Friday, December 30, 2005

Cyberonics' device for treating depression finds more acceptance

Houston Chronicle December 30, 2005 By ANNE BELLI
Five months after it was approved for sale, an implantable device dubbed by its maker as the next frontier in treating severe depression is winning favor with some doctors willing to prescribe it for patients. -->
Houston-based Cyberonics says a growing number of psychiatrists and surgeons are being trained to use its vagus nerve stimulator, and an increasing number of insurance companies are agreeing to reimburse patients for their costs.
"I think it is a good device and it is a new treatment option for a group of very ill patients," said Dr. Thomas Schwartz, assistant professor of psychiatry at SUNY Upstate Medical University in Syracuse, N.Y. The medical school was one of 20 sites that took part in a federally approved three-year study of the device, and Schwartz was lead investigator at that site.
Still, despite the encouraging signs, some psychiatrists continue to question whether Cyberonics' VNS is effective. And insurance companies have yet to write coverage of the therapy into their policies, agreeing to reimburse only on a case-by-case basis.
"I'm just really skeptical," said Dr. Christopher Merkl, a Houston psychiatrist who has received marketing material from Cyberonics. "I haven't been impressed with the literature on this."
Indeed, analysts said it likely will be at least a couple of years before the medical and reimbursement communities alike embrace the company's device as a treatment for the sickest of the mentally ill.
"I think it is a two-year process," said Thom Gunderson, an analyst with Piper Jaffray in Minneapolis.
The U.S. Food and Drug Administration approved Cyberonics' vagus nerve stimulator in July for the treatment of severely depressed adults who had not responded to at least four different treatment regimens.
Roughly the size of a stopwatch, the VNS is a pacemakerlike device that is surgically implanted in the patient's upper chest and sends pre- programmed electrical impulses to the vagus nerve in the neck. It has been used to treat epilepsy since 1997, and Cyberonics officials believe it may eventually be effective to treat a wide range of other conditions, including bulimia.
Launch costs blamedCyberonics' chief executive and president, Robert "Skip" Cummins, said during a conference call with analysts last month that the company suffered a loss of $22 million on revenue of $29 million for the quarter that ended Oct. 28. That was an elevenfold loss over the same period last year.
But Cummins attributed the loss in part to the costs associated with launching the device for depression. And he said that more than 2,000 psychiatrists and 250 surgeons were trained in the VNS therapy during the quarter.
Further, earlier this month the company reported that 62 insurance providers had agreed to reimburse costs associated with the therapy for depression, up from the previously stated 31.
Prominent supportersPiper Jaffray's Gunderson said these are signs that the psychiatric and insurance communities are warming up to the vagus nerve stimulator. He also noted that several prominent psychiatrists have lent their support to the device.
"I am becoming more encouraged as more physicians are signing up for this," Gunderson said. "You really need luminaries if you are going to get significant snowballing."
Schwartz said: "I think it has started out a bit slowly. But the average psychiatrist, I think, is excited to have something that is a new possible treatment."
He added that the university's clinic has recently been restructured to specialize in the the treatment of depression. About 10 patients are in the process of being evaluated for the VNS device, he said.
Costs and benefitsBut not everyone is as convinced.
Dr. Martha Leatherman, a San Antonio psychiatrist who sees primarily geriatric patients, said that her patients aren't always good candidates for the device because studies show it may take several months, even a year, for it to cause significant improvements.
She said her interest in the device was high at first but waned in the last year as the FDA flip-flopped on whether to approve the device.
"It was far from an unqualified endorsement," she said, adding that she wasn't sure if the benefits would outweigh the high costs. The device costs about $15,000, and the surgery required to implant it runs about $25,000.
Leatherman also said she wasn't convinced that the device worked better than electroconvulsive, or so-called "shock," therapy, which is sometimes used to treat such severely depressed patients.
Still, she said she has recommended it for two patients who are waiting to see if their insurance will cover the cost.
Question of familiarityIn a research note to investors earlier this month, analyst Alex Arrow with Lazard Capital Markets said that most psychiatrists are still unfamiliar with the VNS device.
"Psychiatrists who have embraced VNS as a treatment option they suggest for patients on a regular basis are the exception rather than the rule, a situation likely to persist until more clinical data can be generated that supports the efficacy claims of the device," Arrow wrote.
Still, other analysts see that the device is off to a good start.
"I think that the numbers that the company has released so far as to the number of psychiatrists who are filling out paperwork for patients is encouraging at this early stage of the launch," said Keay Nakae, a senior medical devices analyst with C.E. Unterberg, Towbin in San Francisco.
He said that as with any new therapy, "you are going to have a mix of reactions" from doctors.
"It doesn't work for everybody," he said of the VNS device. "But it does seem to represent a treatment option."

Source: infowars


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