Cochlear scores critical FDA approval for its innovative hearing aid system

Nucleus Hybrid Implant--Courtesy of Cochlear

In a major regulatory win, Cochlear ($COH)--the world's largest maker of cochlear implants--scored FDA approval for its next-generation device to treat sensorineural hearing loss.

The agency approved the company's Nucleus Hybrid L24 Cochlear Implant System for individuals 18 and older with severe or profound sensorineural hearing loss of high-frequency sounds in both ears, but who can still hear low-frequency sounds, the FDA said in a statement. The device--part hearing aid, part cochlear implant--contains an external microphone and speech processor that delivers sounds to the inner ear, and a hearing aid portion that sits in the outer ear and amplifies low-frequency sounds. It also includes innovative features like the ability to manually adjust sound settings and wirelessly stream data onto a mobile phone.

In a clinical study, fifty individuals with severe to profound high-frequency hearing loss were tested before and after receiving the implant. The study found that after 6 months, a majority of patients showed significant improvement in word and sentence recognition. Although 68% of individuals experienced adverse side effects like low-frequency hearing loss and dizziness, the FDA decided that the benefits of the device outweighed the risks, the agency said in a statement.

U.S. approval for the implant system helps Cochlear in a transitional moment: Despite holding a virtual monopoly on the industry, the Australian company has hit a few road bumps in recent years. Cochlear downgraded its profit forecasts for the second half of fiscal year 2013, a change it blamed on customer holdout for its "game-changing" Nucleus 6 device. In 2012, the company saw its profits fall by 68% after a costly recall of its Nucleus CI500 implant. Cochlear makes 40% of its overall revenue in the U.S., The Wall Street Journal reported in 2013--so increasing its hold on the market could help the company restore growth.

With FDA approval in hand, Cochlear also hopes to stay one step ahead of its competition. California-based Sonitus Medical won FDA clearance in 2013 for its SoundBite hearing aid system--an in-the-mouth device that uses bone conduction to transmit sound. Researchers at Harvard and MIT recently unveiled an innovative, low-power signal-processing chip that could provide an alternative to traditional cochlear devices. Rivals in emerging markets also pose a threat, as companies in India and China released cheaper cochlear implants in 2013.

- read the FDA statement

Editor's Note: A previous version of this story mischaracterized Cochlear's position in the market for hearing-aid devices. The company is the world's largest maker of cochlear implants, not the world's largest maker of hearing aids.