Leading neuromodulation company,
) made an initial investment of €2 million in a German
privately-held company, cerbomed GmbH. However, the investment can
increase afterwards to €5.5 million if cerbomed achieves certain
clinical milestones. Cyberonics strongly believes that this
preliminary investment in a non-invasive neurostimulation device
company like cerbomed is perfectly in line with its goal to expand
cerbomed's NEMOS t-VNS device received CE Mark approval for the
treatment of epilepsy and depression in 2010 and for pain in 2012.
Apart from Germany, this product is also commercially available in
Per the investment deal, Cyberonics, as a minority shareholder
of cerbomed, will serve a worldwide sales distribution agreement
for the NEMOS system. According to the company, this €2
million investment will be used to fund cerbomed's current clinical
trial for epilepsy in Germany. Cyberonics expects to conduct a
similar trial in the U.S. for FDA approval.
Cyberonics' Vagus Nerve Stimulation (VNS) therapy system is the
first implantable medical device to receive U.S. Food and Drug
Administration (FDA) approval for the treatment of epilepsy. With
Epilepsy being the second most prevalent neurological disorder in
the world, the market is growing in leaps and bounds.According to
the U.S. Centers for Disease Control and the National Epilepsy
Foundation, between 2.5 and 3.0 million individuals in the U.S.
have some form of epilepsy, with 150,000-200,000 new cases
diagnosed each year. Thus, the market is growing rapidly and has
The recent World Health Organization study on Epilepsy also
revealed that there are over 3.0 million individuals with epilepsy
in Western Europe, with over 150,000 new cases diagnosed each year.
Increased investment in the European market along with changes in
the organizational structure has enhanced the company's performance
in this region, which led to double-digit sequential growth in the
last-reported quarter. Europe, representing approximately
two-thirds of the company's international business, recorded
improved performance in U.K., France and Germany.
International growth prospects have also led Cyberonics to other
regions across the world.At present, the company has established
businesses in Canada and Europe and intends to expand its epilepsy
business in emerging markets with huge growth potential like Latin
America (particularly Brazil), Russia, Australia and Asia
(including Japan, China, India and Taiwan). We expect the latest
endeavor in Germany to prove itself as a fruitful venture for
However, with the presence of players such as
St. Jude Medical
), the company faces stiff competition. We are also concerned about
the current reimbursement related issues faced by the company.
Currently, Cyberonics retains a Zacks #3 Rank (short term Hold
rating). We are Neutral on the stock over the long term.
CYBERONICS INC (CYBX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
To read this article on Zacks.com click here.