Company Interview / Control Bionics receives key US approval

Jeremy Steele, CEO of Control Bionics (ASX: CBL), shares the company’s goals after receiving approval from the U.S government. This approval concerns the new insurance code, making the 'neuro node' device eligible for reimbursement, allowing the company to sell the product more widely and make it more accessible to patients with Medicare, Medicaid, and potentially private insurance. The device's approval has been years in the making, Jeremy expresses.

Control Bionics' neuro node is an electromyography sensor developed in Australia by Peter Ford and is used primarily by individuals who cannot communicate verbally due to conditions such as motor neurone disease or cerebral palsy. The device allows them to connect with technology and communicate with others. The U.S, Australia, and Japan are notable markets for Control Bionics' products. Besides neuro node, Control Bionics and Deaken University are collectively working on 'Drove', an autonomous wheelchair device, which is currently launching in Australia after receiving TGA approval.

The deployment of AI and next generation assistive technology are being utilised to further enhance Control Bionics' work, according to Jeremy. He is optimistic about the possibilities AI brings to their latest device, the 'neuro strip', regarding the extraction and use of high-fidelity data from the human body. Future applications can aid in diagnosis and treatment of multiple conditions, like incontinence, a widely debilitating issue with currently limited solutions. Similarly to Elon Musk's team, Control Bionics is also harnessing non-invasive AI interface but effectively on the skin surface, therefore perceived more accessible and comfortable to users.

Full unedited transcript below:

0:11

Aussie MedTech Control Bionics has received approval from the US government for a new insurance code that will make its neuro node device eligible for reimbursement more than $4,000. The move will allow the company to sell the device more widely in the US, and make it easier for patients to get the device covered by Medicare, Medicaid, and potentially private insurance. To discuss in further detail, Control Bionics. Jeremy Steele joins me now. Jeremy, just talk us through what this actually is and how important the reimbursement is.

0:42

Well, much like the system here in Australia, um, Medicare and Medicaid are the government funding for individuals in the US. And the process for getting a device approved for Medicare Medicaid can take many years. And in fact, it's taken us a number of years. But effectively it um, it um, lists the neuro node, um, To be eligible for reimbursement for individuals who are currently covered by, uh, Medicare, which is federally based in Medicaid, which is state based. So it's a really exciting achievement for the business. And one, as I said, it's been many years in the making. But, Jeremy, what is new? Oh, no. Just take a step back and explain to us what you're doing at Control Bionics. Yeah. So so the neuro node is a electromyography sensor. So EMG is is the shortened version of it, but, uh, what it is, it's a device that's placed on the skin that can, uh, sense, uh, muscular activity. So for individuals who are unable to communicate verbally, um, they'll use

1:41

technology, uh, in order to be able to communicate to people who have, uh, motor neurone disease or cerebral palsy, uh, conditions that are familiar to most people, uh, unable to speak verbally. And so they use the neuro node in order to connect with technology at the neuro node. Um, a fantastic device that was developed here in Australia by, uh by Peter Ford. Um, uh, and in fact, uh, has been in the market for many years now. But that technology is relatively unique. We don't really see any competition, and so we sell that device in many markets around the world. The US is our biggest market, Australia and also Japan. We were just watching vision earlier as well. Of your other product drove. Tell us the latest with that and what you're doing there.

2:26

Yes I drove product. We released or kind of announced the release of last year and got TGA approval as a class on medical device a couple of months ago. So that's an autonomous wheelchair unit. So you attach it to an existing powered wheelchair and it allows it allows for an individual who can't consistently control their own wheelchair to, um, set up locations inside the house and the wheelchair. Basically, they can select the destination and the wheelchair will drive there automatically. Well, first, not really been able to be commercialized previously. And you know, we've had some smart people and work with Deakin University here to come up with a way in which you could do that in a cost effective manner so that, um, in the process of launching that here in Australia and uh, actually going through, uh, commencing the FDA approval process in the US as well, thanks to a, uh, about a half a million, uh, Australian dollar grant we got from the ALS Association in the US to assist us in getting that, uh, FDA application in. So how much

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are you seeing the development of technology, the likes of AI, next generation assistive technology really help control bionics? Yeah. Look, it's a I mean, AI is, uh, you know, if you don't hear it at least five times a day, then you're probably you're probably not listening. I mean, it is certainly a well thought about, um, opportunity for a business like ours. I think for us, you know, I recognize that, um, one of the key tenants of successful use of AI is in is in data. And the neuro strip, um, which I saw you showing that video just before, uh, which is our newest device, uh, the fidelity of the data that we're picking up off the body is such that I think, um, that device and the data that comes from it will, um, play a key part in, um, many, many different applications for how that data can be used to understand, then diagnose and then treat a whole host of conditions that, um, that individuals have and, uh, perhaps that don't have solutions today.

4:26

So take incontinence for example. Um, it's just a, that's a massive issue, uh, that exists in the world today. There isn't really a good solution. And, uh, we're hopeful that the nearest trip and the data that comes from it, um, and the use of AI will be something that can really revolutionize, um, how people might treat incontinence in the future. I read an article saying that your technology is kind of similar to to what's being used by Elon Musk's artificial intelligence, um, space in in this space as well. What do you say to that to be compared to the likes of what Musk is doing?

5:01

Uh, well, look, I'll take that every day of the week. Uh, I guess, um, what I would say is that the key difference between what we're doing and what his group is doing is they're doing what's called invasive. So obviously, you're inserting a chip, uh, inside the body. Um, I think that certainly has a place. What I would say, though, is where, you know, we're non-invasive, and so we're on the skin. Um, and you know, that certainly from my perspective, I think that's that's a place in the market where people are very willing to contemplate attaching what is effectively a Band-Aid to your skin to access the the data that comes from your body. Um, I think in the fullness of time, um, that the kind of brain computer interface or BCI, as it's called, will have a place in the market. But I think there's a much bigger opportunity for surface based EMG, which is what the nearest strip does. Now, you have not reported yet, so I know you can't discuss too much about financial metrics, but with the development that you are seeing, do you think

6:01

that potentially your share price is unfairly undervalued? Where do you see growth coming through in the next couple of years? Yeah. So, um, look at it. You know, for a small cap stock, it's been a difficult kind of 12 to 24 months, regardless of how you've performed. I think what I would say and I say that to shareholders, both existing and prospective, is we've been at this for a long time. This business has been around for about 20 years where FDA approved CE mark TGA. Um, our core business is is growing and will continue to grow. And the, uh, this code that we announced today underpins what I imagine will be a really significant year for us in FY 25 as we continue to grow that core business. I think the real opportunity for shareholders is what comes next. And so we're on the back of both this code and some work we've been doing. We believe the neuro not only strategy, which is selling our core intellectual property to third parties, uh, is an avenue for growth. And then on top of that, we've got the neuro strip

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and drove, which is kind of further growth, um, beyond what our core business will do this year. So I think the next couple of years are going to be, um, uh, a couple of really good, um growth years for us. And I think, um, I think there's, uh, there's more good news to come for our business.