Firm reports lower sales for third straight quarter Fischer Imaging of Denver scored a major coup this month when it signed an OEM agreement with healthcare giant Johnson & Johnson of New Brunswick, NJ, for sales and marketing of Fischer's
Firm reports lower sales for third straight quarter
Fischer Imaging of Denver scored a major coup this month when it signed an OEM agreement with healthcare giant Johnson & Johnson of New Brunswick, NJ, for sales and marketing of Fischer's Mammotest Plus stereotactic breast biopsy tables. The agreement comes at a crucial time for Denver-based Fischer, which on Oct. 21 reported its third straight quarter of lower revenues due to a sharp decline in OEM shipments to multimodality vendor GE Medical Systems.
GE had been a major customer for Fischer's Tilt-C tilting C-arm until early this year, when the Milwaukee vendor began reducing the number of systems it ordered from Fischer. The drop has dramatically impacted Fischer's revenues, with the company reporting lower sales in its first and second quarters of 1997 (SCAN 4/30/97 and 8/6/97).
That trend continued last week, with Fischer reporting results for its third quarter (end-September) that showed that the company is still waiting for a rebound. Fischer had revenues for the period of $14.6 million, down 30% compared with sales of $20.9 million in the third quarter of 1996. The firm posted a net loss of $3.9 million, compared with net income of $241,000 in the same period a year ago. The third-quarter 1997 results included a one-time restructuring charge of $2.9 million; without it, Fischer had a net operating loss of $984,000.
The lower results are due to the decline in Tilt-C shipments, which continues to hurt the company by contributing to a 50% drop in OEM sales, Fischer executives said. In response, Fischer has restructured by consolidating its manufacturing facilities, and has aggressively sought out new OEM partners.
The agreement with Johnson & Johnson, as well as a similar deal announced this month with biopsy device developer Imagyn Medical Technologies, should help Fischer boost its financial results as well as its competitive position in the table-based breast biopsy market.
Under the terms of the multiyear agreement between Fischer and J&J's Ethicon Endo-Surgery division, J&J's Mammotome breast biopsy device will be adapted to work with Fischer's Mammotest Plus, a biopsy table that enables clinicians to use digital spot mammography to locate and biopsy breast lesions. Johnson & Johnson acquired the Mammotome product when it purchased Biopsys Medical earlier this year (SCAN 5/28/97). Mammotome is a biopsy gun that uses a vacuum technique to excise tissue for biopsy.
Fischer and J&J will jointly handle sales and marketing of the Mammotest Plus/Mammotome systems in the radiology and surgery markets in the U.S. and internationally, according to Anthony DeCarolis, vice president of sales and marketing. Fischer sales representatives will act as table specialists to J&J's interventional breast biopsy specialists, and the company will also handle installation and warranty of the systems. The Fischer table will also be represented at all major trade shows that J&J attends, DeCarolis said.
The agreement finally puts Fischer on level footing with U.S. Surgical and its ABBI breast biopsy system, which uses a U.S. Surgical driver fitted to a table supplied by Trex Medical subsidiary Lorad. Fierce competition with U.S. Surgical was the cause of a drop in Mammotest sales earlier this year, which contributed to Fischer's financial problems.
"If you have a Johnson & Johnson, with their sales force, versus a U.S. Surgical, you are now on equal ground, whereas before we were at a distinct disadvantage," DeCarolis said.
Fischer had been looking for a partner for the past year to give it the same marketing heft that Lorad enjoys through U.S. Surgical, according to DeCarolis. The deal with J&J began to take shape after the Biopsys acquisition, because Mammotome is a natural fit with Mammotest Plus.
The agreement with Imagyn of Newport Beach, CA, does not have quite the potential payoff of the J&J alliance, but it will bring a new revenue stream to Fischer. Imagyn has developed SiteSelect, a breast biopsy driver that will also be fitted to Mammotest Plus. Like ABBI, SiteSelect takes percutaneous core samples of breast tissue, but Fischer and Imagyn believe it is less invasive than ABBI because it removes tissue only around the lesion, rather than from the skin line down. SiteSelect is under 510(k) review at the Food and Drug Administration. Fischer will handle sales of Mammotest Plus/SiteSelect systems to the radiology market, while Imagyn will sell to the surgery market.
Fischer saw Mammotest sales pick up in the third quarter, DeCarolis said, perhaps due to the company's efforts to adapt the table to different biopsy devices. Fischer has adapted Mammotest to fit all breast biopsy drivers, including U.S. Surgical's ABBI, and has filed for 510(k) clearance for an ABBI-outfitted Mammotest. The Johnson & Johnson agreement will not begin to impact Fischer's financial results until the fourth quarter, DeCarolis said.