“AcclaimPlus” Listening Condition Update

• One of the outcomes from the EFS was the realization of a potentially meaningful “listening condition.” The Acclaim’s fundamental architecture is designed to pick up sound from the ear itself and therefore allows devices – like hearing aids or consumer electronics – to be used in the ear. Patients that would like to use a similar ‘listening condition’ in everyday life, may choose an option that allows for such flexibility.
  
  

• Two participants chose to wear their hearing aid in the “Acclaim ear” during the daytime during their participation in the EFS study. At first, this was primarily to mitigate the system noise. Preliminary data supports that the hearing aid appears to provide additional gain to the system enabling a better signal to noise ratio, as well as allowing the participants to enjoy features of the third-party hearing aids such as direct streaming audio and phone calls. It is possible that some patients will wear a hearing aid in their “Acclaim ear” to provide the system with more gain and/or to take advantage of certain hearing aid features. This dataset did not show that the hearing aid provided meaningful acoustic amplification on its own. Although a small dataset and preliminary, the interim results of the AcclaimPlus listening condition are encouraging and informative.
  
  

• One participant chooses to use the Acclaim implant alone at all times. This participant’s results were also encouraging and informative.
  
  

• The Company believes that the flexibility patients may have with the fully implanted Acclaim cochlear implant to use electronic devices and accessories in the implanted ear due to its design and fundamental architecture could provide interesting opportunities and preferred features for patients. It could also be an important differentiator for the fully implanted Acclaim cochlear implant over other competitive devices.

Timeline Update

• Envoy Medical maintains its goal of submitting an application for an Investigational Device Exemption (IDE) in the next few months. The company is optimistic that it can begin to enroll that study, should it be approved, by year-end 2024.
  
  

• The Company will provide more details on study design once approval is granted to begin the study.
  
  

• Assuming approval, the Company maintains its view that commercialization may be achievable by the end of 2026.

Financial Results for the Quarter Ended June 30, 2024

Revenue was $68 thousand compared to $63 thousand for the same period in 2023. The increase is attributable to the sale of two Esteem FI-AMEI units during the period, which offset reduced battery sales due to supply chain issues.

Cost of goods sold increased by $83 thousand for the same period in 2023. The increase is attributable to manufacturing and materials scrap for the Esteem FI-AMEI product of $62 thousand, additional contractors for manufacturing technicians and quality inspections of $20 thousand. and supplies for the newly expanded manufacturing space of $11 thousand with offsets from other costs of $10 thousand.

R&D expenses increased approximately $438 thousand to $2.6 million for the three months ended June 30, 2024 compared to the same period in 2023. The increase is primarily due to an increase in headcount and contractors in the engineering and clinical departments for the three months ended June 30, 2024, as the Company increased headcount across its clinical and cochlear departments in preparation for its pivotal clinical study for the Acclaim CI.

Sales and marketing expenses increased by approximately $114 thousand to $497 thousand for the three months ended June 30, 2024 as compared to the same period in 2023. The increase was primarily due to increased market access fees to secure insurance reimbursement for the Esteem FI-AMEI product, offset by a reduction in headcount in that department.

General and administrative expenses decreased by $250 thousand to $1.6 million compared to the same period in 2023. The reduction is due primarily to reduced professional and legal fees related to the closing of the Business Combination in 2023 of $951 thousand, and was partially offset by increases in personnel-related costs of $198 thousand, directors and officers insurance of $175 thousand, non-cash stock option expenses of $99 thousand, loss on lease modification of $135 thousand, and other operating costs of $94 thousand, for the three months ended June 30, 2024.

As of June 30, 2024, the Company had cash and cash equivalents of approximately $1.7 million.

About the Fully Implanted Acclaim^? Cochlear Implant

The Company believes the fully implanted Acclaim CI will be a first-of-its-kind fully implanted cochlear implant. Envoy Medical’s fully implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound.

The Acclaim CI is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. The Acclaim CI is expected to be indicated for adults who have been deemed adequate candidates by a qualified ear surgeon and audiologist.

The Acclaim Cochlear Implant received the Breakthrough Device Designation from the U.S. Food and Drug Administration (FDA) in 2019.

CAUTION: The fully implanted Acclaim Cochlear Implant is an investigational device. Limited by Federal (or United States) law to investigational use.

About the Esteem^? Fully Implanted Active Middle Ear Implant (FI-AMEI)

The Esteem fully implanted active middle ear implant (FI-AMEI) is the only FDA-approved, fully implanted hearing device for adults diagnosed with moderate to severe sensorineural hearing loss capable of delivering 24/7 hearing capability using the ear’s natural anatomy. The Esteem FI-AMEI requires no externally worn components and nothing is placed in the ear canal for it to function.* Unlike hearing aids, you never put it on or take it off.

* Once activated, the external Esteem FI-AMEI Personal Programmer is not required for daily use.

Important safety information for the Esteem FI-AMEI can be found at: https://www.envoymedical.com/safety-information.

Additional Information and Where to Find It

Copies of the documents filed by Envoy Medical with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-Looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. Such statements may include, but are not limited to, statements regarding the expectations of Envoy Medical concerning the outlook for its business, productivity, plans and goals for future operational improvements and capital investments, the availability and benefits of future funding, the Acclaim CI being the first to market fully implanted cochlear implant, the timing of Envoy Medical’s IDE submission and beginning of its clinical trial, the effect of such clinical trial on the development of Envoy Medical’s business, the impact of proposed legislation on the hearing health market, reimbursement for the Esteem FI-AMEI device, and the Envoy Medical business, and future market conditions or economic performance, as well as any information concerning possible or assumed future operations of Envoy Medical. The forward-looking statements contained in this press release reflect Envoy Medical’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. Envoy Medical does not guarantee that the transactions and events described will happen as described (or that they will happen at all). These forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to changes in the market price of shares of Envoy Medical’s Class A Common Stock; Envoy Medical’s success in retaining or recruiting, or changes required in, its officers, key employees or directors; unpredictability in the medical device industry, the regulatory process to approve medical devices, and the clinical development process of Envoy Medical products; competition in the medical device industry, and the failure to introduce new products and services in a timely manner or at competitive prices to compete successfully against competitors; disruptions in relationships with Envoy Medical’s suppliers, or disruptions in Envoy Medical’s own production capabilities for some of the key components and materials of its products; changes in the need for capital and the availability of financing and capital to fund these needs; changes in interest rates or rates of inflation; legal, regulatory and other proceedings could be costly and time-consuming to defend; changes in applicable laws or regulations, or the application thereof on Envoy Medical; a loss of any of Envoy Medical’s key intellectual property rights or failure to adequately protect intellectual property rights; the effects of catastrophic events, including war, terrorism and other international conflicts; and other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” in the Annual Report on Form 10-K filed by Envoy Medical on April 1, 2024, and in other reports Envoy Medical files, with the SEC. If any of these risks materialize or Envoy Medical’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. While forward-looking statements reflect Envoy Medical’s good faith beliefs, they are not guarantees of future performance. Envoy Medical disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Envoy Medical.

Investor Contact:

CoreIR
516-222-2560
[email protected]

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.