FDA PANEL RECOMMENDATIONS COULD HIT CYBERONICS WHERE IT COUNTS, ANALYST SAYS

The FDA's Neurological Devices Advisory Panel, which meets today, is likely to vote in favor of approving Neuronetics' NeuroStar device for depression, Lazard Capital Markets analyst Alexander Arrow said in a Jan. 24 research note.

Lazard believes the NeuroStar device "will directly compete for the same depressed patients that would otherwise receive a Cyberonics VNS implant," and that in any case, "investors are likely to react as if it will," Arrow said. "Hence, we anticipate that Cyberonics shares will decline Monday on new competitive concerns."

The panel is also likely to recommend that the FDA require Cyberonics to fund additional postapproval clinical trials, although "we don't foresee a material new expense, as the company is already running a 450-patient depression dosing study as well as trials for other indications," Arrow said.