FDA Clears Cyberonics' AspireHC
By: Zacks Equity Research
January 04, 2012 |Comments: 0
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Cyberonics
(CYBX) recently received approval from the US Food and Drug Administration (FDA) for its re-designed AspireHC (High Capacity) generator whose shipment was discontinued by the company earlier.
Earlier, in February 2011, this major neuromodulation company received FDA approval for AspireHC, a new and improved generator to be used in vagus nerve stimulation (VNS) therapy. However, later in July, Cyberonics had to discontinue shipment of two models of its Aspire platform generators.
The decision was based on the realization that stimulation output delivered to patients was less than that programmed by a physician. The company also suspended enrollment in its E-36 clinical trial pending resolution of this hardware related design issue. In October, Cyberonics had submitted applications to the FDA and European notified body, DEKRA Certification, B.V. for redesigning the AspireHC generator.
In addition to gaining FDA approval, Cyberonics recently achieved Renewal Approval of CE Mark, which enables the company to keep on selling VNS Therapy System for the treatment of refractory epilepsy and depression in the European Union and Canada. Cyberonics presently plans to resume the limited commercial release of the AspireHC generator in Europe and initiate a limited commercial release in Canada.
Cyberonics’ AspireHC generator represents the fifth generation of VNS Therapy. It has a longer battery life, more user-friendly features and improved electronics that prove more beneficial to VNS patients as well as physicians. The FDA approval of AspireHC is expected to pave the way for the AspireSR seizure response system generator, which is the subject of the E-36 clinical trial in Europe. Cyberonics plans to submit the re-designed AspireSR generator to the ethics committee and competent authority approvals for the E-36 clinical trial by the end of its fiscal 2012.
Presently, about 118 people worldwide have been provided with the AspireHC or AspireSR generators. Prior to the withdrawal of AspireHC generator, this model contributed around 9% of worldwide sales of Cyberonics. The company believes that the re-designed model of AspireHC will regain sales growth in the upcoming quarters.
Recommendation
Amidst several headwinds in the form of shipment cancellation, mounting third-party reimbursement issues along with stiff competition in the neuromodulation space from players like Medtronic (MDT) and St. Jude Medical Inc. (STJ), the re-designed product approval of Cyberonics is a relief for the company. Additionally, the company’s effort to expand in Europe, Japan, Latin America, China and India is encouraging. The company is investing in these countries which should boost its international performance in the rest of fiscal 2012. Presently, Cyberonics retains a Zacks #3 Rank (Hold) in the short term, in line with long-term Neutral recommendation on the stock.
Cyberonics’ AspireHC generator represents the fifth generation of VNS Therapy. It has a longer battery life, more user-friendly features and improved electronics that prove more beneficial to VNS patients as well as physicians. The FDA approval of AspireHC is expected to pave the way for the AspireSR seizure response system generator, which is the subject of the E-36 clinical trial in Europe. Cyberonics plans to submit the re-designed AspireSR generator to the ethics committee and competent authority approvals for the E-36 clinical trial by the end of its fiscal 2012.
Presently, about 118 people worldwide have been provided with the AspireHC or AspireSR generators. Prior to the withdrawal of AspireHC generator, this model contributed around 9% of worldwide sales of Cyberonics. The company believes that the re-designed model of AspireHC will regain sales growth in the upcoming quarters.
Recommendation
Amidst several headwinds in the form of shipment cancellation, mounting third-party reimbursement issues along with stiff competition in the neuromodulation space from players like Medtronic (MDT) and St. Jude Medical Inc. (STJ), the re-designed product approval of Cyberonics is a relief for the company. Additionally, the company’s effort to expand in Europe, Japan, Latin America, China and India is encouraging. The company is investing in these countries which should boost its international performance in the rest of fiscal 2012. Presently, Cyberonics retains a Zacks #3 Rank (Hold) in the short term, in line with long-term Neutral recommendation on the stock.
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