ULTRASIS - ONWARDS AND UPWARDS

Some impending competition?

DEPRESSION DEVICE SAID TO GAIN ACCEPTANCE

The Associated Press
Wednesday, December 28, 2005; 6:25 PM

HOUSTON -- A tiny implantable device that aims to treat depression patients has started gaining some acceptance months after the federal government approved its use, the manufacturer said.

The Vagus Nerve Stimulator delivers mild electrical pulses every 5 minutes to the vagus nerve, which carries information to parts of the brain that control mood, sleep and other functions.


An increasing number of psychiatrists and surgeons were receiving training to use the stimulator devised by Houston-based Cyberonics. More than 2,000 psychiatrists and 250 surgeons were trained for the therapy during the quarter that ended Oct. 28, said chief executive and president Robert "Skip" Cummins.

"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," said Dr. Thomas Schwartz, assistant professor of psychiatry at SUNY Upstate Medical University in Syracuse, N.Y, one of 20 sites that participated in study of the device.

More insurance companies were agreeing to reimburse patients for the cost of the device. By early December, 62 insurance providers had agreed to pay for costs associated with the therapy.

The U.S. Food and Drug Administration approved the Vagus Nerve Stimulator in July to treat severely depressed adults who haven't responded to at least four treatment regimens.

Those are signs that Cyberonics' device is making inroads. But it could take at least two years before the medical community and insurance companies accept Cyberonics' device, said Thom Gunderson, an analyst with Piper Jaffray in Minneapolis.

Insurance companies have agreed to reimburse patients who use the device only a case-by-case basis and haven't included coverage for the therapy into their policies. And some psychiatrists continue questioning whether the device is effective.

"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."

Cyberonics lost $22 million on revenue of $29 million for the quarter that ended Oct. 28. Costs associated with launching the device accounted for some of the loss, Cummins said.