Imatron claims its EBT technology finally accepted by medical community

May 10, 2000

Armed with a second FDA approval for its electron beam scanner and three times the sales force of a year ago, company officials at South San Francisco-based Imatron say that after years of trying to sell the medical community on its technology, they have

Armed with a second FDA approval for its electron beam scanner and three times the sales force of a year ago, company officials at South San Francisco-based Imatron say that after years of trying to sell the medical community on its technology, they have record sales to show for their efforts.

Imatron’s earnings have slowly but steadily risen as the company has tried to keep ahead of the big multimodality vendors’ systems with its own CT scanner, which now has approval for lung scanning, as well as heart scanning.

The FDA cleared the lung scanning application of Imatron’s EBT unit last month (SCAN 4/26/00).

Imatron’s first-quarter 2000 revenue rose by 117% to $11.3 million compared to $5.2 million in the first quarter of 1999.

The company posted the highest profit in its history in 1999. Imatron made a revenue gain of $7 million over the previous year, netting $37.5 million compared to $30.7 million in 1998 (SCAN 3/1/00). About $7 million was from service contracts on the scanners, said Imatron spokesperson Robin Kelley.

This is a different story from a year ago, when Imatron’s 1998 year-end revenue was down by 18% from the previous year. Imatron posted a loss of $14.8 million, compared with a net loss of $11.4 million in 1997 (SCAN 4/14/99).

Imatron CEO Lewis Meyer attributes the company’s improved performance to several factors.

The company sold seven scanners in the first quarter of this year. In 1999, it sold 19 for the entire year.

In addition, this year the company has put nearly $1 million more into sales and marketing. Imatron used to have a sales force of five for domestic and international markets; it now has 16 salespeople.

Although Imatron’s quarterly report claimed the company had its highest backlog in history, Meyer declined to be specific about the numbers.

“We don’t like to talk about numbers because a backlog is a moving target. It is changing, but it is changing for the better every day,” he said. “Our official word is we will sell at least 30 scanners this year, compared to 19 scanners in 1999. We also expect revenue to increase 50% over revenue in 1999.”

So far, this improvement hasn’t translated into record stock prices.

But that doesn’t mean Imatron hasn’t been selling stock. The FDA announced its approval for the electron beam angiography technology in November 1999.

When Imatron announced news of the FDA clearance for EBA Nov. 18, 65 million shares were traded and the price rose to $4.75 per share, said an Imatron spokesperson.

Over the last few years, Imatron’s stock has fluctuated between $1 and $8 per share.

“We obviously hope our accomplishments will translate into a higher stock price,” Kelley said.

Meyer said his company is depending on the medical community to get the message out that its ultrafast CT scanner can detect coronary calcifications along with lung cancer. The FDA gave Imatron market clearance for electron beam angiography for low-dose, single-breath-hold lung scanning (SCAN 4/26/00).

As long as there are smokers, there will be a need for this technology, Meyer said. The survival rate in the first year for a person diagnosed with lung cancer is 12% to 15%. He sees Imatron’s scanner as a way to push this figure up to 80%.

“The medical community takes a long time to adopt a new paradigm. There must be some critical mass of peer-reviewed journal articles before people say, ‘Aha, we have something, this is real.’ I would have thought we were beyond that three years ago. It’s surprising to me that it took so long to get to where we are today,” Meyer said.

Meyer refers to the mechanical CT systems offered by GE, Marconi, Siemens, and Hitachi as the “poor man’s effort” in CT production and maintains Imatron’s product is faster, records more accurate sweeps, and produces a better image.

As reported in its year-end 1999 report, Imatron sold 19 scanners that year as compared to 15 scanners in 1998.

CT market analyst Philip Drew said Imatron still has to prove its mettle to become more of an industry leader. Drew noted that although Imatron did improve sales, it doesn’t mean the scanner is becoming a best seller in the industry. Also, the proof that a company is doing well sometimes comes in the form of imitation.

“No one has copied or tried to take on their technology,” he said.

Drew said Imatron did the right thing last year when it exited the service business by selling four of its HeartScan imaging centers.

“They were smart to get out of the service business and concentrate on clinical developments,” he said.

Imatron has moved on to other things. The company owns 16% of Positron, creator of PET scanners and systems (SCAN 2/29/00). Even if the medical community starts to embrace PET and Positron begins to take off, Meyer said Imatron won’t expand its interest or try to acquire Positron.

“I happen to be extremely bullish when it comes to the future prospect of PET,” he said. “But we don’t want to acquire or expand our interest in Positron. We are happy to be a shareholder.”