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[CYBX] Conditional approval? Don’t tell the FDA:

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh23876_2004-09-23_16-26-20_n23...

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Cyberonics gets FDA OK for small study

CHICAGO, Sept 23 (Reuters) - U.S. regulators, who rejected Cyberonics Inc.'s (CYBX.O: Quote, Profile, Research) device to treat depression in August, cleared the therapy for use in a small study, the company said on Thursday.

Cyberonics shares, down 40 percent after the U.S. Food and Drug Administration in August rejected the implantable device, rose 6.2 percent to their highest since mid-August, when the FDA rejected the company's application to use the device to treat severe depression.

But analysts noted Cyberonics, which is being pursued by Advanced Neuromodulation Systems Inc. (ANSI.O: Quote, Profile, Research) , cannot use data gathered in the study to support a regulatory submission to use the device to treat severe depression. It currently is only approved to treat epilepsy.

"From a regulatory perspective, this is essentially meaningless. However, from an experience situation, it is actually a good thing," said analyst Mark Landy of Susquehanna Financial Group.

"This is not something one can point to and say they're closer to an approval," added A.G. Edwards analyst Jan Wald, who tied Thursday's rally to short-covering.

Speculators had established large short positions, betting on a decline, when the FDA rejected the implantable device after an advisory panel recommended approval.

Cyberonics said the "conditional approval" will make the device available only to 100 patients taking part in the study. An FDA spokeswoman said there's no such thing as a conditional approval. "Either it's approved or it's not approved," she said.

A company spokesman said there seems to be "some confusion" at the FDA and said everything in the company's statement was correct.

The company sells the pacemaker-like device as a treatment for epilepsy and has been seeking approval for its use in patients with treatment-resistant depression, a population at high risk of suicide.

Houston, Texas-based Cyberonics in late August said it would try to persuade the FDA to reconsider its decision and viewed a new study as its "last-resort" option.

Analysts have largely written off the chances the FDA would reverse its decision.

"Before that product is approved for general use in the treatment of severe depression, they are going to have to do a significant randomized study as was suggested by numerous members of the advisory panel in general discussions about the application. I don't think there is any way around it. This is just a little Band-Aid," said Ira Loss, an analyst with Washington Analysis, an independent research group.

"What FDA has done here is to try to take the rough edges off a very difficult decision they had to make," he added.

Cyberonics said it continues to work through the informal appeals process as Advanced Neuromodulation urges reluctant Cyberonics' executives to enter into merger talks.

"Advanced Neuromodulation is going through the steps to work toward getting (Cyberonics) shareholders on board. Cyberonics is doing all it can to block that. There's still more to come," said William Plovanic, an analyst with First Albany Corp.

"I think part of what Cyberonics' strategy is to show in some way, shape or form that valuation is much higher. Will it turn hostile? It's already headed down that path."

Cyberonics shares were up 58 cents, or about 2.6 percent, at $23.08, in midday trading on the Nasdaq, off the day's best of $24.30.
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