iCAD sets course to build CAD sales

January 3, 2008

Early next year, iCAD could learn whether it can come to the U.S. market with a computer-aided detection product for Fuji’s computed radiography system for breast imaging or if the company must gather additional data to support a PMA supplement to the FDA for the product.

Early next year, iCAD could learn whether it can come to the U.S. market with a computer-aided detection product for Fuji's computed radiography system for breast imaging or if the company must gather additional data to support a PMA supplement to the FDA for the product.

The outcome, tied to a meeting last week between iCAD president and CEO Ken Ferry and a top FDA official, will directly affect a growth strategy that positions the company's CAD for use with the several hundred Fuji CR mammography units operating at U.S. sites as well as ones that might be sold by Fuji and other CR makers not yet in this marketplace. A good working relationship with the agency is also critical for iCAD products still in the pipeline, including one for CT colonography and another for lung CT.

Toward these ends, executives from iCAD met Dec. 3 with Donna-Bea Tillman, Ph.D., director of the FDA's office of device evaluation, and her staff to appeal a decision made earlier in the year not to approve a PMA supplement application for the company's CAD product as intended for use with Fuji CR mammography. When interviewed at the RSNA meeting, Ferry said he planned to argue that the CAD software--already in use at more than 1300 sites to analyze digital mammograms acquired by means other than CR--should be immediately approved.

"We have a very compelling argument. We have the science to prove it," said Ferry, who at the time had already submitted to the FDA a lengthy document detailing this argument.

In the Dec. 3 meeting, Ferry said he cited agreements with the FDA dating back to 2002 about how the company would do supplements for its FDA-approved digital CAD product.

"We followed that process to a 'T'," he said. "We submitted a data set and performance that was consistent with prior supplements approved for this exact product for use on GE, Hologic, and Fischer [products]."

These supplements, he said, were approved in a few days to a maximum of five months time. By comparison, iCAD submitted its PMA supplement regarding Fuji CR 18 months ago.

"It was a good solid discussion," Ferry said. "They said they would probably have additional questions over the next several weeks and then get back to us in January, probably the middle of the month, either with a decision or some sort of an update."

The company has a lot at stake. Ferry estimates that several hundred Fuji CR systems are performing mammography at U.S. clinical sites. CAD sales to these sites represent substantial revenues, he said, but iCAD will get none of them unless the FDA approves its CAD product for Fuji CR.

"We think there is a tremendous amount of pent-up demand for CAD," he said. "None of these sites has CAD today and that is a huge growth opportunity for us."

If iCAD fails to win immediate approval by the FDA, the company could be forced to gather clinical data to support a new PMA supplement, a process that could take three to six months, according to Ferry. These data would then have to be reviewed by the FDA.

Getting its CAD program approved for CR is a big part of the growth strategy that Ferry has mapped out for iCAD. In addition to its sourcing agreement with Fuji, it has another agreement to supply CAD to Agfa, if and when Agfa receives FDA approval to begin selling its CR mammography system.

Even without these revenue streams, however, Ferry expects to continue building the company's financials, thanks to an agreement with GE Healthcare to supply an FDA- approved version of CAD with GE's digital Senographe systems. Sales of this software have increased iCAD's run rate from $16 million in 2005 to an expected $26 million to $27 million this year, Ferry said.

Full-field digital mammography sales by GE will double this year alone, according to GE executives, who expect growth to accelerate in 2008, when the company opens a new production facility dedicated to FFDM detectors. Ferry expects iCAD to benefit directly from these sales as well as future ones. Last month, GE and iCAD signed an agreement to collaborate in the development of iCAD's software for the Senographe.

Looking to diversify its product line, Ferry is developing a CT colonography package based on software licensed from the National Institutes of Health. Clinical trials are set to begin in the first quarter of 2008 and could take four to six months to complete.

The company is also developing a CT lung CAD program, while exploring opportunities to partner with or acquire companies that have a base in the automated interpretation of breast MR.