UPDATE -- Bracco wins $11.4 M in damages from GE

March 30, 2009

Other headlines: EPIX audit warns of riskIDC revenues plummet from DR

UPDATE -- X-ray contrast case: Bracco wins $11.4 M in damages from GE

Buoyed by last week's U.S. District Court decision, Bracco Diagnostics is anything but shy about saying GE Healthcare used "false and misleading advertising and marketing" to gain an advantage for its Visipaque x-ray contrast agent over Bracco's Isovue product. But how -- or even whether -- the company will use the legal finding in its future marketing of Isovue is a matter of speculation the company is not willing to address, at least not publicly.

"We cannot comment on our ongoing marketing plans," said a Bracco spokeswoman, "but we are pleased with the outcome of the litigation and think healthcare providers have a right to receive accurate scientific information. They have a right to know that the court ruled that GE Healthcare had engaged in false and misleading advertising and marketing."

Although GE efforts allegedly extended to x-ray contrast agents other than Isovue, these agents and their manufacturers were not included in the outcome of the court case because the Italian maker of contrast agents was the only party to the lawsuit, according to the Bracco spokeswoman.

"We are pleased with the award we were given," she said, "which actually represents one of the largest awards for false advertising claims in U.S. history."

GE Healthcare is on the hook for $11.4 million to Bracco Diagnostics after the U.S. District Court for New Jersey ruled that GE used false advertising to win sales for its x-ray contrast agent Visipaque over Bracco's Isovue agent.

Bracco is framing the ruling, handed down March 27, as "one of the most significant false advertising cases to date." Filed in 2003, the litigation revolves around GE's use of a clinical study published that year in the New England Journal of Medicine. The study compared two contrast agents, Visipaque and Omnipaque, both of which were made by GE. Bracco alleged in the court case that GE used the data to claim that its Visipaque was safer than other products not compared in the study, including Bracco's Isovue. GE Healthcare made the advertising claims even though studies by independent researchers, as well as ones conducted by Bracco and GE, demonstrated that they were inappropriate, according to Bracco.

In its decision, the court sided with Bracco, permanently enjoining GE Healthcare from making inaccurate claims and ordered GE to pay damages of $11.4 million, according to a statement from Bracco on the court's findings. GE must also perform corrective actions that include issuing a press release and taking out advertisements to ensure that healthcare providers are informed about the court's findings.

EPIX audit warns of risk

The only commercial provider of an FDA-approved MR vascular agent is teetering on the edge of insolvency. A financial audit of Epix Pharmaceuticals led the company to issue a "going concern" alert on its Form 10-K, filed March 13 with the Securities and Exchange Commission. Despite dedicating more than 10 years to the development of its VasoVist blood pool agent, Epix Pharmaceuticals now is pursuing therapeutic agents, looking to sell off all rights to the MR agent.

IDC revenues plummet from DR

Blaming the global economic downturn and a weak U.S. dollar, digital radiography provider Imaging Dynamics reported a 62.8% drop in revenue in the fourth quarter, ended Dec. 31, 2008, compared to the year earlier quarter. The steep decline in the quarter to revenues of $3,071,181 is continuing, according to the company. Revenues are down 48% so far this year compared to the same time last year. Despite the downturn at the end of last year, the company managed to boost its cash and cash equivalents to $1.1 million from $0.7 million in the previous quarter.

The down market in the last quarter of 2008 produced a loss of $0.08 per share compared to a loss of $0.10 per share in Q4 2007. For the year, the company reported a loss of $0.21 per share on revenues of $16,876,980 as compared to a loss of $0.24 per share on revenues of $32,446,401 in 2007.