Cygnus Skyrockets After FDA Panel Recommends Approval of Company's Glucose Product

The device, Cygnus said, could lead to more effective treatment of diabetes by detecting trends and tracking patterns in glucose levels in adult sufferers.
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Shares of medical device maker

Cygnus

(CYGN)

nearly doubled on Tuesday after a

Food and Drug Administration

advisory panel recommended approval for

GlucoWatch

, a product designed to closely monitor glucose levels in diabetics.

But some diabetes specialists were less optimistic about GlucoWatch.

After the stock market closed Monday, the FDA advisory panel unanimously recommended the approval of the watch-like device designed to use electric sensors to painlessly and non-invasively measure glucose levels throughout the day. The FDA usually takes its cue from its advisory panels.

Shares in Cygnus, a company based in Redwood, Calif., surged Tuesday, closing up 8 3/4, or 97%, to 18 in late afternoon trading.

Its device, Cygnus said, could lead to more effective treatment of the disease by detecting trends and tracking patterns in glucose levels in adult diabetics.

Diabetes, a potentially deadly disease that hinders the body from either producing or using insulin, the hormone that converts sugar and starch into energy, affects an estimated 17 million to 18 million Americans.

Many diabetes sufferers currently monitor their glucose levels several times each day using the so-called fingerstick, an invasive prick test that is inconvenient and painful.

The worldwide market for glucose monitoring devices is approximately $2.5 billion, the company said.

Following the FDA announcement, Elise Wang, a

PaineWebber

analyst, raised her recommendation to a buy from a neutral and lifted her 12-month price target to $20 a share from a previous $10.

But Andrew Drexler, director of the

Mount Sinai Diabetes Center

in New York, said he was skeptical that GlucoWatch would prove to be highly accurate in detecting exact changes in patients' blood-sugar levels.

"My sense from what I've seen is it's not going to be the breakthrough we're looking for," Drexler said. "It's an advance, but how accurate it will be I'm not sure."

Cygnus said in a statement GlucoWatch was not intended to replace other monitoring devices.