Advanced NMR revamps operations to boost MR mammography prospects

Major changes are under way at MRI developer Advanced NMR of Woburn,MA. The firm's president, Paul Bullinger, resigned and nearly30 employees were laid off late last month. The moves are intendedto reduce cash outflows while the company awaits Food and DrugAdministration approval of its Instascan echo-planar MRI upgrade.Advanced NMR's dedicated MR mammography project will be spun offinto a separate, soon-to-be-public company.

The restructuring should help Advanced NMR to attempt a trickymaneuver: to launch a second major product development effortin breast MR imaging before earning a return on years of investmentin fast MRI (SCAN 9/25/91). Advanced NMR will form a spin-offcompany to handle development of the mammography system exclusively.

Channeling the two products into separate companies will providenew resources and corporate focus for the breast MRI project,while allowing Advanced NMR to concentrate on selling Instascanonce it is approved, said William Voorheis, new president andCEO.

Advanced NMR has worked with GE Medical Systems in adaptingInstascan to GE's high-field Signa MRI systems. GE, however, continuesto evaluate its fast MRI options. Instascan requires substantialhardware and software changes that contribute to an upgrade costof over $500,000. Other fast MRI alternatives, such as ultrafastgradient-echo techniques, can reach nearly the speed of echo-planarMRI at a lower cost.

While GE has made its Signa installed base available to AdvancedNMR for recruitment of research sites and eventual commercialsale of Instascan, the imaging vendor has not committed itselfto taking on the product as a part of its own line. Three Instascanupgrades have been sold to research sites, which is a slower paceof revenue growth than previously anticipated, according to Voorheis.

Bullinger delved into reasons why Instascan sales were belowexpectations in an interview with SCAN last month.

"We're dealing with prestigious sites that receive systemsfrom GE free," he said. "We're trying to sell them aproduct, and they're scrambling to come up with the money."

Bullinger's resignation was tendered for personal reasons,according to Voorheis, who was formerly manager of manufacturing.Many of the employees who were laid off had held administrativepositions, he told SCAN.

"We had the wrong people in the wrong slots. We had theopportunity to shift around the staff and we took it," Voorheissaid. "Without question, our sales are not where we had projectedthem (because) we thought we would get FDA approval sooner, sothere was a need to conserve cash."

Voorheis predicted that the FDA would act on Instascan shortly,however, after which the company would begin marketing the productaggressively.

"I don't want to give anybody the impression that we're(experiencing) financial difficulties," he said. "Thatsimply is not true."

However, Advanced NMR's financial report for the first quarterof 1992 (end-March) indicates that the company had no revenuefor that period and reported a loss from operations of $1.29 million.Accumulated losses from the company's date of inception in June1983 totalled $16.8 million as of March.

Advanced NMR is hoping that the formation of a subsidiary companywill allow the firm to fully fund its MR mammography programwithout further depleting company resources. Bullinger plannedto finance MRM research and development with profits from Instascan,but sales were too slow to make his plan work.

Clinical trials of the dedicated MR mammography system areexpected to start next May.

Advanced NMR will hold a majority interest in the new company,which tentatively will be named MAM-MRI Image Technology. An initialpublic offering is being prepared, Voorheis said.