate.

When a person enters the implant candidacy process they may have had a certain level of hearing that enables them to get by quite well in day-to-day life.  They may be willing to wait a bit longer for new technology that is under development in order to receive a certain new feature.  On the other hand, there are those who are in a situation where they are no longer able to communicate or function well at work or in their relationships.  They may need an implant as quickly as possible to begin the process of restoring their hearing so that they are able to communicate with loved ones and/or resume their daily activities.  It is for this type of situation in particular that I would not recommend waiting for new technology.

Cedric Navarro:  This is especially true for children.

One of the nice things about the Advanced Bionics product line is that our technology platform is able to provide many new improvements merely through software or external processor upgrades.  So there really is no reason to wait for a cochlear implant knowing that you are going to get the benefits of new technology and better sound processing strategies over time.

TK:  Even with the new externals, we try to make the processors that we develop, as much as we can, backwards compatible.  That’s proven to be much more difficult with our first generation cochlear implant mainly due to power requirements and some other technical challenges that we face.  But for everything that we’ve manufactured since early 2001, we’ve maintained backward compatibility and we intend to continue to do that as much as possible.   Of course, we are also continuing to work on new innovations for our first generation device as well, it is just not always possible to provide the same types of innovation in the same time frame as for recipients of our more recent generation devices.

HS: What are your intermediate-term objectives for cochlear implant product development, over the 5-year time frame?

TK: Advanced Bionics has always been really committed to patient performance.  We believe people get cochlear implants to hear better and that we have a responsibility to continue our efforts to improve performance for those who have chosen our cochlear implant.

We have several projects ongoing right now that we hope will drive patient performance ahead in a variety of different ways.  Of course it is likely that not all of these ideas will meet with success; however, for the ones that do, we absolutely intend to bring them to market so that recipients of our device have the opportunity to hear better in more situations.  ClearVoice is a great example of this commitment.

Of course, we will also continue to try to improve power consumption since that will allow us to improve battery life and create sound processors that are smaller in size.  Wireless connectivity is also becoming a very important topic for recipients of cochlear implants so we will continue to invest in projects that address this need.

Another area of great interest to AB is expanded bilateral and bimodal functionality. I think you will see that we have some very nice features in upcoming products that address both bilateral and bimodal hearing.  This is just the beginning.  We will continue to innovate and try to lead the market in this area.

HS: What do you think the competitive landscape will look like in the 5-10 year time frame?

TK: The great thing about the situation that we are in now, with several established and emerging competitors in the market, is that there is more pressure to do more, do it faster, and do it better.

We are obviously moving towards miniaturization and wireless connectivity, as I have already mentioned.

Of course all companies have been investigating fully-implantable technology for many years. There is a lot of work going on in a variety of areas to better understand the feasibility of some technologies required to achieve this as well as in understanding the use case involved with such products.  In addition to this I think we will see more innovation in the area electrode technology and preservation of residual hearing.

Over the past few years there has been a great deal of research into expanding the service delivery model, including areas such as streamlined programming, remote fitting, and self-customization of programs.  I am guessing we will see more of this in upcoming years.

HS:  What do you envision for hearing restoration in the long term?  We’ve been reading about hair cell regrowth for decades.  Fully implantable cochlear implants seem to be a technology challenge rather than one requiring medical breakthroughs.  Optical stimulation rather than electrical stimulation has been in the news occasionally.

TK:  There is active research going on in all of these areas, as you know. There is promise that we will be able to regrow hair cells.  The question for me is what kind of functionality we will be able to restore with this technology.  Eventually, someday we will get there, but I don’t think that it will be in the next 10 or maybe even 20 years.

Regarding fully-implantable cochlear implants, the question that I have is whether we will be able to introduce this technology without any degradation to patient performance.  Once you have a microphone implanted under the skin or in some alternate location in the body, how robust will it be?  External microphones today can suffer problems due to moisture and debris.  In the body where you have a lot of moisture and potentially other types of contaminants, how well would the microphone survive? And how long will such a microphone be able to transmit sound accurately?  Another important consideration is implantable batteries.  Obviously safety will need to be a primary consideration, but also batteries will need to be very small yet last a considerable amount of time in the body to minimize the need for repeated surgeries for replacement of a depleted battery. I do believe that we will get there I am just not sure how long it will take before this kind of solution becomes really mainstream.

The area of optical stimulation is a really exciting.  I’m not sure how quickly we will see the research and development going on here to turn into a usable product but it is certainly very interesting.  I am guessing that this will take more time than 10 years but this is certainly not my area of expertise so maybe I will be pleasantly surprised!

Next: The Human Factor.

Tracey Kruger

Cedric Navarro

_________________________________________________________________________

Howard Samuels:  Once you are granted regulatory approval, what affects the amount of time between the approval date and when the product becomes available?

Tracey Kruger:  There are a lot of things that can affect that.  We always try to be prepared so that commercial launch can take place quickly following an approval; however, sometimes we need extra time for things such as operational readiness.  We need to ensure that we have built a sufficient quantity of all components of a product to be able to satisfy the demand.  For a product such as Neptune, this included new headpieces, multiple cable lengths in several colors, color caps and covers, not to mention the processors themselves!  We always try to avoid any issues related to insufficient product availability to avoid backorder situations.

Other examples of things that can cause delays are completion of all necessary documentation, availability of supporting materials or even something as simple as updated product order forms.  Of course, we know these things are needed and do our best to ensure that we have completed all necessary work prior to receiving regulatory approval but on occasion unexpected issues can arise that cause delays.  We just do whatever we can to minimize this – having a great team really helps!

Finally, another reason for a delay in release of a product is actually more to do with strategic planning.  There may sometimes be good reasons to delay the launch of a product in some regions of the world in order to introduce it at the most optimal time rather than solely based on when it receives regulatory approval.

Cedric Navarro:  And sometimes it is a regulatory strategy.  How you bring a product to market in the US is very complex.  Because there are a lot of concerns in the medical world today, the FDA is an agency that is predicated on protecting patient safety at all costs.  Sometimes that means it’s that one in a million concern that they have for that patient that delays an approval.  To mitigate this risk, we may develop a regulatory strategy for approval of only a portion or feature of a new product that we may not intend to bring to market on its own. This approach gives the agency a chance to thoroughly review the data so that they are comfortable that there are no safety issues.  Once you have completed that, then you will submit the more significant change that you intend to put into the market.  And the purpose of breaking the submission up in phases is kind of like that old joke, how do you get down off an elephant?  Well you don’t, it’s just too big.  So if you split a large new system in portions, it can make it easier to get through the review cycle because that allows you to get a portion of the system approved that the agency is now confident with.  Then you can focus on the next portion.

HS:  Back to the operational aspect, are you in communication with the FDA during the approval process?

CN:  We are, however, by law, one thing the FDA is not allowed to do, is to provide any company with a proposed approval date of when they think it will happen.  So what happens is, once you get to about the 100-day point in the cycle, the FDA tries to respond to all applicants within 100-120 days.  If we haven’t heard anything by the end of those 120 days, usually we are feeling pretty confident.

HS:  Just prior to the end of the approval cycle, you really don’t know if the FDA is going to come back and say, ‘you know, this may potentially cause a sore on the back of the ear.’  So you don’t want to manufacture a bunch of product that you may have to discard.

TK:  We sometimes manufacture prior to receiving approval if we are very confident that nothing like that will happen.  This is actually quite common when it comes to things like user guides, which are often susceptible to late changes by regulatory bodies.  It is another one of those things that can definitely hold up a product launch.  It often takes a great deal of time to implement such changes, go through approvals of the changes and then produce the product with the change incorporated.

HS:  What are the differences dealing with global regulatory agencies?  What additional work is involved?

CN:  The nice thing about global harmonization is that there is not a lot of additional work in terms of the testing and the type of work that is done.  However the regulatory pathway is different.  Some countries require a different regulatory pathway depending on where the product is manufactured.  For example, some countries require U.S. approval before we can submit to their country. Other countries have their own regulations that we need to follow.

HS: What are you allowed to say publicly about new products at various points in the approval process?

CN:  That’s actually very limited, and again the US is the most restrictive market.  It’s not only what can we say, it’s what can we show. Before a product is approved, we are not allowed to make any commitments about potential dates of launch or product claims.

We have to wait until we have a product in a submission before we can show a product.  And then it has to be clarified that this product is under development.  If we decide to show a product while it is under regulatory review, we can’t talk about its performance or its features and we must state that it is pending regulatory approval.

TK:  Outside of the US, the rules are different.  In Europe, for instance, we could talk about an unapproved product, and even take orders for it before it is commercially available if we wanted to, without regulatory approval so long as we state that it is still pending regulatory approval.

Next: Upgrades and Future Technology Directions.

Tracey Kruger

Cedric Navarro

_________________________________________________________________________

Howard Samuels: Would you describe the process for regulatory approval for new cochlear implant hardware and software?

Cedric Navarro:  In the United States, the regulatory approval process for new cochlear implant hardware whether it is the implant itself, the externals, or the software, is the same.  The manufacturer submits a 180-day PMA (Pre-Market Approval) supplement to support the change. Additional information that may be required is a clinical trial.  When we make a significant change, or introduce a new feature or new hardware, we must gain approval from FDA via a PMA Supplement.

What that means is from the day you submit, the FDA has 180 days to review all of the data, to assess your claims, and determine whether you have provided enough data to show that there are no safety issues or any efficacy issues.

For example, ClearVoice is a groundbreaking algorithm that our patients just love, and that there has been a lot of positive feedback about.  ClearVoice is actually the first sound-processing algorithm in the industry that has ever been given a superiority claim by the FDA.  Prior to that, all of the sound-processing strategies in the industry had to prove that the new sound-processing strategy was no worse on average than what patients had before.  And that’s a pretty easy bar to hit.

Whereas for ClearVoice, we believed strongly that this technology would improve patient performance and clinically, statistically speaking, would demonstrate that it is superior.  In order for us to make the new claim, we had to conduct a clinical trial.    If you have a new claim, you have to do a clinical trial before you do your 180-day supplement.

HS:  If Advanced Bionics had chosen to introduce ClearVoice as an algorithm, and not say that it is superior, but that it is an algorithm intended for noise reduction, then you would just submit for the 180-day process without having to conduct the study, correct?

CN:  Well the speech enhancement algorithm itself is a new feature.  So ClearVoice is a new feature that we didn’t have before.  We would have had to do a clinical trial, but it would have been simpler, because it would have been a non-inferiority design with no claim of improved performance benefit.

HS:  So this is something that you choose in your submission to the FDA?  You say ‘we want to demonstrate that this is superior; here is our data; and we have conducted the clinical trial.  Now start your 180-day clock.’

About the 180-day clock, is that the target time frame?

CN:  The FDA is not held to that.  Because of various issues, very rarely do you get a submission approved more quickly than 180 days.  At Advanced Bionics, our relationship with the agency is really great, so on some external devices, we have beaten the 180-day clock.  But if you look at FDA’s performance objectives, and they publish these, the 180 days is not what the performance goal is.  The goal, for what is called a 180-day supplement, is to have 80% of the supplements reviewed and approved by 230 days.

HS:  To summarize, if you don’t have a superiority claim, then you can just make a submission.  If you have a superiority claim, you run clinical trials, and then make a submission.  Then there is this nominal 180-day period; the FDA studies it, thinks about it, takes people out to dinner, I don’t know what they do.

CN:  No, they don’t do that! (laughter)

HS:  Then you get a phone call one day, or a fax, and it says …

CN:  We will get a letter from the FDA that will say ‘Your approval has been granted.’  And there are conditions of approval, that talk about any follow-up reports or any other information that you need to provide.

HS:  But sometimes it is not approved.  What happens then?

CN:  In the review cycle, if they find a deficiency, or if they don’t have enough information in order to grant an approval, they will send you an additional information request.  All of this is in written format.  You will get a letter stating the additional data that you need to provide.  Or maybe they just have some questions they would like to have answered.

The 180 days is their review time.  That doesn’t mean it goes from January 1st to July 1st.  When they write up questions, it actually stops the review cycle.  So if they go through 100 days, and at the end of 100 days they send you five questions, then the clock stops at that 100 days.  And then what happens is they restart the clock when the manufacturer responds.

Next: The Logistics of Introducing a New Product.

Tracey Kruger

Cedric Navarro

_________________________________________________________________________

Howard Samuels:  How is Advanced Bionics taking advantage of the changed financial landscape being part of Sonova?

Tracey Kruger: One clear benefit of being part of Sonova is gaining access to the outstanding technologies created by Phonak that today benefit recipients of hearing instruments.  As you are aware, many of these technologies are also very likely to bring benefit to recipients of cochlear implants.  AB now has the opportunity to bring these products and features to market in a much more timely manner than would have been possible on our own, which will benefit recipients of our technology.

Another obvious benefit is the increased level of investment that Sonova has made in Advanced Bionics, which will allow us to focus on more innovation projects as well as continual improvement to customer service.   For example, if you look at the funding that has been provided for expansion of our technical development team, whether it’s our R&D team or our R&T (Research and Technology) team, I would estimate that they have almost doubled in size in the 3 years since the acquisition of AB.   That is real evidence of Sonova’s commitment to AB and those choosing our technology.

HS: How can Advanced Bionics take advantage of Phonak’s technology portfolio, and what can Phonak use from AB’s portfolio?

TK:  In the beginning, when we were acquired by Sonova, it took some time for us to find ways to take advantage of one another’s technologies.  We are now seeing Phonak technology adopted in our new products coming to market.  The advantage that we have for products going forward is that we are starting our collaboration in the very early phase of product development for both companies.  Many of our technologies are now designed knowing that they will be used, in many cases, for both hearing instrument platforms and cochlear implant platforms.

One of the benefits of this process to AB is that in some cases the development effort for new products and technologies will come from Phonak, enabling us to focus on our core strengths.   The other, long-term benefit for both companies is that recipients of our (AB and Phonak) technologies may have the opportunity to use these devices, cochlear implants and hearing instruments, synergistically for improved performance, as well as added convenience with shared accessories and interoperability.

Next: The Regulatory Approval Process Explained.

Tracey Kruger

Cedric Navarro

_________________________________________________________________________

Howard Samuels: We are sitting with Tracey Kruger, Vice President of Global Marketing, and Cedric Navarro, Vice President of Regulatory/Clinical Affairs and Quality.

Thank you for taking the time to talk with CochlearimplantHELP.com.  It is rare for a cochlear implant company to talk about its technology plans, rather than its history, so this opportunity is very much appreciated.  Users of Advanced Bionics cochlear implants and people investigating cochlear implants for themselves or a loved one value this unique occasion to hear about Advanced Bionics from two of its senior executives.

Sonova Holdings AG acquired Advanced Bionics. Can you tell us a bit about Sonova and the companies under its umbrella?

Cedric Navarro: Sonova Holdings goal is to be a total hearing solutions company.  Prior to the acquisition of AB, Sonova consisted of several hearing instrument companies including, Phonak and Unitron, as well as a variety of hearing instrument retail businesses.  So they had in the Americas and globally companies that actually do the design and manufacturing, fitting and distribution of hearing instruments.

With all of that technology, what they didn’t have was a company that would address the needs of individuals with severe to profound hearing loss who receive limited benefit from conventional hearing instruments.  And they identified Advanced Bionics as the company to fill that niche.  Early on it was obvious that there were a lot of synergies between AB and Phonak, Sonova’s primary hearing instrument brand.

HS: Sonova has reported that new electrode arrays, implants, and processors will be introduced on a roughly annual basis. This is much more frequent than the roughly 5-year product development cycle across the industry in the past.  Can you explain the rationale behind this dramatic increase in development?

Tracey Kruger:  In the past when Advanced Bionics was a privately held company, innovation pace was gated by the amount of money available to invest in product development projects. With the acquisition of AB by Sonova, it was clear that Sonova needed to invest in order for Advanced Bionics to compete in the marketplace, and to create the most innovative products on a competitive timeline.  And so Sonova has invested heavily in the years that they have owned Advanced Bionics to ensure that the technology and the pace of innovation would advance quickly.

Cochlear implant companies have tended to lag in adopting new innovations as compared to hearing aid companies.

One of the reasons Advanced Bionics is able to increase its pace of innovation is our ability to take advantage of technologies developed by Phonak rather than developing similar technologies completely independently.

HS:  Hearing aids don’t need to go through as much regulatory approval as cochlear implants.  Can you describe the difference in the approval process for the two different types of products?

CN:  Actually there is a tremendous difference because as an active implantable device, a cochlear implant is the highest risk classification device whereas a hearing aid is in the lowest risk class.

The biggest difference is that for a hearing aid, companies are free to launch products into the market as quickly as they want because there are no risks to patients whatsoever and there are no claims that affect patient safety.

For any change we make, any new feature we add for cochlear implants, we need to demonstrate to the regulatory agencies that we haven’t negatively impacted safety or efficacy. So in many cases we have to do clinical trials and studies that will take up to a year (or more) to conduct before we even start the approval process.

HS: As a follow-on to that question, I assume that there is always a continuous quality improvement process going on, and that there are probably many improvements that happen over the course of the life of a product that don’t get introduced as a new product.  It’s maybe something that is more reliable.  Do you have to go through the same approval process for each of those?

CN:  Yes we do.  For improvements to enhance reliability or to improve manufacturing yield, the FDA requires follow-up submissions.  The type of the change dictates the length of the approval process.

HS: Hearing aids generally come in different levels of performance and features, depending on how much you choose to pay.  Cochlear implants seem to come loaded with all of the goodies.  Can you explain the difference in product offerings?

TK: A lot of the difference between how hearing aid companies market their devices and how cochlear implant companies market their devices, which tend to be much more inclusive, is really more historical than anything else.  When the industry first started, the idea of  ‘kits’ were introduced so that a recipient would have everything needed to use their cochlear implant system.  As new accessories became available, more often than not they were simply added to the kit provided to new recipients rather than sold completely separately.

Reimbursement structure and competitive pressure has helped to further establish the practice of including a significant number of key system components in sound processor kits.

In contrast, in many cases recipients of hearing aids pay out of pocket for their hearing instruments and have a broad range of needs based on the individual degree of hearing loss, lifestyle and economic considerations.  This wide variability created the need for differing levels of sophistication amongst hearing instruments, as well as an extensive range of features, accessories and pricing to address the market demand.

Next: Accelerated Product Development.

Tracey Kruger

Cedric Navarro

_________________________________________________________________________

CochlearimplantHELP recently interviewed two senior executives at Advanced Bionics.  Tracey Kruger, Vice President of Global Marketing, and Cedric Navarro, Vice President of Regulatory/Clinical Affairs and Quality have given us extraordinary insight into the workings of a cochlear implant manufacturer.

Because of the singular amount of information that they have provided us, this interview will be published in several sections:

1. Business Relationships, Cochlear Implants and Hearing Aids
2. Accelerated Product Development
3. The Regulatory Approval Process Explained
4. The Logistics of Introducing a New Product
5. Upgrades and Future Technology Directions
6. The Human Factor