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October 8, 2004

Cochlear uses reliability data to bend ear of doctors

From: The Australian, Australia - Oct 8, 2004

Helen Matterson October 08, 2004

COCHLEAR, hoping to capitalise on a product recall by US rival Advanced Bionics, is to release analysis that shows its hearing implants are up to four times more reliable.

The Australian has obtained a Cochlear brochure that compares its implants with the implant models AB is recalling. The brochure, which Cochlear is due to send to doctors, contains data revealed by AB on the reliability of its models.

Almost a fortnight ago, news that AB was recalling 440 Clarion and Hi Resolution implants -- amid fears there might be moisture in the internal circuitry that could cause them to fail -- sent Cochlear shares up 18 per cent.

At the time analysts said the recall might hurt AB's reputation. Two years ago, the company was forced to recall implants over a meningitis scare.

Goldman Sachs JB Were suggested there was the potential for Cochlear to make an extra 200 unit sales which would increase net profit by about $2.5million.

The Cochlear brochure uses reliability data rarely released by AB but which was posted on its website during the recall.

The AB data shows the number of recipients using the Clarion devices after three to five years ranged from 92percent to 97.7 per cent, while its Hi Res model had a removal rate of 1.1 per cent.

Cochlear concludes the AB devices -- and those of a lesser US competitor, Med-EL -- are two to four times more likely to fail than Cochlear's Nucleus range.

The brochure also says that none of the 58,000 Nucleus devices so far implanted has failed due to moisture in the internal circuitry.

Cochlear declined to comment on the brochure.

A spokesman said that since the recall a number of patients had opted for Cochlear rather than AB implants. However, sales data would be released to the market only at the company's annual meeting on October 19.

Advanced Bionics parent company Boston Scientific has said the recall may last from one to two months, though analysts believe it will be over in a matter of weeks.

Cochlear shares firmed 5c to $24.70 yesterday.

© The Australian