CMS declines coverage for Cyberonics' depression device

CMS has declined to reimburse for Cyberonics' VNS depression-treating implant.--Courtesy of Cyberonics

Cyberonics ($CYBX) may have to scale back its projections for fiscal 2013, as the Centers for Medicare and Medicaid Services (CMS) has again declined to cover the company's brain-stimulating implant for treatment-resistant depression.

The VNS Therapy neuromodulation device won FDA approval in 2005, and the CMS rejected a 2007 application for reimbursement. But, since then, the device has performed well in clinical studies, Cyberonics said, helping a tough-to-treat population with minimal adverse events.

"Cyberonics is very disappointed in the position taken by CMS that the new evidence accumulated over the past 5 years and recently published in four peer-reviewed journals does not support reconsideration of the non-coverage decision," CEO Dan Moore said in a statement. "We believe the total body of evidence that began appearing in the scientific literature in 1998 presents compelling rationale for access to VNS Therapy in a very ill subpopulation of Medicare beneficiaries."

Moore said the company will work with other interested parties to find a way to expand access to VNS for depression, and Cyberonics is looking at all of its options to appeal the CMS' decision.

Cyberonics' shares fell about 10% on the announcement, trading at $44.09 premarket on Wednesday, and the company's stock price has slumped about 16% since the start of the year.

The company had forecast full-year sales of up to $250 million, about 14.2% growth, and high-end income of $77 million, a 26.3% jump over 2012. Last quarter, Cyberonics charted $62.7 million in revenue and $20.4 million in profit.

- read the statement

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