Former Pittsburgh competitors merge, team on assistive technology

| Monday, June 16, 2014, 11:15 p.m.

When Adam Davidson was 3 months old, doctors told his parents that he would never walk or talk because of cerebral palsy and other disorders.

Now 18, his family says he is “a talker” — thanks to speech-generating technology from DynaVox Systems LLC.

Devices made by DynaVox enhance the communicating abilities of people who suffer from cerebral palsy, Lou Gehrig's disease and other conditions that make it difficult to move and speak.

The South Side-based company is getting another chance to continue improving tools that help people with such speech and learning challenges from ALS, cerebral palsy or other motor disabilities since merging last month with Tobii Technology AB of Sweden.

The two former competitors, leaders in making communication and education devices for the assistive technology market, are now one company, focused on expansion.

Founded in 1995, DynaVox went public in 2010 on its strength as a leader in speech devices and symbol-adapted software. But its debut as a public company was followed quickly by changes in the market — the introduction of the iPad and other tablets that could perform the same function.

That led to falling sales, a default on $15 million in debt and eventually to a Bankruptcy Court-supervised auction of its assets won by Tobii on May 23.

It's been a month since the companies combined, and CEO Oscar Werner said he and Bob Cunningham, chief strategy and clinical officer at DynaVox, are figuring out its future, even the name of the combined company.

“Call it Tobii-DynaVox as a working name, but that could change,” Werner said last week at DynaVox's South Side headquarters, where 160 of the company's 286 domestic employees work.

The combined company has undisclosed new products on the eve of introduction, but still to be determined is a marketing strategy and which brand names to use in global markets now open to both. DynaVox's current top product, the T-10 tablet, was introduced last fall.

Tobii's Assistive Technology unit has been a leader in eye-tracking technology — an area Dynavox struggled to develop its own, even acquiring a company in the attempt.

“Suddenly, we have access to the technology we had been struggling to get,” said Cunningham. “You have to have great eye-tracking technology. But it was never possible to compete with someone like Tobii. Their technical strengths were our weaknesses.”

Werner said the companies hope to add to combined annual sales of $90 million by capturing more of a market estimated at $500 million a year worldwide.

“There's a huge unmet demand,” said Werner. In the United States alone, he estimated 150,000 people annually need their devices, compared to 30,000 who now use Tobii-DynaVox products.

Those with aphasia — who lack the ability to understand or produce language — and people with spinal cord injuries are two of the largest unmet markets, Werner said.

“We can put them into eye-tracking technology, so when they go to school, they can type with their eyes. Independence is the word these people would use; they regain their independence,” he added.

Eye-tracking technology uses a device that follows where a persons eyes look on a computer screen. The user can select an item on the screen — a letter of the alphabet or an icon — simply by looking at it longer. They can spell words or sentences that the device translates into spoken words on a speaker. DynaVox's speech-generation devices and software work similarly, with the user tapping a touchscreen.

Upcoming products at Tobii-DynaVox will focus on speed, Werner. said “How do you get 30-50 percent better at communicating? The challenge is increasing the rate of accessing a computer, just as fast as you and me.”

Tobii of Danderyd, Sweden, now owns 100 percent of DynaVox, the result of events triggered last year after it defaulted on $15 million in debt. Competing technology such as Apple's iPad caused sales to fall. In its final financial report, for the year ended June 30, 2013, DynaVox lost $8.7 million on sales of $65 million. That compared to a loss of $57.5 million on sales of $97.3 million, in the prior 12 months.

Its largest shareholder, Vestar Capital Partners, put the company up for sale, but no deals were completed, Werner said. Then in March, JEC Capital Partners LLC acquired Dynavox's debt from lender GE Capital Corp.

On April 8, JEC Capital foreclosed on three DynaVox affiliates, placing them in Chapter 11 bankruptcy. Vestar then initiated a court-supervised public auction for all of the DynaVox assets.

Tobii, JEC Capital and a third party submitted bids on May 15, with a judge confirming Tobii's offer of $18 million as the winner.

Davidson's parents, Raye Lynn and Scott Davidson of Gibsonia, said pre-school teachers encouraged them to get him a communications device. He started working on a DynaVox unit at age 3, at first generating single words. “That was the beginning of knowing this would be good device for him,” Scott Davidson said.

“It's like a heart transplant for him; it gave him life,” said Adam Davidson, his brother. “He can type in anything he wants; he's a talker.”

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