Osteo-Technology halts operations

Delays at the Food and Drug Administration forced ultrasound densitometryfirm Osteo-Technology to close down operations in April, saidThomas J. Sherwin, former president (SCAN 10/4/90). The firm continuesto exist and is seeking a buyer.

The Framingham, MA, start-up firm had sold its Signet ultrasoundbone mass analysis device internationally for nearly two years.But the FDA approval process dragged on for three years afterOsteo-Technology filed a premarket approval application (SCAN4/27/88).

"The FDA procrastinated us to death," Sherwin said.

The company had performed fairly well in Italy and Switzerlandfollowing the introduction of the Signet in those countries inJuly 1989. Thirty-seven units carrying $55,000 price tags weresold overseas. A private clinician is testing the system in Japan,he said.

The compact instrument was designed as a preliminary screeningtool for osteoporosis. It employs ultrasound to measure velocitychanges of low-frequency signals as they pass through the patella.The velocity changes provide a measure of bone strength, whichcan be used to identify patients who should be referred for additionaltests on a more expensive, dual-energy x-ray absorptiometer.

Osteo-Technology never got a chance to see how the conceptwould fly in the U.S., however. The FDA blocked its introductionwith a 1987 ruling that the Signet would have to undergo full-blownexperimental testing before commercial approval would be granted,Sherwin said.

Although the agency's orthopedic review panel rejected theapplication in the fall of 1989, the FDA indicated in early 1990that the Signet would be conditionally approved. It reversed itsposition in September with a challenge to the biostatistical methodsused in clinical testing.

"When we got that letter, my board walked out en masse,"Sherwin said.

Venture capitalists Montgomery Medical Ventures of San Francisco,Wind Point Partners of Racine, WI, and Oppenheimer & Companyof New York City spent $7.5 million to get the company off theground after it was organized in 1984.

At this point, Osteo-Technology is neither a going concernnor is it in bankruptcy, Sherwin said. The Signet is in mothballsuntil the product or the company finds a new owner.