Cyberonics (CYBX) has reinforced its existing relationship with NeuroVista Corp. by another agreement related to the field of EEG-based seizure detection. Earlier, in October 2009, the company announced that it licensed the NeuroVista technology encompassing the areas of seizure detection, rechargeable battery system, wireless communication, and an implantable lead.
Subsequently, in July 2010, the company entered into another agreement related to an external charging system for an implanted battery. These steps are taken by Cyberonics to further reinforce its position in the epilepsy medical devices market. NeuroVista is an early-stage medical devices company primarily developing technologies to treat epilepsy.
Cyberonics is a medical technology company with core expertise in neuromodulation. The company has developed the Vagus Nerve Stimulation (VNS) therapy system, which is meant for the treatment of epilepsy. Additionally, it has the potential to treat other neurological disorders, such as depression, Alzheimer’s disease, anxiety, chronic migraine headaches and bulimia.
The device is widely accepted amongst neurosurgeons, which is evident from the company’s impressive results. During the fourth quarter of fiscal 2010, net product sales in the U.S. attributable to the epilepsy indication increased 25% year-over-year to $38.3 million.
In addition, Cyberonics’ core US epilepsy business had a unit growth of 14% during the quarter and 7% in fiscal 2010. The international business delivered another record quarter with 18.1% and 20.9% growth, in units and revenues, respectively. The company continues to focus on product development primarily associated with epilepsy and aims at further improving the VNS Therapy System.
We also note that Cyberonics witnessed continuous expansion of its gross margin over the past few years. The improvement was driven by higher production volumes, manufacturing efficiencies, rise in average selling price and increased sales of the new higher-margin Demipulse generators. We expect margins to improve on further product development initiatives undertaken by the company.