Neuromodulation company, Cyberonics ( CYBX ) announced the 100,000th patient implant of its Vagus Nerve Stimulation (VNS) Therapy system. The announcement comes in the fifteenth year of VNS approval for the treatment of epilepsy by the U.S. Food and Drug Administration (FDA) and the twenty-fifth anniversary of Cyberonics' founding.
The 100,000th patient implant of its flagship product marks a landmark in Cyberonics' operating history. It also reflects the widespread acceptance of the company's VNS Therapy system as a treatment for refractory epilepsy.
The Epilepsy Market
According to the U.S. Centers for Disease Control and the National Epilepsy Foundation, around 2.0 million individuals in the U.S. have some form of epilepsy, with 140,000 new cases diagnosed each year. Thus, the market is growing rapidly and has huge potential.
Recently disclosed by the Institute of Medicine Report, roughly one in 26 individuals are prone to suffer from epilepsy at some point during their lives. Clinical studies conducted by the New York University support Cyberonics' VNS Therapy system to treat refractory epilepsy. The data suggest that the VNS Therapy system was successful in reducing seizures by at least 50% in more than 60% of the patients under observation. Further, studies from the Emory University also support the use of the VNS Therapy system, based on a cost-benefit analysis.
VNS Leads the Upside Potential
Cyberonics grossed more than $50 million in revenues for the second successive quarter on the back of robust growth in the U.S. epilepsy device market. In the second quarter of fiscal 2013, revenues increased 17% year over year to $63 million.
While domestic sales of epilepsy devices soared 16%, international sales jumped 28.3% year over year, favorably impacted by double-digit sales growth in Europe and increased shipments to Japan as well as improved sales in all other international regions. Over the last four years, epilepsy market revenues in the U.S. increased 97% and we expect the momentum to continue. Moreover, international performance should improve on account of increased sales and marketing efforts, and geographic expansion.
We currently have a long-term 'Outperform' recommendation on Cyberonics which carries a short-term Zacks #2 Rank (Buy). With no dearth of near-term positive catalysts, competitive pressure from Medtronic ( MDT ) and St. Jude Medical ( STJ ) remains our only concern.
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