Medical device maker Cyberonics Inc (CYBX.O) said federal Medicare administrators turned down a request to consider providing reimbursement coverage for its depression treatment, sparking a selloff in the company's shares.
The decision by the U.S. Centers for Medicare and Medicaid Services (CMS) dimmed hopes of wider sales of the company's most important product and saw Cyberonics shares fall 10 percent in extended trade on Tuesday.
The agency ruled six years ago that there was not enough evidence to support use of the company's Vagus Nerve Stimulation (VNS) therapy system in patients with treatment-resistant depression.
The implantable VNS device is also approved for sale in the United States to treat refractory epilepsy, for which the CMS provides reimbursement coverage.
Cyberonics estimates that CMS already pays for about a quarter of the VNS Therapy System implants, a regulatory filing from February shows.
The company's stock was trading at $43.00 in extended trade on Tuesday after closing at $47.75 on the Nasdaq.
(Reporting by Zeba Siddiqui in Bangalore; Editing by Stephen Coates)