Cochlear Gets a Big Tick From US FDA - Share Price Moves Up

Summary

• Share price movements are mainly event-driven. The changes reflect the sentiment of market participants.
• For a healthcare stock, a significant event that leads to share price moving north is the approval of the Company’s products by the regulatory authorities.
• US FDA authorisation is a critical aspect and gives ample evidence on the future of a healthcare company.
• Cochlear received US FDA approval for four new products providing hearing technology solutions.
• Post the announcement, Cochlear’s share price rose and closed ~6% higher at A$204.0.

The Australian healthcare sector has always been lucrative to its investors and hence often grabs attention with the potential of providing remarkable returns. There are several variables which are responsible for increasing the interest of an investor in the healthcare industry, such as new discoveries, FDA approvals, recent developments, patents, clinical trials, among others.

US FDA approval, especially, is a crucial aspect that provides a good view of what the future holds for the healthcare company. Generally, if a company receives FDA approval, there are high chances that it will result in an increase in stock price. The share price of a healthcare stock tends to climb if the Company obtains approval for its drug or device. However, market participants should evaluate each Company and each product independently to avoid any setbacks.

ALSO READ: Progress Report & FDA Approvals for ASX listed Healthcare Companies

Let us throw light on an ASX-listed healthcare company, Cochlear Limited that received US FDA approval for four new products and how the announcement impacted its share price.

Cochlear Receives FDA Approval For Four New Products, Stock up ~6%

Stock Information: On 3 July 2020, COH last quoted at A$204.000, up by 5.87%. The market capitalisation of the Company stood at A$12.66 billion, with nearly 65.69 million shares trading on the ASX.

About Cochlear Limited:

Cochlear Limited (ASX:COH) is into development and supply of implantable hearing solutions to offer a lifetime of hearing outcomes. Currently, Cochlear is functioning across the divisions covering EMEA, Americas, and the APAC regions and markets its products in over 100 nations.

On 3 July 2020, Cochlear disclosed that the Company received approval from the US Food and Drug Administration (FDA) for four new systems. The latest products of Cochlear add to its existing suite of hearing technology solutions.

The newly approved products include:

• Nucleus^® Kanso® 2 Sound Processor.
• Nucleus^® 7 Sound Processor (for Nucleus 22 implant recipients).
• Custom Sound^® Pro fitting software.
• The Nucleus^® SmartNav system.

These four products demonstrate the Company’s continuing dedication and commitment to bringing innovation in hearing technology. Notably, Cochlear disclosed that it should commercially release all the new systems in the United States and Western Europe in the upcoming months, depending on the local approvals.

Let us shed some light in these recently approved systems:

Nucleus^® Kanso^® 2 Sound Processor: It is the smallest off-the-ear cochlear implant sound processor across the world which has proven hearing performance technologies. This sound processor is the first and only off-the-ear implant sound processor provided by cochlear. This offers direct streaming from compatible Android™ or Apple devices, and also compatible with the Nucleus Smart App, allowing control of device settings, information as well as functions.

Nucleus^® 7 Sound Processor: This sound processor is now compatible for Nucleus 22 implant recipients. This implies that Nucleus 22 implant recipients are now able to upgrade to the latest behind-the-ear sound processor of Cochlear and, for the first time, gain access to direct smartphone connectivity along with streaming from compatible Android™ or Apple devices.

Moreover, Cochlear said that there are over 17k individuals across the world with a Nucleus 22 implant and this upgrade indicates that for the first time people who have benefitted from their implant for nearly last forty years are able to access direct smartphone connectivity along with a smaller and lighter design.

Custom Sound^® Pro fitting software: This software helps clinicians in fitting sound processors provided by Cochlear and harnesses nearly forty years of experience and input from the thousands of clinicians across the world. Moreover, this software keeps patient at the centre of care, including a new dashboard as well as Patient Goals feature, promoting patient engagement and enabling more efficient tracking of progress between appointments.

Moreover, Pro fitting software is designed to improve the fitting experience for clinicians and patients; this enables hearing health specialists for offering personalised care for each patient.

Nucleus SmartNav System: This is a new tool to provide support surgeons in optimising the placement of the electrode in cochlear implant surgery.

Nucleus SmartNav system provides wireless, actionable intraoperative insights for supporting the insertion of the electrode with real-time navigation. This provides surgeons added assurance of a positive surgical result for their patients. The Nucleus SmartNav system comprises of an advanced iPad-based solution as well as a surgical sound processor offering an instinctive workflow to provide support during surgery and at the same time gives surgeons further advice for in-theatre decision making.

Moreover, Cochlear disclosed that this system offers valuable information for supporting placement optimisation of the Company’s implant electrode throughout the surgery.

Bottomline

US FDA approval for four new products is a great achievement for Cochlear. Subject to local approvals, the Company will provide these products in the United States and Western Europe. The new products will enhance the top-line and bottom-line of the Company, a significant achievement in current times.