January 2002

Attendance declined to 53,569 professional healthcare providers, guests and exhibitors for RSNA 2001. That total is 11 percent less than a year ago, when 60,443 people attended RSNA 2000.

On the scientific side of RSNA, approximately 21,000 research presentations and posters covering 15 subspecialities were presented in Chicago.

One research study explored a catheter guidance system that combines x-ray with a magnetic field to direct a magnetized guidewire toward the targeted location. The report found that it is possible to block off a brain aneurysm by using a catheter to deliver materials, such as coils, that will reduce turbulent blood flow and, in most cases, provide a permanent cure.

The system provides magnetic control and simultaneous real-time x-ray visualization to guide a magnetized guidewire through the vascular system. A neurologist steers the guidewire by remote control from the computer console and can move it in any direction.

Computed-aided detection (CAD) software already is used with mammography to help detect breast cancer. Now researchers at the University of Chicago are showing how computer-assisted reading can be a useful adjunct to CT (computed tomography) scans to help detect early lung cancer.

“With the increased use of CT scans for the detection of lung cancer and other diseases, radiologists’ workloads have increased tremendously,” said Samuel G. Armato III, Ph.D., assistant professor of radiology.

Armato said the ideal use of the computer-aided detection (CAD) method is as an initial interpretation of CT scans, with the final analysis accomplished by a radiologist’s review of the computer-generated findings.

In the university study, CAD was applied to 38 low-dose CT scans with a total of 50 lung nodules, 38 of which were biopsy-confirmed lung cancer and were not found during initial clinical interpretation. CAD found 41 of 50 total nodules and 30 of the 38 previously missed cancers, with false-positive rates of 1.6 per section. This amounts to the detection of approximately 79 percent of previously missed cancers.

A Stanford (Calif.) University study indicates that CAD, coupled with CT colonography (CTC) holds promise for radiologists, acting as a “second set of eyes” for physicians screening for potential colorectal cancers.

The study scanned 51 patients with single- and multidetector CT. For all 51 patients, CAD CTC achieved 93 percent sensitivity with an average of eight false-positives per colon.

For supine scans, CAD CTC achieved 91 percent sensitivity, with an average of 11 false-positives per colon. For prone scans, the CAD algorithm achieved 100 percent sensitivity, with an average of four false-positives per colon.

The study concluded that CAD enables the detection of clinically significant polyps reliably with a low false-positive rate in supine and prone scans with varying preparation, distension and imaging quality, and a low-polyp prevalence.

Magnetic resonance image-guided focused ultrasound surgery (FUS) is testing positively as a noninvasive treatment for uterine leiomyoma or fibroids, said Clare Tempany, M.D., associate professor of radiology at Harvard Medical School (Cambridge, Mass.), and director of clinical MRI at the Brigham and Women’s Hospital (Boston). The procedure uses high-intensity ultrasound waves to heat and destroy uterine fibroids.

In the tests, women underwent pretreatment MR imaging to identify and define the target fibroids for FUS. The focused ultrasound delivers heat to the target, based on fibroid volume. During this phase, temperature-sensitive MR imaging is performed to monitor the location of the ultrasound beam and to track temperature changes in tissue.

Because of the precision provided by coupling MRI with FUS, the target tissue is heated to the point of destruction, while healthy tissue only a few millimeters away from the target area experiences only a slight increase in temperature with no resultant damage. Imaging is conducted again after the procedure to evaluate treatment results.

Preliminary findings have shown precise definition of the target volume by MR imaging and noticeable shrinkage in the fibroids subsequent to this noninvasive treatment. Further study is required, but early indications are that women with fibroids on the inner or outer uterine wall would be most responsive to this new type of treatment.

A new technique that uses a balloon catheter to deliver radiation to breast-cancer patients offers the probability of significantly reduced treatment time and a more simple standard procedure.

Women who have a lumpectomy, or surgical removal of the cancerous tumor, often need additional radiation treatment. The typical treatment consists of a daily course of external beam radiation therapy for six weeks.

In the new form of brachytherapy, a single balloon catheter is inserted in the breast and the radiation is evenly delivered to the breast tissue surrounding the balloon. The new procedure is done twice daily for a total of five days.

The technique, which can be performed either during the surgery to remove the breast tumor or during a separate outpatient procedure, involves inserting a catheter with a deflated balloon on the end into the cavity created by the removal of the tumor. The balloon is filled with saline solution until it conforms to the cavity. Balloon and catheter remain in the breast for the duration of therapy.

In a multicenter study, 26 women received the new balloon catheter device to evaluate its performance and safety. Side effects were mild, including only minimal local symptoms. So far, a total of 43 women have been treated with the device, which is awaiting FDA approval.

At the Wake Forest University School of Medicine (Winston-Salem, N.C.), a study has found the prospect that caffeine diminishes blood flow to the brain, or creates what past studies suggest as “cerebral perfusion.”

Researchers, led by Aaron S. Field, M.D., Ph.D., assistant professor of radiology, University of Wisconsin (Madison), studied whether coffee consumption should be taken into account when doing a perfusion MRI study — one of several techniques known collectively as functional MRI (fMRI).

Their investigation showed decreased cerebral blood flow following caffeine consumption and increased cerebral blood flow following caffeine withdrawal, indicating the potential for errors in interpreting functional MRI exams.

Caffeine dose consistently reduced blood flow by nearly one-fourth in the gray matter of the brain where the nerve cells concentrate and by one-fifth in the white matter where fibers connect different parts of the brain, according to the study. Heavy caffeine users had significantly higher gray-matter blood flow in the frontal areas of the brain than did low-level users.

While PET proponents are not completely happy with the agency’s final ruling, they admit that it could have been worse, given the initial proposal.

In its Nov. 30 decision, CMS set the new reimbursement rate for FDG PET at $1,375 for 2002. The bad news is that the amount is 41 percent less than the current rate of $2,331. The good news is that the rate is greater than CMS’ initial proposed rate of $841.50.

The Society of Nuclear Medicine (SNM of Reston, Va.) and the American College of Nuclear Physicians (ACNP of Reston) called the new rate “both good and disappointing.”

The organizations said the lower rate “may have a negative impact on the expansion of PET services into communities where it does not currently exist, since it will be more difficult for hospitals and other facilities to recoup the significant costs associated with the installation and operation of PET centers.”

SNM and ACNP added that the situation is “unfortunate, since PET is increasingly used in clinical medicine, and is a vital diagnostic and treatment planning tool for many cancers, neurological and cardiac conditions.”

SNM and ACNP said they were pleased at CMS’ “responsiveness” to their concerns expressed when the lower rate was proposed in August. With an average wholesale price of $750 for FDG, the groups contended that CMS’ proposed rate of $841.50 would have resulted in facilities losing money on each PET scan.

“We were able to show how there were errors in the data on which CMS had originally based its proposed reimbursement,” stated Alan Maurer, M.D., president of the SNM, in a prepared statement. “The [CMS] responded by developing a more reasonable, though still disappointing, reimbursement amount.”

Maurer added that SNM plans to work with CMS in the future to add more reimbursable indications for PET imaging.

SNM also created a new government relations subcommittee chaired by Peter Conti, M.D., associate professor of radiology, clinical pharmacy and biomedical engineering at the University of Southern California (Los Angeles) and director of the PET Imaging Science Center at the University’s Keck School of Medicine (Los Angeles). The panel will work to broaden PET coverage to new indications and improve the overall reimbursement for PET procedures. The group also will examine the effect of the new FDG reimbursement rate on the nuclear medicine community.

Commercial impact
How will CMS’ decision affect the commercial side of PET imaging?

Fixed-site and mobile medical imaging company Alliance Imaging Inc. (Anaheim, Calif.) reaffirmed its commitment to provide PET services after reviewing the CMS decision.

Richard N. Zehner, Alliance’s chairman, CEO and co-founder, said the new lower reimbursement rate could benefit mobile PET services, since most hospitals may not have enough PET volume to justify the purchase of a PET system.

Prior to word of the lower reimbursement rate, Alliance anticipated its PET revenues would account for 2.5 percent of total revenues this year. As of Sept. 30, Alliance had 14 PET systems in its arsenal of approximately 404 medical imaging machines in operation. Speaking with Medical Imaging at this year’s annual meeting of the Radiological Society of North America (RSNA of Chicago), Zehner said the company plans to add more PET units in 2002.

“There is a market where the demand at this point is greater than the supply of assets,” he added. “I think you will see over the next four to five years that will hold true.”

An October 2001 report from market research firm IMV Medical Information Division (IMV of Des Plaines, Ill.) would support Zehner’s comment, as the number of PET procedures continues to increase quarterly.

From April 1 through June 30, IMV estimated there were more than 40,000 PET procedures. That total was up 7 percent — or 2,600 procedures — from 37,400 in the fourth quarter of 2000. Most of the procedures were for oncology, followed by neurology and cardiology applications.

Syncor International Corp. (Woodland Hills, Calif.), which provides nuclear pharmacy and medical imaging services, anticipates the financial impact of the lower reimbursement rate on its business will be “minimal” and the company remains “very bullish” on PET.

In the nuclear pharmacy services business, Syncor compounds and dispenses radiopharmaceuticals for diagnostic and therapeutic use by nuclear medicine departments in hospitals and outpatient clinics. The company has a network of 130 domestic and 19 international nuclear pharmacies, as well as 65 domestic and 18 internationally owned or operated medical imaging facilities.

President and CEO Robert Funari said PET represents less than 0.5 percent of procedures performed at 65 domestic and 18 international medical imaging centers owned and operated by Syncor’s wholly owned subsidiary, Comprehensive Medical Imaging Inc.

Syncor has three PET cameras in its own facilities and operates a fourth PET scanner at a hospital in southern Florida. The company plans to add a fifth PET unit in the near future.

“None of the PET imaging activities performed by our own facilities are affected by the change in reimbursement,” said Funari.

He estimated that hospital-based facilities and mobile providers perform 65 to 70 percent of PET imaging procedures, with the remaining 30 to 35 percent handled by independent centers.

Funari believes the new reimbursement rate will result in a shift in PET procedures “from hospital-based facilities to independent medical imaging testing facilities and the acceleration and demand for PET as a cost-effective tool in properly identifying and staging disease.”

CMS schedule

The Medicare Coverage Advisory Committee’s (MCAC) Diagnostic Imaging Panel meets Jan. 10 for presentations on the use of FDG PET or other neuroimaging devices for the diagnosis and management of patients with Alzheimer’s disease. The panel will review asymptomatic patients who are at high risk of AD due to positive family history; patients with mild cognitive impairment or similar syndrome; and patients with dementia.

The meeting was scheduled to begin at 8 a.m. at the Baltimore (Md.) Convention Center. The deadline for presentations and comments was Dec. 27 at 5 p.m. At the end of the day, the panel said it would make its recommendation.

Telegnostics’ goal is to allocate radiologist time more effectively and to provide underserved communities and understaffed radiology departments with radiology interpretive services. The long-range plan is to establish a nationwide virtual reading environment to support the remote reading of radiological images from client sites, by radiologists anywhere and anytime.

Initially, Telegnostics’ radiologists in Denver and Boston will interpret images from numerous locations in Nevada. iView’s facility in Denver will provide the professional reading services for these images. Telegnostics’ first pilot site of this virtual radiologic environment will be in Reno, Nevada. The pilot technology deployment will be in conjunction with NorthStar Imaging (Elko, Nevada).

PACS and teleradiology equipment connecting the radiologists will be located at DeJarnette’s headquarters. The Towson operation also will supply the technical component to the manufacturing and distribution parts of the business and will collect the images.

iView President Jay Cook, M.D., will serve as president of Telegnostics.

The companies anticipate the transaction will close this month, subject to regulatory approvals.

Agfa announced its intention to purchase its technology partner of the last 10 years in September. Financial details were not disclosed.

Mitra provides healthcare imaging and information management systems and has been instrumental in the development of Agfa’s IMPAX PACS (picture archiving and communications system).

Agfa said that it plans no changes for Mitra, as the company would operate and be managed as a separate business unit. The company structure, management and all employees will be retained.

In September, John Glass, general manager of Agfa HealthCare, said the addition of Mitra will help form the core of Agfa’s new HealthCare Informatics business and will lead Agfa and Mitra’s other OEM partners in the development of enterprise integration software.

Two years ago, Agfa and Mitra formed a jointly owned company, Impax Technology Inc. (Waterloo) to develop and market fully engineered software products building on Agfa’s IMPAX software platform.

The degree of Intermagnetics’ success could depend greatly on one customer in particular — Philips Medical Systems International B.V. (Best, Netherlands).

Intermagnetics President and CEO Glenn H. Epstein outlined the company’s plans at the annual meeting of shareholders and investors in November.

Leading the way for Intermagnetics would be its recent completion, successful test and delivery of its first of a series of new high-field open MRI magnets to Philips Medical Systems International.

Philips is using Intermagnetics’ magnet for its Panorama 1.0T MRI system, which Philips introduced as a works-in-progress at the annual meeting of the Radiological Society of North America (RSNA of Chicago) in 2000.

The open magnet has a field strength of 1.0 tesla. Its light weight is designed to allow high-field open MRI systems to be sited on any hospital or medical imaging center floor without the traditional heavy iron shielding of conventional magnet systems.

Intermagnetics also recently began commercial shipments of 3.0 tesla magnets for Philips’ Intera 3.0T MRI system, which targets the clinical and research market. The ultra high-field MRI system — also introduced at RSNA 2000 — is designed for neuro, orthopedic and cardiovascular applications.

Epstein said that the “combination of Philips’ increasing market share and the growth of new applications for 3.0T scanners have begun to produce incremental revenue as we originally projected. We expect to see increasing revenue from this product in the current fiscal year with continued growth in the future.”

He added that the company expects the 1.0T open magnet system “to produce additional incremental revenue within the coming 12 to 18 months.”

In November, the company unveiled plans to close its Littleton, Mass., general radiography manufacturing facility and relocate some product lines, sales and service to its headquarters in Bedford.

The consolidation of the Hologic Systems division resulted in the elimination of approximately 80 jobs and a restructuring charge of approximately $1 million — primarily for severance costs — in the first quarter of FY2002, ended Dec. 29, 2001.

“We made the decision based on extensive analysis that the conventional radiography business does not fit the long-term goals of this company,” Hologic President and CEO Jack W. Cumming told analysts on Nov. 13. “Profit margins were getting squeezed…. Therefore, we made the decision to close that facility.”

The facility was to close by the second week in January.

In discussing fiscal year-end results with analysts, Hologic CFO Glenn Muir said Hologic Systems had—in his words — “an abysmal [fourth fiscal] quarter,” ending Sept. 29, 2001. Sales decreased to $5.3 million and the division lost more than $2 million.

Some Littleton employees will relocate to Bedford to help handle ongoing service and parts replacement for its general radiography installations.

The Littleton announcement was Hologic’s second manufacturing consolidation last year. In February 2001, the company announced plans to relocate its FluoroScan Imaging Systems Inc. (Northbrook, Ill.) subsidiary to Bedford. The transfer was completed in April and the Northbrook facility was closed.

The layoffs at Littleton also marked Hologic’s second workforce reduction last year. In its August restructuring, Hologic decreased its workforce by 10 percent.

With the additional 80 layoffs in November, Hologic has reduced its employee base by approximately 25 percent in 2001.

For the fiscal year, ending Sept. 29, 2001, Hologic’s revenues increased to $178.5 million, compared with $93.7 million in FY2000. The gain was due primarily to $86.5 million in sales from the mammography and general radiography system businesses acquired in 2000. The company posted a net loss of $20.8 million, compared with a net loss of $18.6 million in the previous fiscal year.

In the fourth fiscal quarter, Hologic took a restructuring charge of approximately $808,000 for severance expenses related to its August layoffs. The company also posted a charge of approximately $361,000 related to the acquisition of the U.S. assets of Trex Medical Corp. (Danbury, Conn.) in September 2000.

With these and other expense-reduction measures evolving, Cumming said Hologic is taking steps on the path to profitability.

Muir told analysts that the company “will need to get to a [quarterly] revenue level of $45 million and $46 million in order to be profitable. At this point, we would like to say we could achieve this goal around the June quarter of next year.”

That timetable would have Hologic in the black in its third fiscal quarter, ending on or about June 30, 2002.

In other company news, Hologic has entered into a strategic alliance with Sedecal S.A. (Madrid, Spain), Stephanix (Paris, France) and Radiologia S.A. (Madrid) to market Hologic products in their respective countries.

Hologic has authorized to Stephanix the exclusive marketing rights for Hologic’s bone densitometry, mammography, digital imaging and general radiography products in France.

Hologic also signed with Radiologia for the exclusive marketing rights for Hologic’s bone densitometry, digital imaging and general radiography products in Spain, and bone densitometry, mammography, digital imaging and general radiography products in Portugal.

For product sales into these countries, Sedecal will supply customers with its high frequency x-ray generators for all Hologic products.

As part of the agreement, Hologic transferred to Stephanix and Radiologia certain operations in these countries.

In addition, a majority of the Hologic personnel who worked in these offices now are employees of Stephanix and Radiologia.

Cumming said the strategic alliance will help Hologic with its distribution channels in that part of Europe and allow Hologic to consolidate its sales and service support efforts into its European headquarters in Brussels, Belgium, reducing Hologic’s operating expenses in this market.

Additionally, Hologic and Siemens AG (Erlangen, Germany) have signed a letter-of-intent to form a strategic alliance for the development of second-generation digital mammography systems.

With this pact, the companies are planning to combine Hologic’s proprietary amorphous selenium direct-to-digital mammography technology with Siemens’ proprietary software for a dedicated physician’s workstation. Final details of the alliance will be formulated over the next several months.

“I think it is significant that two competitors have said ‘We believe we can bring technological advances to the market for the benefit of women that will enhance the opportunity for earlier detection [of breast cancer],’” said Cumming. The companies, he added, have “set aside competitive angst and have looked at what the benefit can be on a societal basis.”

In the proposed alliance, Siemens and Hologic would combine their proprietary mammography technologies and expertise to bring to market direct-to-digital mammography systems. The companies also are mulling joint efforts to migrate the current technology to the next generation of mammography systems.

Siemens and Hologic also plan to partner on the development of an image acquisition console as part of a fully integrated approach to breast cancer detection. Proprietary Siemens software will be used to build a dedicated physician’s workstation designed to improve workflow and patient throughput and will be configured to integrate future digital computer-aided detection (CAD) applications.

“It allows us to bring a full-systems approach to market at an accelerated rate because of the capabilities of Siemens’ software,” Cumming said.

“I don’t think either company today has been able to quantify how far the relationship will go in technological contributions. The exploration of that begins when we sign that agreement.”

Holger Schmidt, president of Special Systems division of Siemens Medical Solutions, said in a prepared statement that the “decision to combine both companies’ vast resources and proprietary technologies should positively impact each of our digital mammography development programs.”

The suit alleges that Hologic, through the production and sale of its Stereoguide and Multicare prone breast biopsy system, infringes Fischer’s patent for its Mammotest stereotactic breast biopsy system.

Fischer is seeking damages of lost profits with interest and is asking that damages be trebled due to the alleged willful and deliberate infringement.

The suit also requests the court to block Hologic from future sales, manufacture or use of its Stereoguide and Multicare product.

Hologic inherited the Fischer patent dispute, along with the Stereoguide and Multicare systems when Hologic acquired the former Trex Medical Corp. (Danbury, Conn.) from Thermo Electron Corp. (Waltham, Mass.) in September 2000.

In a prepared statement, Fischer Imaging Chairman Morgan Nields alleged that Hologic “has continued to sell products that have been subject to ongoing patent litigation brought by Fischer Imaging. Our efforts during the last year to reach an acceptable business solution to this issue have been unsuccessful. In the face of new sales of products that we believe infringe on our patent, we will now aggressively pursue a legal remedy.”

Nields added that it is Fischer Imaging’s understanding that “Hologic has an agreement to receive a partial indemnification, subject to certain limitations, from Thermo Electron for damages resulting from an infringement action by Fischer against Hologic.”

Nields also cited Hologic’s recent filing with the Securities and Exchange Commission (SEC), which stated that if Fischer Imaging were to win the suit and be awarded damages, “Hologic cannot assure that its indemnification from Trex Medical and Thermo Electron would be sufficient to cover the amount of the award.’’

Speaking with analysts on Nov. 13, Hologic President and CEO Jack W. Cumming immediately addressed the issue of the Fischer Imaging patent infringement suit, calling the legal action “basically non-news and a non-event.”

He added that Thermo Electron “is defending that suit and we are indemnified up to the purchase price of $55 million. We did extensive due diligence on it. We believe that we do not infringe and the claim, if any, would not come close to that amount.”

Hologic acquired Trex Medical for approximately $55 million in September 2000.

GEMS and Amersham will develop new positron emission tomography (PET) based molecular medical imaging technologies and systems. The companies’ first project is to develop a PET synthesis system that will produce a new generation of targeted molecular radiopharmaceuticals.

Current PET synthesis systems that interface with cyclotrons can generate one diagnostic pharmaceutical; most often, it is fluorodeoxyglucose (FDG). GEMS’ and Amersham’s goal is to design and deliver what the companies call the “next-generation chemistry lab” that can produce a number of PET diagnostics with high disease specificity.

The final products would be used for the diagnosis of a wide range of human diseases, including cancer and Parkinson’s disease at an early stage.    The first products to be developed will be high pharmaceutical quality FDG and F-DOPA, which is used to aid in the diagnosis and evaluation of Parkinson’s patients.

Amersham and Bristol-Myers Squibb’s Medical Imaging (BMS-MI) unit (formerly DuPont Pharmaceuticals of No. Billerica, Mass.) will cross-license their respective ultrasound contrast patent rights in the field of diagnostic imaging.

Under the pact, neither Amersham Health nor Bristol-Myers Squibb Medical Imaging will pay licensing fees or royalties. The companies also agreed to drop infringement litigation, clearing the way for each party to market their diagnostic ultrasound products without infringing on the other’s intellectual property or incurring further litigation expense.

The configuration combines Philips’ 1.5 T Intera I/T MRI scanner with its Integris Vascular angiography system in the same room.

Both Philips and UCSF say the combination MR and x-ray cath lab will enhance treatment for stroke and cardiovascular disease and help explore other beneficial applications.

“We are interested in looking at a multitude of neurovascular areas that might lend themselves to the [MR and x-ray] combination,” said Jack Price, Philips’ president and CEO. “We are just scratching the surface of what are some real opportunities that need to be investigated and understood.”

The two components of the system have been installed in different bays within the same room in UCSF’s radiology department. Closing a lead- and copper-shielded sliding door can separate the bays, enabling the two medical imaging units to be used separately, which UCSF does approximately half the time.

Charles Higgins, M.D., director of cardiovascular radiology at UCSF Medical Center, said the concept initially was discussed about eight years ago, but was placed on the back burner until recently. Increased interest in interventional MRI in order to avoid radiation dose for both the patient and healthcare providers was one catalyst to re-ignite the concept. Advances in MR with more rapid imaging also make possible the use of MRI as a replacement for fluoroscopy to guide catheter manipulations and interventional devices during procedures.

By combining MR and x-ray, UCSF hopes “to guide some parts of interventional procedures using x-ray angiography and other parts using MR,” added Higgins. “That is the crux of what we are exploring right now — How much of it can be taken over by MR?”

Installation of the Philips XMR suite was completed in July and UCSF has performed procedures using the system. While results have been positive, Higgins said UCSF is “very much in the exploratory phase.”

Higgins sees the suite as advantageous on several fronts. One such application is for stroke victims to help determine the type of stroke, the location of the blockage and whether there is hemorrhaging.

The combination of MR — which can image tissue — and x-ray angiography — to show a blood vessel — also can be helpful in the delivery of chemotherapeutic agents or other types of destructive material to a tumor. UCSF currently is performing the procedure by injecting a chemotherapeutic agent that is bound to iron particles. The distribution can be visualized on MR and injections performed to ensure the tumor is filled with the chemotherapeutic agent.

As for other applications, Higgins suggests using the Philips’ XMR suite to reduce radiation dose, especially in children with congenital heart disease. Even after surgery, many catheterizations may be necessary in ensuing years, because they require other types of interventions.

“We have now developed a technique to deliver heart valves and do stenting and angioplasty procedures under MR guidance,” Higgins said. UCSF has conducted the procedure successfully on animals.

As for getting the Philips XMR to market, Price estimated that “it will take us a good year working with UCSF before we can be out there commercially promoting this [suite]. In the meantime, there may be some other institutions where we can work on a research basis with them.”

Siemens Medical Solutions Inc. (Iselin, N.J.) recently closed on two supply contracts. One pact is a five-year agreement with group purchasing organization Radiology Partners Inc. (RPI of Tampa, Fla.). The agreement will give RPI members access to Siemens’ full product line, including electromedical, ultrasound, oncology and information technology products. Siemens estimates the RPI pact will generate $15 million to $20 million in annual sales. Siemens also completed a multi-year agreement worth an estimated $5 million with Touchstone Medical Imaging Inc. (Brentwood, Tenn.) for CT scanners. Touchstone currently has nine facilities in six states.

American Diagnostic Medicine Inc. (ADM of Elmhurst, Ill.) has signed an exclusive, multi-year agreement with GE Medical Systems (GEMS of Waukesha, Wis.) for more than 40 positron emission tomography (PET) and fused imaging systems for ADM physician groups, imaging centers and hospitals. ADM has placed an initial order for six Discovery VI fused imaging systems for installation at ADM facilities in California, Florida, Illinois and Texas.

Invivo Corp.’s (Pleasanton, Calif.) wholly-owned subsidiary, Invivo Research Inc., has signed a three-year, sole-source agreement with MedAssets HSCA Inc. (Wood Dale, Ill.) for Invivo’s MRI-compatible patient monitoring system.

CADx Medical Systems Inc. (Laval, Quebec, Canada) received an approvable letter from the FDA for its for Second Look computer-aided detection (CAD) system for mammography. The approvable letter applies to the pre-market approval (PMA) application for Second Look. Marketing clearance for the Second Look system is subject to final labeling discussions with the FDA. CADx is a subsidiary of Shire Pharmaceuticals Group plc (Basingstoke, United Kingdom ).

Health Care Markets Inc./Medical Imaging

Stock Index Analysis

Varian Medical Systems Inc. (Palo Alto, Calif.) has approved a two-for-one stock split on the company’s outstanding common stock. Varian Medical Systems expects the stock dividend will be paid on or about Jan. 15, 2002 to stockholders of record on Dec. 10, 2001. After the stock split, Varian Medical Systems will have approximately 70.2 million outstanding shares.

Palatin Technologies Inc. (Princeton, N.J.) has completed the sale of 4.9 million shares of stock, which yielded proceeds of $11 million. The money will be used for general corporate purposes. Palatin is developing the imaging agent LeuTech for the detection of infection. Palatin and Walter Reed Army Medical Center (Washington, D.C.) currently are evaluating the efficacy of LeuTech for the early detection of inhalation anthrax.

Compiled and analyzed by Health Care Markets Inc. (Hilton Head, S.C.), the stock indices above plot the performance of two market segments: Imaging Devices and Imaging Services. The indices are part of WDI’s healthcare database of more than 1,000 companies. For comparison we also plot the progress of the S&P 500. The indices began in January 1991 with a base of 100.

Revenues at IDX Systems Inc. (Burlington, Vt.) fell slightly in the third quarter, as the company reorganizes. Revenues decreased to $86.6 million, compared with $87.6 million in the third quarter of 2000. IDX posted a loss in the quarter of $8.6 million, compared with a net loss of $4.8 million in the year-ago quarter. The net loss excludes the company’s equity in Allscripts operating results. When included, the net loss is $12.2 million. For the nine-month period, revenues gained 15 percent to $279.8 million, compared with $243.9 million in the same period of 2000. The company’s net loss was $7.8 million, compared with a net loss of $18.6 million in the year-ago period. The nine-month net loss figure excludes one-time gains, charges and IDX’s equity in Allscripts operating results. When included, IDX posted net income of $5.2 million.

Revenues at Alliance Pharmaceutical Corp. (San Diego) were buoyed in its first fiscal quarter, ending Sept. 30, by a $5 million product rights payment from Mallinckrodt (St. Louis), a unit of Tyco International Ltd. (Pembroke, Bermuda). Revenues total $5.02 million, compared with $14,000 in the first quarter of FY2001. Alliance also posted a net loss of $6.9 million, compared to a net loss of $13.8 million in the year-ago quarter. The payment from Mallinckrodt comes from an agreement for Alliance’s Optison cardiac ultrasound contrast agent. Expenses in the first fiscal quarter include a $1 million non-recurring royalty charge related to the amendment of the Optison agreement.

Revenues declined in the third quarter for PET equipment designer and manufacturer Positron Corp. (Houston). Revenues declined to $356,000, compared with $3.4 million in the third quarter of 2000. Positron posted a loss of $567,000, compared with net income of $1.5 million in the year-ago quarter. For the nine-month period, revenues totaled $1.3 million, down from $6.1 million in the same period of 2000. The nine-month net loss was $1.8 million, compared with net income of $1.1 million in the year-ago period.

The sale of one less electron beam tomography (EBT) scanner in the third quarter meant lower revenues for Imatron Inc. (South San Francisco). Revenues slipped to $16.9 million, compared with $17.5 million in the third quarter of 2000. Net income declined to $47,000, compared with $1.6 million in the year-ago quarter. Imatron sold eight EBT scanners in the third quarter, compared with nine units in the third quarter of 2000. For the nine-month period, revenues increased 24 percent to $54.7 million, compared with $44.3 million in the same period last year. Net income climbed to $3.1 million, up from $2.8 million in the year-ago period. Imatron CEO S. Lewis Meyer said the company expects revenues and net operating income to fall short of earlier projections due to economic uncertainty in the United States. Imatron estimates 2001 revenues of $71 million, 14 percent greater than last year.

The sale or closing of 46 medical imaging centers since May 2000 deflated revenues at US Diagnostic Inc. (USD of West Palm Beach, Fla.) in the third quarter. Revenues decreased to $12.3 million, compared with $30.1 million in the third quarter of 2000. Revenues from the centers still under USD’s ownership totaled $11.5 million in the year-ago quarter. The third-quarter net loss was $2.3 million, compared with a net loss of $9.6 million in the third quarter of 2000. For the nine-month period, net revenues totaled $44.7 million, compared with $107.8 million in the same period last year. Net revenues from open centers was $38 million for the nine-month period, compared with $35.8 million in the year-ago period. The net loss was $15.7 million, compared with a net loss of $14.1 million in the year-ago period.

Fonar Corp. (Melville, N.Y.) notched greater revenues in its first fiscal quarter, ending Sept. 30. Revenues increased to $10.2 million, compared with $8.9 million in the first fiscal quarter of FY2001. Fonar also posted a net loss of $3.8 million, compared with a net loss of $3.9 million in the year-ago quarter. Fonar said its best-selling MRI scanner, the Indomitable, in which a patient stands between MRI magnets, contributed $1.6 million in revenues in the quarter.

Palatin Technologies Inc. (Princeton, N.J.) released its financial results for its first fiscal quarter, ending Sept. 30. Revenues from license fees and royalties totaled $41,667, compared with revenues from research grants, contracts, license fees and royalties of $896,748. The company posted a net loss of $3.6 million, compared with a net loss of $2.5 million in the year-ago quarter. Palatin blamed the increased net loss on the impairment of assets of approximately $950,000 related, in part, to improvements in its research-and-development facility in Edison, N.J.