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Pharmaceutical industry

FDA Nears Approval of Device for Treating Depression

Strategic Insights

— 1 min read

The Food and Drug Administration is poised to grant Cyberonics' implantable electrical device for epilepsy treatment tentative approval as a therapy for chronic depression, pending the company meeting several conditions. This decision has sent shares of Cyberonics soaring $11.53, or nearly 42 percent, to $39.01 in heavy trading. The device, known as the VNS Pulse 102, is implanted in the upper chest and sends pulses through the vagus nerves to parts of the brain associated with the diseases being treated.

Key Takeaways:

  • The FDA may permit Cyberonics' device to be marketed for treating chronic depression resistant to other treatments, subject to the company meeting certain conditions.
  • Cyberonics estimates that 4.4 million Americans suffer from severe and recurring forms of depression that could be treated with the device, a number 10 times higher than those who might use it to reduce or eliminate epileptic seizures.
  • The company hopes to meet the FDA's conditions by the end of May, with Chairman and CEO Robert P. Cummins predicting that sales could reach $1 billion by 2010 if adopted at the same rate as it has been for epilepsy.
  • The device is estimated to cost $20,000, with insurers calculating that severe depressions that cannot be treated cost an average of $42,000 a year per patient.
  • The FDA's decision has surprised analysts and investors, coming after a August ruling that Cyberonics had not presented strong enough evidence that vagus nerve stimulation was an effective treatment for depression.
  • Dr. Peter Whybrow, an expert on depression at the University of California, Los Angeles, describes the device as "a pacemaker for the brain" that sends pulses through the nerves into parts of the brain associated with the diseases being treated.

Statistics:

  • 4.4 million Americans suffer from severe and recurring forms of depression that might be treated with the Cyberonics device, more than 10 times the number who might use it to reduce or eliminate epileptic seizures.
  • Sales of the device could reach $1 billion by 2010 if adopted at the same rate as it has been for epilepsy.
  • The device is estimated to cost $20,000.
  • Insurers calculate that severe depressions that cannot be treated cost an average of $42,000 a year per patient.

Sources:

  • Associated Press, "FDA Nears Approval for Brain Stimulation Device"
  • Cyberonics' press release, "Cyberonics Reports First Half 2008 Fiscal Year Results"

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