iCAD prepares CR mammography CAD for market

March 13, 2008

The director of the FDA’s Office of Device Evaluation has informed iCAD that the agency will approve its SecondLook Digital computer-aided detection software for use on Fujifilm’s computed radiography mammography system (CRm), according to Ken Ferry, president and CEO of the company. iCAD has spent 20 months seeking FDA approval for the software.

The director of the FDA's Office of Device Evaluation has informed iCAD that the agency will approve its SecondLook Digital computer-aided detection software for use on Fujifilm's computed radiography mammography system (CRm), according to Ken Ferry, president and CEO of the company. iCAD has spent 20 months seeking FDA approval for the software.

The ODE director personally conveyed the approval decision to the company in an e-mail, Ferry said. In response iCAD has provided "certain deliverables," which the FDA official found satisfactory, he said.

"Basically we are working on labeling," he said.

The company and the FDA entered this last stage of the approval process in mid-February, when iCAD sent a proposal on labeling to the ODE, according to Ferry. Marked-up copy came back on March 3, he said. The company is planning to file a response March 12.

"Nothing in the edits they put together concern us," Ferry said. "We think we can find some common ground and then it is really a function of whether that is the final draft. If it is, then it's a matter of how long does it take to get all the signatures on the document and get to final approval."

Ferry described recent developments with the FDA in a conference call following the March 6 release of fourth-quarter and year-end financial results that showed growing demand for the version of CAD that the company sells primarily for use on GE Healthcare's full-field digital mammography products.

iCAD reported a 26% jump in revenues in the fourth quarter of 2007, tallying $8.1 million and posting net income of $525,000. For fiscal year 2007, the company, which also sells CAD systems that analyze digitized film mammograms, had total revenues of $26.6 million, which were up 35% over the prior year.

Ferry projected revenues of between $15 million and $16 million for the first half of fiscal 2008, based partly on the still pending sale of SecondLook Digital for use with Fuji CRm systems. About 400 of the systems are currently installed in the U.S., with another 75 to 100 shipping each quarter.

A preliminary study by iCAD of the Fuji CRm installed base at the end of 2007 indicated that about a quarter of the 300 customers had money budgeted for CAD and were ready to spend it when a system became available, Ferry said. The only company with such a system currently in the approval process at the FDA is iCAD.

Following FDA approval, iCAD expects to win over a substantial number of the other installed CRm customers, Ferry said, as well as many of the new CRm installations being made each quarter by Fuji. He estimates an 80% "attachment rate" of CAD to new CRm shipments.

"We won't know for certain until we get experience, but we think this is reasonable, since about 95% of (digital mammography systems with solid-state detectors) ship with CAD," Ferry said.

The percentage of Fuji CRm systems shipping with CAD software could be higher, he said, just as the number of systems produced could increase, as a result of CAD availability.

"We have heard from a number of customers and salespeople that one of the hindrances to selling this form of digital mammography has been a lack of CAD," Ferry said. "It has been a competitive problem for (Fuji), so I would hope this (approval of CAD) would increase their traction in terms of total unit sales and push it into the upper range of 100 per quarter or north of that."

Ferry hopes to have FDA approval in the second quarter, possibly as early as April 1, he said. Shipments of CRm-tailored CAD would begin soon after. He cautioned, however, that final approval is not yet in hand.

"Nothing is over till it's over--until you have the document in hand," he said. "We take the FDA process very, very seriously. We are not trying in any way to get out ahead of it. But we think, based on the direct feedback we have received, that this is going to end up favorably."