<< CYBERONICS
anyone who was left was resilient,” he says. “We were able
to use that. It speaks to the passion of the people who were
here. We still had a lot of talent at the company. It’s all about
the team you put on the field. It’s easy to make a plan. The
challenge is executing the plan. And it showed when we
turned in a profit in our fourth quarter [of 2007] after two
straight years of $50 million losses.”
In keeping with the strategy, bucket number 1 got larger in
December, after Cyberonics licensed patents from Southern
Illinois University for vagus nerve stimulation for treatment
of stroke and traumatic brain injury.
A Bright Future
Going forward, the top priorities are growing the epilepsy
business and continuing to develop other neuromodulation
Change in Strategy applications.
The most important decision, perhaps, was when manage- “The next step for us initially is to remain the leader in
ment determined that, contrary to the mantra under Cum- medical device treatment of epilepsy,” Moore says. While
mins, it could no longer view VNS Therapy as a platform international growth has been strong, he says, it can be
technology from which it could develop many indications. It even stronger. VNS Therapy was recently approved for
simply did not have the resour ces treatment of epilepsy in China, and the com-to pull that off. So it had to fig- pany is working on getting approval
ure out what to do with each in Japan.
potential indication. U.S. numbers provide room
“We identified all the po- for growth too, Moore says.
tential applications, 20 or About 2.7 million people in
so, and put them into three the United States have some
‘buckets,’” Moore says. “The form of epilepsy. About half
first bucket consisted of indica- of those have types of epilep-tions for neurology and neurosurgery. sy that are within the current
The second bucket was depression, FDA-approved labeling for
and other indications for psychia- VNS therapy. Drug treatment
try. The third was other potential is always tried first, and it fails in
VNS indications, such as obesity and about one-third of patients. That
bulimia. We decided we would focus means that more than 400,000 U.S.
epilepsy and keep other neuro applications patients could use the therapy. “In 11
such as Parkinson’s and MS. For psychiatry appli- years, we’ve reached about 40,000 patients, so
cations, we decided to seek a partner to continue with we only have 10% of our potential market—less
depression, and package some of the psychiatry indi- if you consider that of the 125,000 newly diagnosed
cations as one group. The third bucket had many epilepsy patients each year, at least 13,000 could ben-indications with market potential that excited efit from VNS Therapy. We were successful last year,
us. But as a $100 million company, we could but we still only reached about 6000 patients, both
not address the needs of all three buckets and new and those needing generator replacement.”
build a good, solid business. So we decided to Gunderson agrees that the firm’s turnaround is
spin off bucket number 2 and get partners for sustainable. “As remarkable as what they’ve done is,
bucket number 3 on a case-by-case basis.” it was a quick fix. They cut costs and got a bit of luck
The first action with bucket number with the hardware replacement cycle,” he
3 occurred in December 2007, when The VNS device shown here features says. “They will have to show good growth
Cyberonics struck a deal with Ethicon Demipulse hardware. Cyberonics only year over year in the epilepsy business, and
Endo-Surgery, a Johnson & Johnson has one product, but that product has spend more time developing other indica-company, for the obesity indication. many potential applications. tions for neurology and related fields. But I
Ethicon Endo-Surgery received the think they can do it.”
rights to Cyberonics’s patents on vagus nerve stimulation So, while it may seem as though Cyberonics has retrenched
related to treating obesity, diabetes, and hypertension in by narrowing its focus to epilepsy, in reality, its growth po-overweight people. Cyberonics received $9.5 million and tential is probably higher than it was when it was spreading
future royalties. itself over a number of different applications.
Cyberonics recently announced that it was unsuccessful There is much room for technological advances, as well,
finding a partner for depression, but Moore is optimistic. Moore says. “A lot of technology can be brought to bear to
“We like the depression indication overall,” he says. “It’s a treat epilepsy,” he says. “With technology advances, we may
big potential market, and VNS is still the only FDA-approved be able to alert patients that they are about to have a seizure
device for treating depression.” Indeed, the company is con- and help them initiate therapy. Future devices may notify a
tinuing with two postmarket studies that were a condition caregiver. New devices may count seizures, leading to bet-of FDA approval for the depression indication. It hopes that ter patient care. There are a number of potential businesses
they will turn up additional evidence that VNS Therapy is within epilepsy that do not exist today. There is a lot we can
an effective treatment for depression; such evidence will be do to help more patients with epilepsy. And we have a team
needed to get CMS to change its mind. that is dedicated to making it happen.” ■
