- Neuronetics, the first company to get FDA authorization for a transcranial magnetic stimulation (TMS) device to treat major depressive disorder in 2008, announced it received a breakthrough device designation from the agency for priority review of the NeuroStar system for an additional indication in patients with bipolar depression.
- The news came same week the company revealed that Christopher Thatcher will step down as president and CEO, effective immediately, after five years at the helm. Thatcher will remain with the Malvern, Pennsylvania-based company in an advisory role through May 1.
- Investors have bailed out of Neuronetics' stock, sending shares to close below $3 on Friday. Just 18 months ago, the stock was trading above $36 a share, following the company’s June 2018 IPO.
Gaining access to the accelerated regulatory pathway toward an expanded indication for its NeuroStar TMS device was a bright spot in an otherwise tumultuous week for Neuronetics. Thatcher announced FDA’s decision on an earnings call with analysts Tuesday.
Two days later, Neuronetics issued a news release to say Thatcher would be leaving the company by mutual agreement. The board is conducting a search for a new CEO. In the interim, CFO Steve Furlong and General Counsel Andrew Macan will fill the void in a newly created office of the president while also retaining their current roles. Board Chairman Brian Farley was named liaison to the president’s office.
Breakthrough status for the NeuroStar device in bipolar patients validates the need for an effective nonpharmaceutical treatment option for the condition, Thatcher told investors. In addition to the use of psychotherapy, bipolar disorder is typically treated with medications that include mood stabilizers, antipsychotics, antidepressants and anti-anxiety drugs.
Another option available to bipolar patients who do not improve with medications is electroconvulsive therapy, in which electrical currents are sent through the brain to trigger a brief seizure as a way of altering brain chemistry. FDA supported the non-invasive, device-based treatment in December 2018 when it published a final order requiring premarket approval for most uses of ECT devices with two exceptions: catatonia, and a severe episode tied to major depressive disorder or bipolar disorder.
For those indications, FDA moved the treatment from Class III, its higher-risk category, to Class II with special controls, a category for moderate-risk devices. The agency said use of ECT in the two conditions had been well studied, and enough information existed to create special controls to mitigate risks.
Vagus nerve stimulation, involving a pulse generator implanted in the chest that delivers electrical signals to the vagus nerve in the neck, was approved by FDA in 2005 for treatment-resistant depression. The device was originally cleared in 1997 to treat seizures. Its manufacturer, Houston, Texas-based Cyberonics, merged with Italy’s Sorin in 2015 and rebranded as LivaNova, based in London.
Transcranial magnetic stimulation is an alternative noninvasive device-based treatment for depression that uses magnetic pulses to stimulate areas of the brain associated with mood. Neuronetics, whose competitors include BrainsWay, Magstim, MagVenture and Nexstim, said it is the first manufacturer of a TMS device to receive breakthrough status specifically for bipolar depression. A recent survey by analysts at William Blair polling 85 psychiatrists who own TMS systems found a third plan to buy more of the devices in the next two years.
BrainsWay has an FDA-authorized indication for its TMS system to treat obsessive compulsive disorder. It received that indication via the De Novo pathway in 2018, based on a study of 100 patients that showed 38% responded to the treatment.
On the earnings call, Thatcher said Neuronetics is working with FDA on a clinical study design for the bipolar indication and expects to have a clearer sense of what that will look like later this year. In a presentation, the company has said longer term, it is also looking to pursue an indication for post-traumatic stress disorder.
First, however, the company that the World Economic Forum named a 2011 Technology Pioneer will try to convince investors that it is on a course to profitability. Thatcher said Neuronetics is aiming to be EBITDA positive in late 2022 to early 2023. In announcing Thatcher's departure, the company reaffirmed that guidance.