Tyco to buy Mallinckrodt for $4.2B in stock and debt
Diversified manufacturing and service company Tyco International Ltd. (Pembroke, Bermuda) has decided to beef up its healthcare holdings with the proposed acquisition of medical products maker Mallinckrodt Inc. (St. Louis, Mo.).
Tyco will pay $4.2 billion for Mallinckrodt – $3.1 billion in stock and assume $1.1 million in debt.
According to the proposal, Tyco will offer Mallinckrodt shareholders $47.50 in Tyco stock for each share of Mallinckrodt stock. That price is 65 percent above the $31.38 per share where Mallinckrodt closed on June 20, just prior to the deal’s announcement. The plan has a walk-away provision that kicks in if Tyco stock rises to $37 or more before the deal closes. In that case, Mallinckrodt has an option to accept fewer shares.
In addition to imaging contrast agents, Mallinckrodt’s product lines include pharmaceuticals, such as analgesics and narcotics and respiratory equipment. The company currently imports 60 percent of the opium used in the U.S. for pharmaceutical purposes.
Industry analysts say the combination of $28 billion Tyco and $2.6 billion Mallinckrodt makes sense and investors’ early reactions were positive.
In a Reuters report, analyst Edward Wheeler, of Buckingham Research Group (New York), said Mallinckrodt’s stock “has been under some pressure. The company has to increase its growth rate and I’m sure Tyco has figured out a way to do that.”
Tyco’s status has been speculated upon since the Securities and Exchange Commission investigated the company, prompting Tyco to restate some past earnings. That investigation ended only days before the Mallinckrodt deal was announced. According to wire reports, the investigation resulted in “only modest revisions in its financial reporting.”
“[This acquisition] offers consolidation opportunities as well as significant manufacturing, purchasing, and distribution synergies,” said L. Dennis Kozlowski, chairman and CEO of Tyco in a prepared statement.
Kozlowski said the acquisition of Mallinckrodt will make Tyco the second-largest manufacturer, distributor and servicer of medical devices worldwide and the leader in bulk analgesic pharmaceuticals. The acquisition immediately will be accretive to earnings.
Company officials opine that Tyco’s international presence will allow Mallinckrodt to enter new geographic markets. Tyco has been acquiring companies to increase its healthcare business segment. In October 1998, Tyco purchased U.S. Surgical Corp. (Norwalk, Conn.) for $3.3 billion.
“Tyco Healthcare has grown to be a powerful force in disposable medical supplies and medical devices through previous acquisitions of industry brands,” said Kozlowski, adding that the acquisitions would keep coming in the second half of 2000. “We’re seeing plenty of opportunities out there,” he added.
The proposed acquisition is approved by both boards of directors and is subject to regulatory clearances.
Mallinckrodt eyes future as part of Tyco
Mallinckrodt Inc. (St. Louis) has spent three years focusing its business on healthcare and watching its earnings per share increase, but Wall Street still didn’t get behind the company.
In recent years, the company divested its non-medical businesses and acquired respiratory products firm Nellcor Puritan Bennett Inc. (Pleasanton, Calif.). Still, the stock continued to lose value, which led Mallinckrodt officials to pursue the sale last week to Tyco International Ltd. (Pembroke, Bermuda).
“We know that one of the things public companies must do in this day and age is create shareholder value,” said Barbara Abbett, Mallinckrodt’s vice president of corporate communications. “In April, we announced we were in an intensive and comprehensive review of all strategic alternatives that the company might be willing to consider.”
Abbett said Tyco responded with an “expression of strong interest” almost immediately, which quickly led to last week’s acquisition announcement and a positive reaction from investors. One day after the acquisition was announced, Mallinckrodt stock spiraled up to $43.63 from its previous close of $31.38.
“Clearly what we saw going on in the market [the day after the deal was announced] says that it was the right move to make with Tyco’s agreement of $47.50 a share with stockholders,” Abbett told Medical Imaging. “Investors clearly have seen the value in the company that Wall Street didn’t recognize previously.”
The Tyco deal marks the third time Mallinckrodt has been acquired. In 1982, Avon Products Inc. (New York) bought the company and in 1986 International Minerals and Chemicals Corporation acquired the business. Abbett said the Mallinckrodt name has continued to flourish under those ownerships and will so under Tyco’s ownership.
For its part, Tyco has been focusing on developing its healthcare offerings through acquisitions. In 1994, the company acquired The Kendall Co., which provides products for wound care, needles and syringes and various other nursing care supplies. Other Tyco Healthcare divisions gained through acquisitions include U.S. Surgical, Valleylab, and Ludlow.
In May, Tyco Healthcare joined the Global Healthcare Exchange online purchasing enterprise.
Tyco is headquartered in Bermuda, but managed from Exeter, N.H. Its healthcare operations are based in Mansfield, Mass.
PSS World Medical to be acquired by Fisher Scientific
Healthcare products supplier PSS World Medical Inc. (PSS of Jacksonville, Fla.) agreed to be acquired by Fisher Scientific International (Hampton, N.H.), a supplier of laboratory and scientific supplies, in a stock-for-stock transaction valued at $840 million.
According to the agreement, approximately 0.3 shares of Fisher stock will be exchanged for each outstanding share of PSS, based on Fisher’s June 21 closing price of $38 per share. The deal values PSS stock at $11.86 per share, a 20 percent premium over PSS’ closing price of $9.88 on June 21.
Early market reaction indicated that some investors questioned the value given to PSS stock in the transaction, expecting as much as $15 per share. PSS Chairman and CEO Patrick Kelly addressed that issue in a news conference, saying, “I know a lot of people are not overly happy with the value we’re getting for the company at this time, but unfortunately the company has had a very tough year. We believe the combination of these companies will make a powerhouse company going forward and those shareholders, who have been in this long term are going to make a lot of money down the road.”
The acquisition will create the $2.5 billion Fisher Healthcare division, which will be based in Jacksonville with Kelly as the president and CEO. The new division will combine PSS with Fisher’s $700 million in existing healthcare operations. Fisher officials feel the combined company will provide growth opportunities in terms of cross-marketing, expansion and e-commerce. Fisher estimates the cost savings to be in the $30 million range over the next three years.
Fisher would inherit more than $260 million in debt from PSS, which it plans to pay off following the close of the acquisition.
“At its IPO in 1991, Fisher’s management team outlined three strategic goals for the company,” said Paul Montrone, chairman and CEO of Fisher. “The first goal was to diversify into other markets. The PSS acquisition is a perfect next step in this strategy.”
PSS and its founder, Kelly, are well-known for an acquisition-heavy growth strategy of consolidating local suppliers into a nationwide network.
In 1996, PSS acquired Diagnostic Imaging Inc. (DI of Jacksonville), which itself was created earlier in 1996 through the merging of four local X-ray equipment and consumables distributors. Since then, DI has used the backing of PSS to acquire numerous other local and regional imaging products suppliers to build an extensive distribution network.
“When we started the process [of looking for an acquisition partner] in January, we put on hold the continued expansion of DI,” said Kelly. “DI currently services about 40 states and we look forward to getting back on track to finish the national network pretty quickly.”
Agfa enters DR market through deal with Canon
At June’s Symposium for Computer Applications in Radiology (SCAR) meeting in Philadelphia, there was a hotly contested debate over the benefits of computed radiography (CR) vs. digital radiography (DR).
During that debate, Ted Ciona, a product manager with Agfa Corp. (Ridgefield Park, N.J.), was asked if Agfa, a strong PACS and CR vendor, would consider selling DR at any point in the future. Ciona simply smiled and replied, “You never know.”
Now we know.
Agfa on June 16 signed a deal to sell DR systems from Canon Medical Systems (Irvine, Calif.) in all worldwide markets, except Japan – a deal Ciona undoubtedly had in the back of his mind while on the SCAR panel.
The contract calls for Agfa to label and sell the Canon systems as the Agfa DR-Thorax system, much the same way Eastman Kodak Co.’s (Rochester, N.Y.) Health Imaging division does with Direct Radiography Corp. (DRC or Newark, Del.). Now, both Agfa and Kodak are selling film, CR and DR.
“We believe both products have unique pros and cons and in specific applications, DR will be superior,” said John Glass, managing director for Agfa’s medical imaging business group. He added that the current agreement with Canon focuses on chest radiography, but Agfa is looking at other DR applications down the road, including full-field digital mammography.
“The primary difference between CR and DR will be economics vs. workflow,” Glass said. “Each customer will have to do their own economic analysis to decide if the workflow has a higher value to them than the initial purchase price. We believe DR technology, from a productivity and a workflow perspective, is a superior technology.”
The deal brings the Canon product to a large installed base, which Agfa has through its film, CR and PACS sales. In a prepared statement, Akira Tajima, managing director and CEO of Canon, said the firm is “pleased to have selected the best partner to accelerate its adoption and expand its distribution.”
The deal does not cover Japan because of Canon’s extensive coverage within its homeland.
The statement added that the Agfa DR-Thorax system is “the first in a potential line of private labeled, Agfa DR products from Canon.” However, Canon so far only offers two DR systems – the chest system covered in this agreement and a table bucky system. Canon also provides PACS products and services.
Agfa’s in-house development of a unique scanhead technology using needle-shaped phosphors still is being funded, according to Glass, and was not affected by the Canon deal. Originally, the new scanhead technology was slated for release in 2001, but Glass said that launch could come sooner. Glass did not say how that product development would affect the Canon deal.
SNM 2000 provides launch for fusion imaging studies
While the 47th annual meeting of the Society of Nuclear Medicine (SNM of Reston, Va.) in St. Louis in June produced its fair share of business news, the meeting also provided what may be remembered as the unofficial launch of fusion imaging and co-registration.
“The theme of this meeting is functional and molecular imaging,” noted Henry Wagner, M.D., in his 23rd consecutive highlights lecture at SNM. Wagner is considered one of the founders of nuclear medicine and is a past SNM president. “Three major fields – molecular imaging, genetics and pharmacology – will be the major forces characterizing medicine, particularly in the United States and extending out to many other countries.”
SNM chose this fused image as the “Image of the Year.” It shows the exact location of the prostate (red) using CT and SPECT and was developed by D. Bruce Sodee, M.D., and Zhenghong Lee, M.D. of the University Hospitals of Cleveland/Case Western Reserve University.
While industry observers in past years have gauged the popularity of the imaging modalities by the number of procedures per thousand patients, Wagner believes that barometer will change in this decade.
“In my opinion, in 10 years, that question will be inappropriate, because 60 percent of all imaging studies will be fused images,” he predicted. “In many cases, if not most cases, you need the structural information and the chemical information.”
Wagner credited what he described as the “tremendous advances in computer technology” for the advent of fusion imaging. “You can fuse any type of image,” he added, “because it is put into a digital domain and you do what is called co-registration of the image.”
CT, MRI and SPECT
Sodee began to investigate co-registration of CT and MRI with ProstaScint SPECT to superimpose the site of SPECT metabolic activity on the same CT/MRI anatomic image. The team was able to fuse the two images and present the data in virtual 3D, resulting in a significantly clearer image of the tumor’s size and its exact location.
“Working with the brachytherpist, we were able to put more seeds exactly where the cancer was,” Sodee said. “Before we [imaged] with co-registration, we were blind.”
Nuclear medicine’s PET
The value of PET was shown in a study on Alzheimer’s disease by a team of researchers at the UCLA School of Medicine, headed by Daniel H. S. Silverman, M.D.
The study involved assessing the occurrence of genetic and educational risk factors in people undergoing brain PET for mild memory complaints. Patients ranged in age from 51 to 86, dividing them into two groups – those with college degrees and those whith less than 16 years of education. PET images were analyzed to determine metabolic activity throughout the brain and regressional calculations were made to estimate the average regional brain metabolism at age 20 for each group.
“The current study, though not conclusive, suggests that neuronal decline may begin many decades prior to the clinical onset of dementia, early enough to affect education level,” Silverman said. If confirmed by subsequent research, the findings eventually may be used to support initiation of emerging preventive measures in young people at elevated risk for Alzheimer’s disease.
In another UCLA study, the use of PET images resulted in a change in treatment in 20 percent of women suspected of having breast cancer. In a survey of 98 referring physicians’ cases, 33 percent of patients had their cancer restaged, 21 percent had their cancer stage upgraded and 12 percent had their cancer stage downgraded.
While PET has propelled nuclear medicine’s resurgence over the last two years, fusion imaging is fueling a second round of hearty interest in the modality.
Equipment manufacturers are positioning their product lines to capture the clinical enthusiasm.
GE Medical Systems (GEMS of Waukesha, Wis.) appears to have the inside track to facilities looking to become early riders on the fusion imaging bandwagon.
GEMS’ Hawkeye is the first FDA-cleared imaging system that merges anatomical and functional images through the combination of CT with SPECT and PET. Hawkeye debuted as a works-in-progress at SNM ’99 as functional anatomic mapping.
“We look at the total global opportunity in functional imaging to be about $1 billion,” said Beth Klein, general manager of GEMS’ global nuclear/PET business. “That is driven by explosive growth in PET, largely here in the U.S. due to the reimbursement that came at the end of last year. It is also due to the emerging segment that is being created as result of combining functional imaging of PET and SPECT with anatomic mapping.”
Hawkeye has been installed in six institutions around the world, performing some 1,500 studies.
“We expect to have more than 50 Hawkeye systems up and operating around the world by the end of this year,” added Klein.
The average selling price is expected to range from $650,000 to $700,000. Hawkeye also will be available as an upgrade to GEMS’ Millennium VG system. The upgrade would carry an average selling price of $275,000 to $300,000.
GEMS also launched its Millennium MC, a next-generation, fixed-angle imaging system designed for nuclear cardiology. The system has a small footprint, which can fit a room 11 ft. by 11 ft. and is upgradeable to a variable-angle general purpose system.
Millennium MC also offers GE-patented Digital CSE detectors and ATC attenuation correction to help reduce cardiac SPECT artifacts.
Millennium MC has an average selling price of $275,00 to $300,000, depending on options.
With the PET market burgeoning, GEMS expects to ship some 100 Advance systems this year. Klein estimates that half of those shipments will be for mobile applications in the U.S. As of SNM 2000, GEMS had approximately 20 orders on hand; approximately eight mobile Advance systems had shipped as of then.
On the brink
Clinical studies have been underway in Rennes, France, since April and the camera is pending FDA 510(k) approval. SMV anticipates clearance sometime this month, taking orders by the end of this year and installations in the early part of 2001.
Lonnie Mixon, SMV’s vice president of marketing, said the company plans to have three PosiTrace installations at clinical sites in Europe this year and two sites eventually in North America.
PosiTrace expects to sell for less than $1 million.
SMV also expanded its line of gamma cameras to include the new DSi, a single-head version of its dual-head DSTi system. DSi, designed for nuclear cardiology, is directly upgradeable to the DSTi.
Mixon estimated that the single-head gamma camera market accounts for 35 percent of all nuclear medicine camera sales. The DSi falls in the $250,000 price range, while the DSTi is approximately $350,000.
At SNM 2000, Siemens Medical Systems Inc. (Iselin, N.J.) showed a works-in-progress PET/CT imaging system, which has been under development under the direction of David Townsend, Ph.D., at the University of Pittsburgh Medical Center (UPMG) for the last three years.
With the conclusion of two years of image acquisition, Siemens is assessing the clinical value of the system, which uses technology from Siemens and CTI Pet Systems Inc. (CTI of Knoxville, Tenn.).
“This is taking our premium CT scanners – such as the Siemens Emotion – and marrying them with our top-of-the-line PET scanner, the E.Cat HR Plus,” said Randy Weatherhead, Siemens’ vice president of nuclear sales and marketing. “Marrying a CT and a PET scanner on one system means the patient is on the same table. You didn’t move the patient from CT to the nuclear department, so the registration of those two images is very precise.”
Siemens plans to install approximately 10 systems next year at clinical sites.
The company also unveiled its seventh addition to its e.Cam line. The e.cam duet is a dual-purpose gamma camera designed for PET or SPECT applications. The unit features a new one-inch, etched, sodium iodide crystal – supplied by Bicron (Solon, Ohio) – and high-speed electronics designed to increase system sensitivity and coincidence count rate.
“This camera gives you about a ten-fold count rate boost over the first generation with a 3/8-inch [sodium iodide detector] system,” Weatherhead added. “It also allows us to do routine procedures, such as cardiac and bone, off the same camera with very good performance.”
Siemens estimates the average selling price for the e.cam duet in the range of $600,000, depending on options. Shipping is set to begin in the third quarter.
Marconi Medical Systems is back in the single-head gamma camera market with its Meridian.
Given that worldwide sales for single-head cameras average 400 to 450 units annually, Marconi still needed to be a player in the single-head market, said Josh Gurewitz, marketing manager for Marconi’s nuclear medicine division.
Meridian is the first gamma camera to be produced outside of Marconi. The system is designed and manufactured by Danish Diagnostic Development (Denmark) to be a small, general purpose imaging unit, capable of functions such as SPECT, gated SPECT, general cardiac and renal applications.
Marconi received FDA 510(k) marketing clearance in early July. The company plans to begin deliveries in September.
The Meridian in basic configuration will list for approximately $240,000 to $250,000.
Marconi also unveiled gPETAZ. AZ is short for AZTec, or adaptive zoning technology. AZTec uses a unique integration and rejection algorithm to capture a great number of “true” coincidence events, improving image quality and lesion detection. On Marconi’s Axis gamma camera, the addition of gPETAZ more than doubles the count rate, while it more than triples the count rate on the Irix gamma camera.
gPETAZ was set to go into production in June. It will be an option on the Axis and Irix.
Marconi also unveiled its Image Fusion 2 (Image Volume Registration) to help physicians integrate multi-modality image data, such as merging CT or MRI with functional images from SPECT or coincidence data. The fused images would be used for simulation and treatment planning for oncology, neurology and cardiology applications.
The new generation of image fusion software offers completely automated registration between the different modalities and enhances the user interface.
Image Volume Registration is going into beta trials in the U.S. and Europe. A commercial release is planned for August.
ADAC Laboratories Inc. (Milpitas, Calif.) unveiled its new CPET Plus, which will replace models in the company’s current CPET line. ADAC has installed 29 CPETs since the product’s introduction two years ago at SNM ’98.
CPET Plus offers enhanced processing speed – 2.5 times faster than the original CPET – and new electronics that allow for additional features, such as simultaneous reconstruction and acquisition.
CPET Plus carries a list price between $1.7 million and $1.8 million, approximately 10 percent greater than its CPET predecessor. ADAC was set to begin shipments of the new CPET Plus by July. A hardware/software upgrade is available for current CPET customers.
ADAC also exhibited its Vantage Pro, the next generation in the company’s Vantage non-uniform attenuation correction line. Vantage Pro has new algorithms that were developed in conjunction with Emory University (Atlanta) and Cardiology Consultants Inc. (Kansas City) and new features, such as iterative transmission image construction and automated quality control tools.
Vantage Pro also will be available as an upgrade package to Vantage’s installed base. ADAC anticipates a third-quarter release for Vantage Pro.
The company also touted CeSAR, or Cedar Sinai Automatic Reporting, being developed at Cedar-Sinai Medical Center (Los Angeles). The works-in-progress automatic report generation product has been under development for almost a year at Cedars; ADAC began its co-development in March.
Mobile PET modality on the upswing
With real estate, the key is location, location, location.
In today’s positron emission tomography (PET) market, ask vendors what’s hot and the answer is mobile, mobile, mobile.
As more and more healthcare providers see the clinical benefits in the advance of PET technology and reimbursement approvals – especially in oncology applications – more facilities are looking to utilize the modality.
Because dedicated PET systems carry a seven-figure price tag and patient traffic for PET is meager compared to the more established modalities, facilities are opting for periodic mobile PET services to image patients and test demand.
Geoffrey A. Smith, president of Medical Coaches Inc. (Oneonta, N.Y.), sees today’s mobile PET market mirroring that of MRI in the late 1980s, when the use of that modality was novel and facilities were gauging its applications and potential.
“[PET] is technically intensive and you need people who understand the system,” he said. “There are a lot of sites that don’t have enough patient population to warrant buying a fixed-site system.”
Medical Coaches was among the vendors at June’s 47th annual meeting of the Society of Nuclear Medicine in St. Louis. The company exhibited a mobile unit owned by PET Scans of America (Fort Lee, N.J.). On board was a mobile CPET system from ADAC Laboratories Inc. (Milpitas, Calif.).
The number of mobile PET trailers currently on the road is expected to grow considerably over the next 12 months.
Alliance Imaging Inc. (Anaheim, Calif.) – which has a fleet of some 370 medical imaging-related mobile units – has one mobile PET trailer in service in southern California and is set to launch a second trailer. Jay Mericle, executive vice president of operations, says several new units are under construction and Alliance hopes to have four or five mobile systems operating before the end of this year.
Mobile P.E.T. Systems Inc. (San Diego) has five mobile units in the U.S. and one fixed site in London.
“We are taking delivery of another 12 to 15 systems before year-end in the U.S. and Europe; 80 percent [in the U.S.] and 20 percent [in Europe],” added Mobile P.E.T. President and CEO Paul J. Crowe. “We’ll probably put into operation another two or three fixed sites, probably in the U.S.”
Alliance’s Mericle said that he has yet to see a preference among healthcare providers for one type of mobile technology over another.
“It is too early in the cycle,” he added. “We don’t see a lot of people having strong equipment preferences. They are more interested in having the technology. I think the perception by most of the market is that the manufacturers do excellent work and it is almost a non-issue in a lot of cases. In MRI, [the equipment manufacturer] is the first question. In PET, it is about the fourth or fifth question.”
If there is one factor that will limit the early growth of the mobile PET market, it is access – or lack of it – to fluorodeoxyglucose (FDG), the sugar-based, positron-emitting radiotracer used in PET imaging. FDG has a short life of just a few hours. That situation forces mobile companies to stay within a route where FDG is available in a reasonable amount of time.
“I think over the next six to 12 months that will change quite a bit,” said Crowe. “There are a number of companies that are developing and installing cyclotron facilities, so that is a short-term problem.”
In addition, many equipment vendors are helping isotope companies develop more facilities to make PET more successful. “It is professional competitiveness, if you will,” Crowe added. “I think everybody is working to bring PET up on the radar screens of more clinicians and consumers. As the tide rises, all the ships come up.”
And it will mean more business for mobile PET trailer manufacturers, such as Medical Coaches.
“The manufacturers of mobile units today are very, very good – even our competition,” said Medical Coaches’ Smith. “We have to be. It is not an easy business. The major manufacturers – ADAC, Siemens, GEMS – make sure we are qualified.”
Smith estimated the cost of a mobile PET trailer at $270,000 to $335,000.
GEMS, Siemens each take stake in Imarad
How promising is the potential for cadmium zinc telluride (CZT)-based gamma ray detector technologies and materials?
GE Medical Systems (GEMS of Waukesha, Wis.) and Siemens Medical Systems Inc.’s Nuclear Medicine Group (Hoffman Estates, Ill.) are convinced enough of the possibilities that both companies have acquired an equity stake in Imarad Imaging Systems Ltd. (Rehovot, Israel).
Imarad has been involved in the development of CZT, an advanced detector technology used in nuclear medicine cameras, since the mid-1990s. GEMS and Siemens both have been working with Imarad on the solid-state detector technology for some time.
Neither company would confirm the amount of their stakes in Imarad, other than to say they have invested an equal amount of money.
“[Imarad] told us they think they are a year to 18 months ahead of the competition,” said Beth Klein, general manager of GEMS’ global nuclear/PET business. “We took an equity stake in [Imarad], because we are very hopeful about what this technology can mean and we want to help accelerate the development of the technology.”
Siemens said its partnership with Imarad may allow the company to introduce this technology much more quickly than if it continued its CZT-based research on its own. Randy Weatherhead, Siemens’ vice president of nuclear sales and marketing, said Siemens’ collaboration with Imarad is three years old.
Klein said GEMS has what she described as “an early mock-up” of what the CZT-based technology could produce in terms of a very small portable camera.
Positron stages comeback with mPower PET scanner
Positron Corp. (Houston) well might borrow and paraphrase from Mark Twain, who once wrote that reports of his death were greatly exaggerated.
Thanks, in part, to an infusion of capital from Imatron Inc. (So. San Francisco) over the past two years, Positron again may become a force in the nuclear medicine imaging market.
Positron is looking to ignite its market rally with the introduction of its new mPower PET scanner. The camera was unveiled at the 47th annual meeting of the Society of Nuclear Medicine (SNM of Reston, Va.) in St. Louis.
mPower, which provides imaging for oncology, neurology and cardiac applications, is an enhanced version of Positron’s Posicam HZL design for whole-body applications. mPower replaces the now former Posicam.
“Now, we can offer a complete system for oncology, neurology and cardiology – all the reimbursable applications,” said John Ariatti, Positron’s vice president of sales and marketing.
mPower’s hardware and software is designed for greater patient throughout – whole-body imaging in one hour – and a 16.6 cm field-of-view with software that provides the capability for segmented attenuation.
Positron hopes to ship a dozen mPower systems before the end of this year. mPower has a list price of $1.75 million.
The company also is looking to expand to Japan to solicit orders and eventually market mPower to the rest of Asia. In the United States, Ariatti said the plan is to expand in the fixed-site and mobile markets. In Europe, Positron expects to have the CE Mark for mPower’s marketing clearance next year.
“We are looking at doing almost twice as much business next year as the company has done cumulatively in the last 15 years,” Ariatti predicted. “We just need to keep getting the word to all in the industry that Positron is back – and we are not just cardiac; we do all applications.”
Positron’s comeback began in April 1998, when electron-beam CT scanner manufacturer Imatron offered loans of up to $500,000 to Positron to help the financially strapped company meet its financial obligations.
In January 1999, Imatron acquired 9 million shares of Positron common stock and a controlling interest in the company.
By August 1999, Positron and Imatron closed on the private placement of 42 million shares of Positron’s common stock for $12.7 million. Positron also issued 21.5 million five-year warrants as part of the transaction. Positron intended to use the proceeds for working capital to begin manufacturing and marketing a PET scanner. Some proceeds were to be used to repay Imatron’s $600,000 working capital loan and interest, going back to May 1998.
At the time, Imatron’s goal was to recapitalize Positron and eventually pare down its majority stake in Positron.
Today, Imatron CEO S. Lewis Meyer sits as Positron chairman. Ariatti estimated Imatron’s minority stake in Positron at 16 percent.
Echocardiography takes center stage at ASE
The 11th annual scientific sessions of the American Society of Echocardiography (ASE of Raleigh, N.C.) took the spotlight in July in Chicago, as the event prompted several major ultrasound vendors to unveil new products.
GE Medical Systems (GEMS of Waukesha, Wis.) released its new Vivid ultrasound platform, which includes the Vivid 3 and Vivid FiVe ultrasound systems. Both products are the result of GEMS’ 1998 acquisition of Diasonics Vingmed Ultrasound Ltd. (Haifa, Israel).
GEMS’ Vivid 3 system in use (left), and a screen shot from GEMS’ Vivid FiVe ultrasound system (right).
The Vivid 3 system is a portable digital cardiovascular ultrasound system aimed at physician offices and clinics. Features on the system include color Doppler, coded octave harmonic imaging and Smart Zoom, which allows users to magnify a specific cardiac structure and reference its original location. The Vivid 3 also features access to stored ultrasound image data during an exam.
The all-digital Vivid FiVe is based on the System FiVe from Diasonics Vingmed and offers tissue tracking and a new real-time visualization tool to aid cardiologists in diagnosing and monitoring coronary artery disease. Other features include contrast imaging and 4D imaging.
Agilent Technologies Inc.’s Healthcare Solutions Group (North Andover, Mass.) debuted its UltraVision package for its Sonus 5500/4500 digital echocardiography systems. The UltraVision package includes power modulation, a new digital signal-processing technique, which increases the signal-to-noise ratio and improves contrast imaging for left ventricular opacification and myocardial contrast enhancement for research applications.
UltraVision also employs a new s3 ultraband transducer to generate larger signals more uniformly through the image, a new curved linear transducer with harmonic imaging and a new soft echo enhancement imaging modality.
Agilent also introduced expanded capabilities for its EnConcert echocardiography information management system. New features include connectivity enhancements, improved image handling, expanded measurements and more flexible reporting options. New DICOM network capabilities allow EnConcert users to import spatially calibrated images from third-party ultrasound systems, while a new Web server option allows clinicians to view finalized reports, compressed images and loops with a standard Web browser.
Acuson Corp. (Mountain View, Calif.) exhibited its new Cypress echocardiography system at ASE and announced that it began shipping the product in North America. Cypress is a portable system (under 20 pounds) for use in echocardiography exams, including stress echo. It is designed with the DICOM communications standard embedded in the system.
For its part, ASE launched its new Web-based education program, ASEUniversity. The site provides CME courses and educational information to physicians and technicians studying echocardiography.
“Unlike many fields of medicine, echocardiography often requires the use of video, color and 3D images, which are difficult – if not impossible – to relate in the form of textbooks and journals,” said Harry Rakowski, M.D., president of the ASE in a prepared statement.
The ASE University site is being developed with assistance from e-health firm Conceptis Technologies Inc. (Montreal).
On the clinical side, one study showed that diagnosing women with chest pain could require different methods than diagnosing men. A study at the Kingston General Hospital and Queen’s University (Kingston, Ontario, Canada) found advantages to using more than one type of stress test for female patients with undiagnosed heart pain.
During the study, the 101 women in the group were randomly assigned to one of three testing methods: traditional treadmill electrocardiographic stress testing, exercise echocardiography using a treadmill, and stress echo using Dobutamine, a drug that mimics the effects of exercise. If a patient’s condition could not be accurately assessed using one of the tests, additional tests were given.
Results showed that using multiple tests lets physicians make a definitive diagnosis in all of the subjects while patients who underwent a traditional EST test were only diagnosed definitively 64 percent of the time before moving on to other tests.
Another study showed that using echocardiography to measure heart volume can identify the risk of stroke in older patients. Researchers at the Mayo Clinic (Rochester, Minn.) found that the size of the left atrium in a patient’s heart can predict the patient’s risk of stroke and other adverse conditions, possibly more accurately than other predictors including age.
Results from a study at the fetal echocardiography lab at Children’s Hospital of Philadelphia showed that 57 percent of twins with twin-twin transfusion syndrome (TTSS) had cardiac abnormalities. TTSS occurs when both fetuses share the same placenta, often causing one fetus to grow faster than the other. The study also found 13 percent of TTSS fetuses had structural abnormalities, most often in the right side of the heart.
Philips Medical buys CardioLogica image management system software
Philips Medical Systems North America (Shelton, Conn.) has strengthened its Inturis image management system through the acquisition of the CardioLogica cardiology information and image management software from the former Cardiovascular Computer Systems Inc. (CCS of Milwaukee).
The deal is a unique arrangement under which Philips owns the intellectual property for CardioLogica, but did not take a stake in CCS. Instead, CCS reorganized in the wake of the deal, renamed itself CadioLogy Software and will contract with Philips to continue development and support on CardioLogica.
The product allows cardiology images and information to be integrated into one electronic patient folder and provides modules for patient scheduling and report generation. It also integrates images with reports, records and hemodynamic data.
Philips plans to integrate the product as the centerpiece of its Inturis for Cardiology image and information management system.
The deal allows CardioLogica to be developed further with Philips’ backing, but also ensures CadioLogy Software will be keep its independence.
Ben Swahn, director of sales and marketing at CardioLogy Software, told Medical Imaging that his company had seen too many small companies be acquired and broken up in the process. CardioLogy Software did not want to see the same thing happen in this case.
“It’s easy to buy a company and integrate that company or bits and pieces into the larger company,” said Swahn. “Unfortunately, you often lose a lot of talent that way and I think one concern on both sides was we didn’t want to repeat that mistake. We’ve been writing software in the same specific niche for 10 or 15 years, so that’s a lot of know-how in one place and we’re all intact now.”
Financial details were not disclosed.
Imco makes its first acquisition as independent
Six months after it was created through a management buyout last December, Imco Technologies Corp. (Pewaukee, Wis.) completed the acquisition of Information Technology Products Inc. (ITP of West Chicago, Ill.), a privately held medical software company.
Imco is the former U.S.-based subsidiary of PACS supplier Rogan Medical Systems BV (Zeist, The Netherlands). Last December, Imco’s employees crafted a management buyout and changed the name of the firm to Imco (Image Management Co.).
“The biggest thing that this acquisition will bring will be people,” said Mark Schwartz, president and CEO of Imco.
An undisclosed number of ITP sales, marketing and engineering employees will join Imco to strengthen the company’s workforce. Among those coming to Imco is Allan Malesh, the former head of ITP, who has been appointed vice president. Financial details of the agreement were not disclosed.
The ITP acquisition is expected to contribute to Imco’s image management and teleradiology product lines with expanded technologies for a broader product line for smaller hospitals and imaging centers.
Schwartz said the acquisition also will bring Imco into new geographic areas and new product areas. “They work in some non-medical areas including industrial and veterinary markets which are markets we were looking to get into,” he added.
According to Schwartz, the transition to privately held company has been going well. “[Being independent] allows us to develop products totally in-house and look at partnerships and relationships and acquisitions like ITP,” he said.
In March, the company unveiled its Imco-RAD PACS product line. Schwartz said the new line is a combination of internally developed products, as well as products developed from partnerships with other companies, including Rogan.
Toshiba to send MRI to Japan
Another U.S.-based medical imaging subsidiary looking to improve its bottom line has decided to move manufacturing overseas.
Toshiba America Medical Systems (TAMS of Tustin, Calif.) has unveiled plans to relocate its South San Francisco MRI manufacturing operations to Nasu, Japan.
John Zimmer, vice president of marketing for TAMS, said the company is trying to consolidate engineering and manufacturing operations with those in Japan to take advantage of economies of scale.
Zimmer said the global popularity of open MRI, which was manufactured in the So. San Francisco plant, confirmed the need to move the manufacturing.
“The price points you need to cover around the world are different than those you need to cover in the United States,” he added. “We have just restructured the Opart [open MRI] line to address those price points.”
In the wake of the manufacturing move, Toshiba revealed plans to expand its U.S.-based research and design center beyond MRI to encompass CT, X-ray, vascular and ultrasound R&D. The U.S. R&D will work in concert with its counterpart in Japan.
Much of the clinical development on the Toshiba product line occurs in the United States, so the new R&D facility will focus on clinical applications and software design. Zimmer said the newly expanded R&D site will cover all modalities and “allow us to build stronger relationships with the luminary institutions here in the U.S. It’s difficult to have a long-term relationship with an institution when we’re separated by the ocean.
“You have to get the leverage by consolidating functions, such as engineering and manufacturing, while maintaining a significant local presence where there’s value,” Zimmer said.
David Kramer, Ph.D., TAMS’ chief scientist, will head TAMS’ new R&D center.
There are 140 employees at the manufacturing site, but some may be reassigned to the R&D center. The R&D center will start at 40 people and is expected to open later this year.
Agilent to move device making to Singapore
The details aren’t worked out yet, but Agilent Technologies’ Healthcare Solutions Group (HSG of Andover, Mass.) is planning to move the manufacture of certain ultrasound and defibrillator products to a manufacturing plant in Singapore.
According to an HSG spokesperson, the move is part of Agilent’s overall plan to consolidate its worldwide manufacturing from 41 global sites to six and 10 “strategic megasites” around the world. The operations will perform final assembly of multiple product lines. Singapore is the first of those sites and will manufacture healthcare and other products.
The announcement came in July, one month after the release of Agilent’s quarterly financials, which revealed a 9 percent decline in HSG revenues for the three months ending April 30. HSG officials feel the move to the Asian site helps control costs and makes competitive sense, because Agilent is at a disadvantage when competing in the Asian market against Asian-based competitors.
Agilent CEO Ned Barnholt said the company will invest hundreds of millions of dollars into the new facility and the company’s Asian presence. More than half of Agilent’s revenues come from outside the United States.
“We’re looking at a three-year timetable to get up to full capacity, but that’s just the beginning,” Barnholt told a news conference.
The decision on exactly which products will move to Singapore will not be made until August. Each division will decide which products to send overseas, based on available suppliers and labor.
Agilent stressed that it will move only the final assembly portion of the manufacturing process overseas and will maintain a manufacturing supply chain organization in Andover. The company also clarified that it will not move any R&D operations overseas.
The first ultrasound and defibrillator products are expected to roll off the Singapore line early next year.
Trex, NABCO sponsor mammo survey
Trex Medical Corp. (Danbury, Conn.) joined with the National Alliance of Breast Cancer Organizations (NABCO of New York) to sponsor a survey of women and their mammogram-scheduling habits.
Trex’s involvement stems from the company’s “Vision of Health Initiative,” a philanthropic program unveiled last October with the selection of NABCO as its first $100,000 grant recipient.
The survey, conducted in March, polled 317 women nationwide over age 40. Fifty-seven percent of the respondents have an annual mammogram every 12 months. However, 29 percent admitted delaying mammograms, either going irregularly or allowing up to 18 months to pass between exams, because they forget to schedule the appointment.
In an effort to encourage women to schedule annual mammograms, the Trex grant will bolster NABCO’s existing E-Mail Reminder, an online service that reminds women to make their mammogram appointment.
NABCO Executive Director Amy Langer said women register at the NABCO Web site after each mammogram, and 10 months after the date of their last exam they receive an E-mail reminding them to make their next appointment. Women can also register with NABCO by clicking on the NABCO icon carried on the Trex Web site.
While the E-Mail Reminder program has been in existence for several years, the money from Trex will help expand the program and enable it to attain a higher profile, Langer said.
Ira Miller, senior vice president of marketing and sales at Trex, said that Trex has provided NABCO with half of the $100,000 to date. While the initiative is a one-year commitment, he said he would like to see the relationship between Trex and NABCO continue.
HCMI seizing opportunity in radiographic equipment market
When the management of Health Care Manufacturing Inc. (HCMI of Springfield, Mo.) decided two years ago that they would begin manufacturing its own low-end radiographic equipment, they thought Trex Medical Corp. (Danbury, Conn.) and its Bennett X-ray subsidiary would be its biggest competitor.
Today, the 12-year-old HCMI is manufacturing and shipping its own radiographic products, while Trex struggles to find a suitable buyer for its radiography and mammography equipment and faces the possible breakup of its operations. In February, Trex’s parent company, Thermo Electron Corp. (Waltham, Mass.), announced its plans to sell Trex as part of a large corporate restructuring.
“I think if someone had voiced a year and a half ago that Trex would be out of business, everyone in the room would have laughed in their face,” said Rodney Moulder, president of HCMI.
HCMI is no stranger to Trex. In fact, since 1996, the company has had a deal with Bennett to private-label radiographic equipment. When that deal expired in August 1999, HCMI did not renew its contract, because the company felt that it could manufacture and sell its own equipment and steal a piece of market from the well-established Trex.
Moulder feels the large gap left in the radiographic equipment industry by Trex’s problems makes it the perfect time to enter the market with its own equipment. HCMI has shipped 60 radiographic rooms since it began manufacturing in January, targeting the low-end equipment market with a 110V stored energy model and an automatic exposure control feature.
HCMI also is developing an orthopedic room with a freestanding tube stand and float top radiographic table. The company hopes to release that product by November, in time for the annual meeting of the Radiological Society of North America (Chicago). Right now, HCMI has no plans to develop a digital radiography system, because the company feels the price of the equipment is much too high for its customer base.
“There is a huge demand for basic radiography equipment that is not being met properly by the existing manufacturers,” said Moulder “We believe the international market will welcome this line of equipment to their markets. The company now is testing its equipment to Underwriters Laboratories standards.”
Advanced Magnetics moves closer to FDA clearance for Combidex
Advanced Magnetics Inc. (Cambridge, Mass.) has received an approvable letter from the FDA for use of the company’s Combidex MRI contrast agent in lymph node imaging. The product was deemed unapprovable as an agent for imaging the liver and spleen.
Combidex is designed to assist in the non-invasive diagnosis and staging of metastatic cancer in lymph nodes. The new drug application (NDA) covers the diagnosis of lymph node disease to assist in directing biopsy and surgery and to assist in the staging of metastatic lymph node involvement for a variety of cancers, including breast and prostate cancer.
Jerome Goldstein, chairman and CEO of Advanced Magnetics, said the liver and spleen applications are not a priority for the company, because it has an existing product, Feridex I.V., for those applications. Feridex I.V. has been available for nearly four years.
The FDA noted some areas that need to be addressed before final approval is granted. Advanced Magnetics said it currently is working on those issues. Goldstein declined to provide the details or estimate how long it will take to gain final approval.
“There’s always some kind of issue on labeling or something [the FDA] wants to change prior to final approval,” he added.
Alara gains 510(k) on MetriScan densitometer
Alara Inc. (Hayward, Calif.) is going out on its own.
After several years of offering its products exclusively to OEMs, the company has received FDA clearance for a bone density scanner, which Alara plans to market and sell itself.
The MetriScan is a self-contained, table-top bone mineral density scanner, which uses storage phosphor technology licensed from Fuji Photo Film Co. Ltd. (Tokyo) to produce images of a patient’s hand almost instantly. The product also is cleared for monitoring changes in bone mass over time, allowing physicians to better track the effects of drug therapy on bone density.
Alara was founded in 1994 as DenOptix Inc., but changed its name to reflect its goals. Alara is an acronym for “as low as reasonably achievable,” referring to the company’s attempt to minimize the radiation exposure to patients. Until now, Alara has provided its products to OEMs for marketing under the OEM’s name. The most notable of those deals is a dental computed radiography device marketed by Dentsply International Inc. (York, Pa.).
Alara’s OEM business accounts for its limited name recognition, but company officials hope to change that with its entrance into the bone densitometry field. The firm currently is building a nationwide sales force and establishing distribution channels.
The company is offering MetriScan on a fee-per-use basis to make the product more readily available to its target market, eliminating the need for an up-front investment by the smaller physicians’ offices.
“Basically, we’ll put it in the office and ask the customer to buy 25 scans up front at $20 per scan for the next month,” explained Allan Fleischer, Ph.D., president and CEO of Alara. “If they use them all up in 30 days, they can order additional scans from us. If they don’t use them, they can say they don’t have a big enough practice to justify the cost and we’ll take the product back.”
Alara charges $20 per scan, while the average Medicare reimbursement is $40.
Fleischer said the company plans to market the MetriScan to general practitioners’ offices, mammography centers, and ob/gyn offices.
The reimbursement issues and lack of patient education has made the densitometry market a difficult one to crack.
Ease of use is another issue that Alara hopes will win some customers. The MetriScan uses a patient’s fingers to measure bone density, making the test easier to administer than a hip scan or heel density test. A patient simply places his or her non-dominant hand on the scanner; in 45 seconds, a T-score is calculated.
“We want to make this easy and accessible so the primary-care physicians that know about bone density testing can do it easily,” said Nat Bowditch, vice president of sales and marketing at Alara. “When they’re taking the patient’s weight and blood pressure, they also can take their bone density.”