Advanced NMR halts InstaScan effort after sluggish sales of EPI package

June 19, 1996

Vendor to focus on breast imaging and MDI unitMRI developer Advanced NMR has announced that it will halt itsmarketing effort for its InstaScan echo-planar imaging product,due to slow sales for the fast-scanning package. The move endsa long and

Vendor to focus on breast imaging and MDI unit

MRI developer Advanced NMR has announced that it will halt itsmarketing effort for its InstaScan echo-planar imaging product,due to slow sales for the fast-scanning package. The move endsa long and often rocky effort by the Wilmington, MA, firm to winacceptance for the technology.

Advanced NMR developed InstaScan for GE's 1.5-tesla Signa scanner,with the cost of an upgrade initially priced at around $500,000.Advanced NMR won Food and Drug Administration clearance for thesystem in August 1992, not long after it was forced to restructureoperations and lay off 30 workers as a result of a cash-flow crunchcaused by the long product certification process.

In 1993, the company's problems appeared to be in the pastafter GE guaranteed that it would buy 100 InstaScan systems orother Advanced NMR products by the end of 1994. Large-scale InstaScanpurchases never materialized, however, and GE eventually developedits own EPI package. The companies restructured their arrangementto focus instead on the development of 3- and 4-tesla MRI scanners,which GE markets and Advanced NMR assembles (SCAN 8/31/94). Thescanners are used for research applications.

Advanced NMR then assumed marketing responsibilities for InstaScanitself, but sales have been disappointing, totaling 10 last year,according to Eileen Kirrane, vice president of corporate communications.Sales have been almost nonexistent this year, with almost allof Advanced NMR's revenues coming from its Medical Diagnostics(MDI) imaging services subsidiary.

Advanced NMR will continue to support its installed InstaScansites but will no longer market the product, Kirrane said. Thecompany may pursue licensing the package to a second-tier MRIvendor that has not developed EPI technology on its own.

Advanced NMR's experience with InstaScan may not bode wellfor other companies marketing their EPI products. Advanced NMRfound that a number of developments conspired against InstaScan,including a lack of insurance reimbursement, a soft equipmentpurchasing environment, and difficulties in training physiciansto use the technology. In fact, Advanced NMR found that physicianswere hesitant to use EPI even when it was installed.

"MDI has equipped certain of its equipment with EPI, andfound there is no desire among the doctors who are served by thatequipment for its capability," Kirrane said.

This reluctance did not apply only to Advanced NMR's EPI products,but to those of other vendors as well. MDI bought two Philipsmobile 1.5-tesla scanners with EPI capability, but has declinedto order EPI on two subsequent scanner orders, due to lack ofdemand by clinicians.

"The doctors think it's wonderful that it's there butthey don't use it," Kirrane said.

Advanced NMR said it would restructure its operations in connectionwith the InstaScan changes but does not expect personnel cutbacks.The company will sharpen its focus in several areas: supportingthe MR mammography development efforts of its Advanced MammographySystems subsidiary, and supplying GE with ultra-high-field scanners.

Advanced NMR will also continue its plan to make Advanced MammographySystems more independent of ANMR. The companies had been planninga merger, but the move was called off after AMS received a capitalinfusion that enabled it to remain independent (SCAN 5/22/96).ANMR still absorbs expenses incurred by AMS, of which it owns61%. Kirrane noted that ANMR would be profitable were it not forabsorbing those losses.

The company's MDI business is performing well, with recordrevenues and strong operating income in the most recent quarter,Kirrane said. Indeed, Advanced NMR's financial picture would havebeen much more dire had it not purchased MDI in 1995 (SCAN 5/10/95).

Concurrently with the InstaScan announcement, ANMR said ithad completed a private placement of $3.6 million in preferredstock with a group of foreign investors. The proceeds will beused to fund MDI's growth, as well as the development of breastimaging clinics using Advanced Mammography's Aurora breast MRIscanner.