Epilepsy: The Advance Of The Century
For years, Albert Jean fought a losing battle against epilepsy. Because of frequent uncontrollable seizures, the Reading (Mass.) youngster couldn't ride a bike, swim, or cross the street. In junior high school, a teacher had to walk him to and from classes. "I didn't want to be walked like a baby, even though I knew it was for my own safety," says Jean, now 15. "I felt like an idiot."
But when he starts high school this fall, Jean plans to go solo. That's because his seizures have substantially subsided thanks to the first new therapy for epilepsy since drugs were tried 100 years ago. Implanted in Jean's chest is a pacemaker-like electrode that continuously sends seizure-blocking signals to the brain through a nerve in his neck--and that he can activate if he feels a seizure coming on. Jean got the setup last year as part of a clinical trial by its manufacturer, Cyberonics Inc., based in Webster, Tex., near Houston. Says Jean: "I feel like an absolute different person."
Cyberonics, which on July 16 received Food & Drug Administration approval to market the product in the U.S., is about to feel like an absolutely different company. While the vagus nerve stimulator--as the device is called--is not a cure for epilepsy, it significantly reduces the number and severity of seizures. That can make a difference in the activity, self-confidence, and overall well-being of those who suffer from the neurological disorder. Indeed, the product so impressed the FDA that it expedited Cyberonics' review process and approved the device several months earlier than expected.
The phone has been ringing off the hook at Cyberonics ever since. Analysts, investors, and medical experts say the 10-year-old company--which has lost some $60 million since going public at 12 a share in 1993--now seems poised to take off. Its shares have jumped nearly 17%, to 8 3/4, since the FDA nod.
LUCRATIVE MARKET. Analysts now expect the company to turn a profit within the next two to three years. "This is the only product like this in the world," says analyst John R. Boettiger Sr. of Houston-based investment banking firm Harris Webb & Garrison. "Cyberonics has an unquestionable monopoly."
The market looks lucrative, too. Of the nearly 2 million Americans with epilepsy, doctors estimate that 200,000 cannot be treated adequately with drugs. At $9,000 for each Cyberonics device, that's a potential U.S. market of $1.8 billion. Those who use anti-epilepsy drugs might be tempted to switch because the side effects of using the Cyberonics device--coughing, hoarseness, and shortness of breath that can occur during stimulation--are less severe.
Cyberonics is the brainchild of Jake Zabara, a now retired Temple University neurophysiologist. Using medical research dating to the 1930s, he hypothesized that stimulation of the brain via the vagus nerve could create an anticonvulsion effect. Zabara joined with Reese S. Terry, now Cyberonics' chairman, to obtain seed money from venture capitalists including Robert P. Cummins, now Cyberonics' chief executive. St. Jude Medical Inc., the cardiovascular-device maker based in St. Paul, Minn., holds a 16% stake.
Now the company has to prove it can manufacture and sell its invention. Half of the company's 16-person direct-sales force has been hired since May. To move 3,000 stimulators next year and as many as 7,000 in 1999, Cyberonics also is seeking support from physicians who participated in some seven clinical studies over the years. The company has about $15 million in cash but needs as much as $30 million to ramp up manufacturing and marketing. An easy solution might be to sell out to a big medical-equipment maker. But for now, Cummins says he's not even thinking about that. "We're focused on making [the device] a success," he says. For Albert Jean, it already is.