Devices Neurology

 News Release - May 1, 2006

Cyberonics Announces 1,100th Patient Treated With VNS Therapy(tm) for Treatment-Resistant Depression (TRD) Since FDA Approval

More Than 40,000 Patients Worldwide Treated With VNS Therapy; TRD Parity in Access to VNS Therapy Remains Cyberonics' Highest Priority; TRD Update Conference Call Scheduled for May 2, 2006 at 8:00 AM EDT

HOUSTON, May 1 (HSMN NewsFeed) -- Cyberonics, Inc. (Nasdaq: CYBX ) today announced that the 1,100th patient in the U.S. has been treated with Vagus Nerve Stimulation (VNS) Therapy for treatment-resistant depression (TRD) since FDA approval in July 2005. VNS Therapy is the first FDA-approved treatment option developed, studied, approved and labeled specifically for patients with TRD.

In July 2005, the FDA approved VNS Therapy as an adjunctive long-term treatment of chronic or recurrent depression for patients 18 years of age or older who are experiencing a major depressive episode and have not had an adequate response to four or more adequate antidepressant treatments. VNS Therapy is also FDA-approved as an adjunctive therapy used to reduce the frequency of seizures in adults and adolescents over 12 years of age with partial onset seizures that are refractory to antiepileptic medications. The number of TRD patients treated with VNS Therapy in the first nine months following approval is approximately two times the number of patients with refractory epilepsy treated with VNS Therapy in the same time period following epilepsy approval in July 1997. In total, more than 40,000 patients have been treated with VNS Therapy for both indications confirming that VNS Therapy is safe, effective and cost effective.

Demand for VNS Therapy for TRD is significantly higher than the number of patients who have been implanted. In the nine months since product launch on August 1, 2005, more than 2,650 psychiatrists have submitted more than 10,000 Insurance Verification and Patient Education Authorization (IVEA) forms requesting Cyberonics' assistance with patient qualification education and insurance verification and prior authorization. Until national and regional TRD coverage polices are in place, the Company is working with patients and their insurers on a case-by-case basis to secure insurance and reimbursement approvals. To date, more than 170 different payers including 34 BCBS plans, 8 Aetna plans, United Healthcare, CIGNA, and several regional Medicare carriers and Medicaid programs have granted between one and fifty TRD patients access to VNS Therapy.

Peer-reviewed data published in Biological Psychiatry and the Journal of Clinical Psychiatry confirm the association of VNS Therapy with significant antidepressant benefits that are sustained and/or increase over time for patients with severe chronic or recurrent treatment-resistant depression. In studies of patients with an average duration of lifetime depressive illness exceeding 25 years and an average of 16 failed antidepressant treatments in their lifetimes, 56% of patients treated with adjunctive VNS Therapy realized at least a meaningful clinical benefit and almost 20% were free of depressive symptoms after two years of treatment. Sixty to seventy percent of the patients who responded after three months and after one year of VNS Therapy, maintained their response out to two years. Similar response, remission and sustained response rates have not been observed in studies of any other antidepressants in patients suffering from the same level of chronic or recurrent treatment-resistant depression included in the VNS Therapy studies. The VNS Therapy studies compared the outcomes of patients treated with adjunctive VNS Therapy and treatments-as-usual (TAU) with a statistically and clinically well-matched, non-randomized control group of patients treated only with unlimited TAU (no VNS). Although the patients treated only with TAU received significantly greater increases in TAU, the patients treated with adjunctive VNS Therapy realized statistically and significantly greater benefits defined as two to three times the response and remission rates realized by the patients treated with unlimited TAU after one year of treatment.

"It's critical that patients with TRD have access to all available FDA- approved treatment options since there is not a one size fits all treatment for this patient population," said Michael Fitzpatrick, Executive Director, National Alliance on Mental Illness (NAMI). "Depression is a lethal and debilitating illness and while it's very encouraging to hear that more than 1,100 Americans with TRD have been implanted with VNS Therapy, we sincerely hope that more patients will be able to gain access to this treatment option."

"Depression is an important public health problem. There are more than four million Americans who experience chronic or recurrent treatment-resistant depression and VNS Therapy provides a meaningful treatment alternative for the many individuals who experience treatment-resistant depression," said David L. Dunner, M.D., Director, Center for Anxiety and Depression, Professor, Department of Psychiatry and Behavioral Sciences, University of Washington.

"Thanks to the extraordinary dedication and perseverance of Cyberonics' Sales and Case Management team, psychiatrists, payer medical directors who have granted case-by-case access, appeals boards that have overturned insurance coverage denials and thousands of patients and their families, more than 1,100 Americans for the first time in many years now have hope for long- term improved quality of life and function," added Robert P. ("Skip") Cummins, Cyberonics' Chairman of the Board and Chief Executive Officer. "The preliminary reports from psychiatrists and patients to our Case Managers suggest that the short-term post-approval outcomes in TRD, similar to what has been observed in short and long-term outcomes in epilepsy over the past eight years, are in many cases better than those reported in the studies.

"Similar to our progress in providing case-by-case access to VNS Therapy, Cyberonics is making steady progress towards our goal of providing psychiatrists and Americans with TRD universal access to VNS Therapy through favorable national and regional coverage policies," added Mr. Cummins. "In epilepsy, it took Cyberonics' reimbursement team nearly three years after approval to obtain favorable national and regional coverage policies. Although we are not aware of any other new neuromodulation device that has obtained more favorable or more broad-based coverage more quickly, our goal in TRD is to beat our epilepsy record and provide Americans with TRD the same universal access to VNS Therapy that has been enjoyed by Americans with refractory epilepsy for the past six years. Cyberonics has recently been informed by several regional payers during requests for prior authorizations that VNS Therapy for TRD is a covered benefit, at least one major regional payer has drafted favorable coverage policy and a number of major regional payers are moving towards favorable coverage. We congratulate and thank these payers for their leadership and vision and we are confident that their TRD coverage policies will prove to be in the payers' best interest considering that a review of peer-reviewed evidence regarding annual healthcare costs and two-year outcomes of patients treated with VNS Therapy suggests that VNS is five times more valuable to payers in TRD than in refractory epilepsy.

"Notwithstanding our progress to date, there are still many difficult challenges ahead on the road to TRD parity in access to VNS Therapy," continued Mr. Cummins. "Payers have so far denied access to VNS Therapy to more than four times the number of TRD patients who have so far received it. Thousands of experts, including psychiatrists, patients and families and members of third party appeals boards that have overturned 80% of the denials cases heard to date, remain frustrated by these payers' unwillingness to consider all the expert opinion and peer-reviewed evidence that confirms that VNS Therapy, the only FDA-approved treatment for TRD, is significantly more effective than the covered treatments-as-usual that have already failed those same patients. When payers deny Americans with TRD access VNS Therapy, those payers are in essence telling those patients and their psychiatrists that the payers' medical directors are more qualified to make treatment decisions for patients with TRD than are psychiatric thought leaders, fully-informed psychiatrists and well-informed patients and their families. According to peer-reviewed literature and medical histories of patients with TRD, the prospects for patients with TRD who have access only to the same treatments- as-usual that have already failed them are uniformly bleak; hopelessness, increased general medical conditions and healthcare utilization, absenteeism, under-employment, unemployment and all too often, suicide. Depression is the number one cause of disability in the United States and many Americans with TRD are disabled and either uninsured or on Medicare, well before they reach age 65.

"So who assumes the risks and realizes the benefits when fully-informed expert opinion is overruled and access to VNS Therapy is denied," continued Mr. Cummins. "The only potential beneficiary is the payer who avoids the up- front costs associated with VNS Therapy and may avoid the long-term costs of care if the patient becomes disabled, uninsured or dies. There are no benefits, only significant risks and costs for the patients and their families, their psychiatrists, their employers, the healthcare system and the American taxpayer whose taxes fund many government programs including Medicare, whose resources ($3.5 billion per year before Part D) are being consumed by under age 65 disabled Americans with TRD who are disabled as a result of the ineffectiveness of non-VNS treatments. Although many consider payers' denial of access to VNS Therapy and other new FDA-approved treatments to be treatment decisions and the practice of medicine, payers take minimal risk when they deny access to FDA-approved, medically necessary and expertly prescribed treatments. The federal ERISA statute, which governs employee benefit plans, preempts state law and limits claims for wrongfully denied benefits to the amount of the benefit itself, thereby insulating payers and their medical directors from the threat of malpractice liabilities that normally accompany treatment decisions and the practice of medicine.

"In summary, the challenges and opportunities to accomplish our mission of improving the lives of people touched by refractory epilepsy or TRD going forward are clear, and neither is being underestimated," concluded Mr. Cummins. "We are more confident than ever that we will accomplish that mission based on expert opinion, the safety, effectiveness and cost effectiveness of VNS Therapy, the rapidly building body of valid scientific evidence, and most importantly based on the long-term patient outcomes provided by VNS Therapy to a group of patients suffering from the most chronic and resistant forms of their illnesses."

TRD UPDATE CONFERENCE CALL

A conference call to provide a TRD update will be held at 8:00 AM EDT on Tuesday, May 2, 2006. To listen to the conference call live by telephone dial 877-451-8943 (if dialing from within the U.S.) or 706-679-3062 (if dialing from outside the U.S.). The conference ID is 8155050; the leader is Pam Westbrook. Presentation slides will be available on-line at http://www.cyberonics.com at 6:30 PM EDT this evening. A replay of the conference call will be available two hours after the completion of the conference call by dialing 800-642-1687 (if dialing from within the U.S.) or 706-645-9291 (if dialing outside the U.S.). The replay conference ID access code is 8155050.

ABOUT VNS Therapy AND CYBERONICS

Information on Cyberonics, Inc. and VNS Therapy is available at http://www.cyberonics.com and http://www.vnstherapy.com .

SAFE HARBOR STATEMENT

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," and "forecast," or other similar words. Statements contained in this press release are based upon information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information should those facts change or should we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning the development of regional and national TRD coverage policies, TRD coverage policies proving to be in the best interest of payers, and achieving our mission of improving the lives of people touched by refractory epilepsy and treatment-resistant depression. Our actual results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy and sales of our product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of Alzheimer's disease, anxiety, or other indications; adverse changes in coverage or reimbursement amounts by third- parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new applications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to Cyberonics' most recent filings with the SEC, including its Form 10-K for the fiscal year ended April 29, 2005.

Source: Cyberonics

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