Cyberonics mulls options in VNS partner search

Medical device maker Cyberonics Inc. said Wednesday it still has not found a partner for its depression system and reaffirmed its position that it will not conduct additional studies until it has found a collaborator.

The company said it is now evaluating alternative actions that could help maintain regulatory approval while lowering its investment in the product.

The Vagus Nerve Stimulator, or VNS system, is implanted in the chest and sends electrical signals to nerves in the neck to alleviate severe depression. It was approved to treat depression in 2005, but as a condition of approval, the FDA required the company to conduct a one-year study of 450 patients and track 2,000 patients for five years.

In February, the Centers for Medicare and Medicaid Services rejected coverage of the device, prompting a drop in sales.

"As we review alternatives, we remain committed to supporting patients and clinical partners while continuing to drive shareholder value," said President and Chief Executive Dan Moore, in a statement.

The company still expects post-marketing study costs in the second half of fiscal 2009 to range from $3.5 million to $4 million. In fiscal 2010, the costs are not expected to exceed $4 million and are anticipated to be less than $2 million in 2011, when the FDA mandated programs end.

Currently, Cyberonics said it has annual VNS sales of $3 million for the depression indication.

Shares of Cyberonics fell $1.20, or 7.1 percent, to $15.8 in morning trading. The stock has traded between $9.59 and $28.95 over the last 52 weeks.