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Interview with Fred Fritz MBA, President, Songbird Medical Inc.

Fred Fritz, MBA

April 5, 2000
    
AO/Beck: Fred, thanks for agreeing to this online interview. As you know, the disposable hearing aid is a topic of great interest for all audiologists. Let's start with a little about the company (Sarnoff) and your own background.

Songbird/Fritz: Songbird is a spin-out of the Sarnoff Corporation - formerly RCA Labs where the color TV and the Liquid Crystal Display were invented. Sarnoff has been rated one of the top 4 brain trusts in America along with IBM, Xerox and Lucent Technologies. Sarnoff employs 700 technical experts and 400 PhD Scientists. Sarnoff has more PhD's in their facility than in any other building on earth. This gives Songbird instant access to world-class scientists of all kinds. Sarnoff will remain Songbird's research arm. That's a huge advantage not available to any other hearing aid company.

I'm a University of Illinois graduate in engineering with an MBA from Harvard. I started my career in Marketing with the Quaker Oats Company. Later, I moved to Schering-Plough where I launched the 'Brown Eyes Blue' Contact Lens and then ran their cough/cold and footcare businesses.

AO/Beck: Fred, why a disposable hearing aid?

Songbird/Fritz: there's a huge unmet human need for hearing healthcare. There are more than 23 million people in North America who are hearing-impaired but do nothing about their problem. We're convinced that a disposable hearing aid will help millions of people overcome the obstacles to purchasing a hearing aid. Because of our product, millions of people will visit a hearing professional - most for the first time. Our company's mission is 'Bringing Better Hearing to the World'. The World's First Disposable Hearing Aid - Songbird - is our first step toward achieving that mission.

AO/Beck: Let's start with a basic description of the disposable product, what can you tell us?

Songbird/ Fritz: Disposability equals advanced technology. The fact that our product is meant to be replaced every 40 days gives us a huge advantage. For instance, because you don't have to change the battery, the entire faceplate area is freed up for a huge microphone that's seven times larger than traditional hearing aid microphones. In acoustics bigger is better. The microphone provides outstanding sound fidelity and is among the lowest noise mic's in the industry. Another significant advantage of having a disposable product is the ability to use a very soft material for our hearing aid's tip. That allows for a very comfortable, deep fit. And, the deep fit helped us achieve the outstanding hearing in noise results that we saw in our clinical evaluations.

As you can see, we're taking a very unique approach. A big piece of that is a simplified approach to fitting. Songbird has a one-size shell and tip with nine pre-set acoustical prescriptions that will enable the professional to fit a very high percentage of mild-to-moderate losses in just one office visit.

Songbird is a very high tech product that we believe the professional will be proud to dispense. The circuitry is quite advanced - WDRC, TILL, two channels, variable attack and release times - not what most people would expect in a hearing aid that will retail for $39.

AO/Beck: Is the product ready to ship? When will it be available?

Songbird/Fritz: We'll launch in 14 lead market cities around the country in May and plan to expand to the rest of the country and Canada this fall.

AO/Beck: Where is the unit made?

Songbird/Fritz: The Songbird Disposable Hearing Aid is manufactured in our plant in Cranbury, New Jersey just outside Princeton.

AO/Beck: Are the components the same as those included in the majority of custom made devices, or are the components from a new manufacturer?

Songbird/Fritz: At Songbird we've reinvented the hearing aid from the ground up. Every component in our hearing aid has been designed exclusively for us. They're not available to any other manufacturer. We've teamed up with a group of world-class companies that we call the Global Hearing Alliance. We've signed these companies to long-term exclusive supply contracts for the millions of component sets we'll need over the next several years. The members of the Alliance have invested over $20 million of their own money just to build the capacity to manufacture our components.

AO/Beck: Fred, tell us about the preliminary studies: How many patients were tested? What type and degree of hearing loss did they have? What were the tests used to measure performance? How did the patients do?

Songbird/Fritz: A clinical evaluation was initiated by Songbird to determine the performance and appeal of the Songbird Disposable Hearing Aid and to verify Songbird's acoustical prescriptions and fitting system.

Songbird hearing aids were dispensed by four independent audiologists in four cities across the US: Phoenix, Salt Lake City, Boston, and Philadelphia. The 49 trial participants included a mix of owners and non-owners of hearing aids with mild-to-moderate hearing loss. Each participant was evaluated by otoscopic exam and unaided audiometric evaluation.

The clinical trial protocol included testing and fitting in an office setting and a two-week, in-home follow up. Each participant was asked to keep a log of wearing times and to complete the APHAB questionnaire and fit and comfort evaluation.

The protocol evaluated the following:
  • Speech recognition in noise via HINT test

  • Fit and comfort, ease of insertion, sound quality all in the clinic and after two weeks' use

  • Effectiveness of the hearing aid in a variety of listening conditions via APHAB

  • Trial Results- Key findings
    Hint Results
    Test results show that the Songbird Disposable Hearing Aid achieved speech recognition in noise results beyond those of the patients' own hearing aids.
    Signal to noise ratio dB:
  • Songbird -6.2

  • Patients own aid -3.1

  • Patients Unaided -1.2

  • Fit and comfort results
    Subjective assessment of the Songbird Disposable Hearing Aid before and after the two week in home use shows high levels of satisfaction on these measures:
  • Excellent comfort

  • Minimal feedback and occlusion

  • Physical fit was successful for a vast majority of the participants screened for the Songbird Disposable Hearing Aid.

    APHAB results
    Songbird overall performance a s measured by APHAB indicates a product that clearly delivers benefits to the patient comparable to or better than independent assessments of other high-end hearing aids, especially in the assessment of aversiveness.

    AO/Beck: If you had to pick a previously/currently available circuit which most closely resembles the Songbird, what circuit would that be?

    Songbird/Fritz: Because Songbird is not like any other hearing aid ever made, comparing a single component does not tell the whole story. The extra large microphone, long lasting battery, ultra soft tip and the sophisticated circuitry all combine to deliver remarkable sound quality and a comfortable fit at a very affordable price.

    AO/Beck: Tell me about the shelf life of the disposables? How long can they be stored in the office, how are they activated and how long do they last?

    Songbird/Fritz: Songbird Disposable Hearing Aids come packaged in a vacuum-sealed pouch and blister pack to keep the zinc-air battery fresh for up to two years. Like other zinc air batteries, once the hearing aid is exposed to oxygen, the battery is activated. Under normal use, the battery will function for 40 days of twelve hours a day use. If the hearing aid is used infrequently, the hearing aid may have a marginally longer life.

    AO/Beck: Which patient population have you targeted for the Songbird?

    Songbird/Fritz: Our mission is 'Bringing Better Hearing to the World'. That means a total focus on the hearing aid non-user. We hope to partner with hearing healthcare professionals who will also embrace this mission. The Songbird Disposable Hearing Aid is very appealing to the non-user and we will invest heavily in consumer communications to build non-user interest. We want to work with professionals who want to grow their practices and will team with us on approaches that will attract non-users and expand the market.

    AO/Beck: Why would an audiologist dispense a Songbird as opposed to a custom-made device? What do you see as the advantages?

    Songbird/Fritz: Songbird appeals to a younger, more mildly impaired non-user population (ages 45-65). The present hearing aid wearer base tends to be older (over 65) and moderate-to-severely impaired. Therefore, Songbird will bring significant increases in patient volume to your practice without negatively impacting your present business. Songbird represents a new product and a new approach for a new market. This is a huge unmet need that currently exists among the 23 million Americans with untreated hearing loss. Despite advances in technology, this group has resisted the idea of wearing a hearing aid. The reasons are well known to all professionals- you live them every day. These are people that the industry has not been able to reach. They are not the people you see in your office everyday.

    The Songbird Disposable Hearing Aid has been developed to directly address the reasons why so many resist wearing a hearing aid. It is a product of the highest quality that's' easy to get and easy to use. Songbird's low cost of entry makes trying it an easy decision -one that doesn't require a huge financial or emotional commitment from the user. Songbird will invest heavily to interest the non-user in our product and in visiting the hearing healthcare professionals who dispense it. And that means new patients and new business for Songbird Dispensing Partners.

    In our market research we asked non-users who were interested in buying Songbird, 'If Songbird weren't available what other hearing aid would you be interested in?'
  • 72% said none

  • 23% said Crystal Ear (Songbird represents a professionally dispensed answer to the mail order problem)

  • Songbird means new patients. And all replenishment sales to those patients go through the professional - so Songbird generates s a very attractive ongoing and incremental income stream.
    Therefore, It's easy to see that Songbird will provide a significant new business opportunity for every Songbird Dispensing partner. A strong partnership between Songbird and the profession can surely 'Bring Better Hearing to the World'.

    AO/Beck: What do you see as the disadvantages to the Songbird?

    Songbird/Fritz: A disadvantage to Songbird is that it is not applicable to all consumers who need amplification. The convenience, comfort, and cost advantages of the Songbird Disposable Hearing Aid makes it an attractive product to more individuals than can be physically or acoustically fit. We hope to broaden our product portfolio with additional hearing aids built on the foundation of advanced disposable technologies. Therefore, we will be able to further satisfy the unmet human need for quality hearing treatment.

    AO/Beck: Fred, what can you tell us regarding the cost of the unit if it's amortized across the average lifespan of a hearing aid. For instance, if the product lasts 40 days and it costs the consumer 40 bucks - that's a dollar a day. If the standard hearing aid lasts a little over five years, that's 1,825 days/dollars. If the patient were to purchase and dispose of the Songbird during that time, it would actually cost the patient about twice the price of the average custom made device over the five years. Why would a patient/consumer do this and what do you think the typical 'return rate' for Songbird users will be? That is, how many units do you anticipate the typical patient will buy?

    Songbird/Fritz: Our research indicates that the average price to the consumer of a comparable traditional hearing aid over a 5-year life is $2,460 while a Songbird Disposable Hearing aid is $2,255 (9 Hearing Aids per year). A savings of $205. Let me illustrate how we compare:
    Traditional Hearing Aid
    Hearing Aid & Fitting: $1,500
    Batteries($1/week): 260
    Maintenance($50/year): 250
    Insurance ($90/year): 450

    5-Year Total: $2,460

    Songbird Disposable
    Hearing Aid & Fitting: $2,255 ($351/year+ $100 Annual exam)
    Batteries($1/week): 0
    Maintenance($50/year): 0
    Insurance ($90/year): 0

    5-Year Total: $2,255

    In addition to the $205 savings, Songbird users only pay a very low up-front cost to acquire the hearing aid, don't need to return to your office for fitting adjustments, experience no lost use due to maintenance or repairs, don't need to buy batteries or worry about having to have them on hand, can always have a back-up hearing aid available and are never more than 40 days away from any new technology that Songbird introduces.

    AO/Beck: Tell us about the proposed/intended distribution path for Songbird. I think many of us are very concerned that Songbird, or perhaps other disposable hearing aid manufacturers may try to dispense through retail locations like Walmart, Cosco, Sam's, Walgreen's and similar venues. If these products are dispensed through the retail giants, the hearing health care professional will be left out of the loop. Obviously this would place the patient's hearing health care at risk (due to potentially non-diagnosed problems such as perforations, cerumen occlusion, otitis media and other conditions which can be effectively managed if they are properly diagnosed in a timely fashion) and would certainly not be beneficial for hearing health care professionals.

    Songbird/Fritz: The Songbird Disposable Hearing Aid is an extremely sophisticated, high tech hearing device. The circuitry and other components we utilize are truly state-of-the-art. It's the combination of those components and our unique design, achievable only because the product is disposable, that allows Songbird to produce sound quality equal to the best hearing aids currently on the market. We believe that a product that good should only be dispensed by highly qualified professionals - those licensed to fit hearing aids.

    Further, Songbird, like all other hearing aids is a Class I Medical Device and, therefore, can be dispensed only by professionals licensed in their state. In line with FDA regulations, Songbird will sell only to licensed hearing aid professionals. So the initial dispense and the ongoing replenishment units go through the professional.

    AO/Beck: Fred, we know that between the audiometric evaluation, the counseling, the fitting and rehab, it can easily take 3 to 4 hours to properly and effectively manage the patient with hearing loss. How do you propose to effectively handle these issues with disposable hearing aids?

    Songbird/Fritz: Fitting a traditional hearing aid takes a significant amount of time. Once the hearing test is complete and the patient has been counseled, there's the time it takes to take an ear impression, place the order, wait for delivery, then fit and program the hearing aid. In many cases this process can be repeated a number of times. Practitioner surveys indicate that programmable CIC's require a total of 6 hours of practitioner time to dispense. Additionally, there are the adjustments, and the time it takes to process repairs. After all this effort, 20-30% of traditional hearing aids are returned for credit.

    The Songbird Disposable Hearing Aid fitting procedure is streamlined to save time in your busy practice and to increase patient satisfaction. Hearing professionals who have used Songbird say that a typical fitting can be done in 1 hour or less. The hour breaks down as follows:

    Patient History 10 Minutes
    Hearing Test 20 Minutes
    Diagnostic Counseling 15 Minutes
    Songbird Prescription Selection 10 Minutes
    Processing Paperwork 5 Minutes
    Total time to fit patient with actual product 60 Minutes


    At the end of the hour, the patient leaves the office wearing their new hearing aid(s).

    AO/Beck: Fred, I think many of the readers will want to learn more about the product. Please give us the toll-free phone number and the website address to obtain more information.

    Songbird/Fritz: Your readers can find out more about Songbird Disposable Hearing Aids by calling 1-800-201-2076 and requesting an information kit or they can visit our website at www.songbirdhearing.com where they can also calculate the positive financial impact on their practices of becoming a Songbird Dispensing Partner.