Envoy Medical Corp. should send Rush Limbaugh a fruit basket.
Thanks in large part to Limbaugh’s plug on his popular radio show, Envoy in White Bear Lake, Minnesota, recently raised another $16.4 million, including $10 million from hearing aid powerhouse Starkey Laboratories Inc., for its implantable hearing device, Esteem.
The latest financing round, which closed at the end of September, brings Envoy’s total take to $140 million.
In addition, Limbaugh’s millions of listeners have flooded Envoy’s website and phone lines, prompting the startup to hire more sales staff.
“It’s been off the charts,” CEO Patrick Spearman told MedCity News. Limbaugh “is worth every penny” of the $250,000 a month advertising deal his company has with the conservative talk show host.
Not that Envoy necessarily needed more buzz. Since the Food and Drug Administration approved its Esteem system in March — the first fully implantable device to treat hearing loss in the United States — the company has been busy.
About 90-to-100 surgeons are training to implant the device, including doctors from Mayo Clinic, Harvard University and Yale University, Spearman said. Ten surgeons ready are to perform the procedure over the next month.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Spearman estimates 80 patients have signed up for the $30,000 out-of-pocket procedure with another 400 expressing “serious interest.”
The Esteem device is located entirely in the ear. The system consists of a sensor, sound processor and driver. The sensor picks up vibrations from the ear drum and converts them into electric signals. The sound processor — a specially designed computer chip — cleans up the signals and boosts their power. Finally, the driver converts the signals back into mechanical vibrations and transmits them to the cochlea.
If Envoy can sell 110 procedures a month, the company would generate positive cash flow by March 2011, Spearman said.
Apparently, one of Envoy’s best moves was reaching an advertising deal with Limbaugh. For the last eight weeks, Limbaugh has pushed the product on his show and website.
As a result, traffic to Esteem’s website has jumped to 2,800 hits a day from 500 to 1,000 hits. The company has hired extra sales staff just to handle the volume.
Getting Limbaugh to promote a product is no easy task. He accepts only one in 11 advertisers that make a pitch. Spearman said he met Limbaugh for two hours and walked away impressed.
“He is a very gentle person,” Spearman said. “Very kind. He is an incredible listener. He has an incredible memory.”
Exposure from Limbaugh’s show helped Envoy land the $10 million investment from Starkey, one of the world’s largest manufacturers of hearing aids, based in Eden Prairie, Minnesota.
The alliance should benefit both companies — Envoy could refer customers to Starkey, and vice-versa, Spearman said.
Envoy’s other investors include Minnesota Timberwolves owner, billionaire Glen Taylor; Roger Lucas of biotech firm Techne Corp.; and former Medtronic Inc. vice chairman, Glen Nelson. Former Boston Celtics great, Kevin McHale — Spearman’s brother-in-law — also chipped in $400,000.
