Any FDA approval is positive--even if it's later taken back

In an unusual reversal of the FDA advisory group's decision a couple of months ago, the FDA refused to approve the use of Houston Cyberonics product (its only product) for depression. The device, approved for use with epilepsy, is a "small pacemaker-like device" that's implanted in the chest and uses thin wires to send pulses to the vagus nerve in the neck.

The study took advantage of having located a convenient group of people diagnosed with depression and already undergoing other kinds of treatments. They gave that group the device, and then they used another group for comparison who did not receive their device but were also being treated by other methods. While the panel saw positive results, the full FDA found fault with the fact that the chosen patients weren't randomly assigned to groups, as well as with the fact that other treatments were going on in both groups.

It looks as though this is just a blip for Cyberonics, though. After having its stock shoot up 80% when the panel approved the original request, last week Dallas-based Advanced Neuromodulation Systems bought a big chunk of Cyberonics shares and started talking about a potential merger.