Company Interview / Strategic shift hits its stride in the UK

Key points:

Control Bionics (ASX: CBL) agrees on an exclusive UK, Ireland distribution deal with Smart BoxDiverse funding strategies in different markets help make the technology accessibleAnticipated growth with new partnerships, products, and Medicare reimbursement in the US

Shares of Control Bionics (ASX: CBL) are tracking higher due to an exclusive distribution agreement with Smart Box for its technology in the UK and Ireland. Jeremy Steele explains that the partnership aligns with their strategy of expanding into new markets, leveraging their unique neuro-node technology.

Jeremy states that the partnership aims to bring their speech-generating devices to more people worldwide, enhancing communication for those with physical needs. He adds that funding varies by market, with support from public and private insurers, including the NHS in the UK, making this technology accessible.

Jeremy mentions that despite recent financial challenges, Control Bionics (ASX: CBL) is diversifying revenue streams and expects strong growth, especially with new products and Medicare reimbursement in the US. He also highlights the strategic partnership with Northstar, which supports Australian businesses with social impact.

Full unedited transcript below:

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But shares of medtech firm Control Bionics are tracking higher off the back of an exclusive distribution agreement with Smart Box for its technology in the UK and Ireland. For all the details on this partnership, Control Bionics managing director Jeremy Steele joins me now. Hi, Jeremy, thanks for joining us. Congratulations. Yeah. Well, so what do you think the market's loving about this partnership?

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Well, I think it's a continuation of our strategy that we've talked a lot to the market about, which is we have some very unique, uh, some really strong protected intellectual property around our neuro node. And we made a statement just over 12 months ago that we wanted to take our device to as many countries as we possibly could. Uh, and so we worked a lot last year in, um, uh, advancing our hardware and our software, uh, to make this product really suited to any market around the world. And we came out and said we were going to do it. And I think it's, uh, it's great to announce this morning that, uh, the UK and Ireland is the first of what we hope to be numerous markets. We announced during the course of FY 25, where we're teaming up with, uh, with leaders in those markets to sell our devices to them so they can then on sell it to people, uh, as part of a broader package of assistive technology solutions. And so these are speech generating devices for those who have trouble communicating. Um, you know, this is a very complex,

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very complex, um, issues that people are dealing with in terms of communication and physical needs as well. What, uh, how much of this would be covered by, by medical plans, by public health plans? Like what is the detail there? Jeremy.

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Yeah. So it is market specific. So in Australia, um, we're very fortunate to have to have the NDIS that, uh, funds speech generating devices and technologies such as ourselves in the US. Uh, it's a combination of both public and private insurers. In the case of the UK and this particular agreement, the NHS in the, in uh, in In the UK operates very similarly to the NDIS, which is if you have a proven need for this technology, then the NHS will provide solutions. In some other markets there is a lot of private funding, which obviously makes it more complicated for people. Um, but I would say increasingly, um, governments and societies are recognising that it's part of our duty as individuals to support, um, uh, support groups of people who have these conditions need access to this, this very important technology. Mhm. Yeah. Because they're not cheap. So that's what sort of um piqued my interest in that. Um, look, what was the timeframe for getting this approval

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in Ireland and England. Because presumably that will give investors some sort of indication as to maybe how long it would take in some other countries you want to move into.

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Yeah. So, so from a regulatory standpoint, we have our CE mark and our UK approval to be able to sell as a what's considered a class one medical device in both of those quite large territories. It's really about identifying for us, the right partner who can accelerate the offerings, and that they have a position in the market that allows them to sell quickly. So Smart Box is a is a perfect and ideal partner. In fact, we've been working with Smart Box for many years now. We use some of their technology and our solutions, and so it's quite a nice partnership for us to return the favor, as it were. So, um, uh, there are a number of other operators in continental Europe who have, you know, quite large positions in the market. And so, you know, I think, um, we've been at this for 20 years. So our technology is proven. There's thousands of people around the world who use it. So it's not a question of whether our technology works. It's a question of us finding the right partner and striking the right commercial arrangements to be able to get them to on sell into their

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market. Yeah. Because in the most recent report, revenues were down and the loss was up. Both, um, you know, loss from ordinary activities and loss for the year. I think that was up by 5% to just over, well, just shy of $6 million. So why is that? Why are you failing to gain traction on the revenue front? Yes. I mean, it's a I mean, I could spend a long time talking to that. It said, you know, it was a flat year, which I don't know, given the the economic environment flat is sometimes up. Um, you know, we're a business that's building scale. And I think one of the things I've talked about since I joined the business at the beginning of last year is we need to diversify the ways in which we're monetizing our, you know, really good technology. And I think we were, you know, too heavily reliant on a small number of, uh, of markets and the ways in which we were selling and generating revenue. And so to diversify our revenue stream was really important, uh, and allows us to perhaps navigate some of the

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bumps that come, uh, when you're dealing in highly regulated kind of third party funding environment. So in Australia, it's been well publicised. The NDIS, uh, had some challenges with assistive technology during the course of FY 24, which had a direct impact to our business and more importantly, to our clients. I'm delighted to say the NDIS has certainly seemed to go on to. To have gotten on top of those issues. And so we're expecting a pretty strong rebound from Australia in, uh, FY 25. And then in the US, we announced, um, a few weeks ago that we've received, uh, what's called a hitbox code, which is a specific Medicare code for reimbursement for the neuro node, uh, which previously didn't have its own reimbursement. And so we expect that to drive strong revenue growth in the US. And then on top of that, we've obviously got this new partnership arrangement, uh, in the UK and Ireland, uh, as well as drive our wheelchair product and the neuro strip, which is our brand new product. So I mean, I'm encouraged investors continue to see, uh, the, the strategic

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success we've had. Our share prices almost doubled, doubled over the course of the last 3 or 4 months. Uh, and I think that's on the back of some excellent activity and outcomes we've delivered strategically. And, uh, and the confidence that shareholders in the market have that, that we will pull that revenue through, Uh, certainly in this financial year and years after that. And you did raise capital toward the end of July, I think it was. So you're well capitalized for now to execute on the strategy. I do note that Northstar um, yeah. Became, uh, yeah, the Northstar Impact Fund became investor controlled bionics. That's good company to keep. Yeah. Look, we weren't, um, to be honest, looking for capital, but but Kerry and the team at Northstar are really to have quite an amazing strategy. And and, uh, it was a real meeting of the minds there. Very much committed to invest in Australian businesses that are that have a real kind of social impact. And, uh, you know, it was a very easy decision for

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us to, to bring those guys on board, and we look forward to extending that partnership with them because I think, um, what Northstar are doing is not just about providing capital, although that's important, but it's about how can they work with the small number of companies that they invest in to help grow and expand those businesses. So it's a pretty exciting partnership for us.