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The picture at Imaging3 (IMGG.OB) just got a whole lot uglier.
IMGG dropped a bombshell on investors this week, when it revealed a major setback in its lengthy battle to secure regulatory approval of its Dominion 3-D scanning device. For months, IMGG has indicated that the company simply needed to resolve one minor issue – involving the Dominion’s label – in order to satisfy reviewers at the U.S. Food and Drug Administration. During a conference call with shareholders on Tuesday, however, IMGG reported that it has now fielded more than a dozen questions from FDA staffers who are evaluating the company’s device.
Although IMGG portrayed most of those concerns as minor in nature, the company admitted that two of them call for image interpretations that could take some time to complete. Nevertheless, IMGG expressed confidence that it could find a radiologist – among its own shareholders – to carry out the evaluations soon.
“I have good relationships with many radiologists, many of (whom) are investors, so I don’t think I’ll have a problem finding someone to do a quick review,” CEO Dean Janes stated during Tuesday’s conference call. “It means I’ll probably have to ask a friend, a radiologist, to stick his neck out and do some opinionated work.”
With that assistance, Janes predicted, IMGG should be able to respond to the FDA’s requests by the end of next month.
But at least one expert voiced concerns about that scenario. Charles Rosen, a California spine surgeon who last year appeared on a short list of candidates for the office of U.S. Surgeon General, said the FDA could see possible conflicts in the proposed arrangement. If the radiologist evaluating IMGG’s images owns stock in the company, Rosen noted, he stands to profit by delivering a favorable review.
“It’s up to the FDA – which has changed in the last year or two for the better – to accept only independently validated opinions,” said Rosen, founding director of the Spine Center at the University of California-Irvine. “And it’s pretty clear that this would be a conflict of interest.”
FDA Crackdown
Lately, the FDA has been paying more attention to such issues. In an “unprecedented move” last November, Clinical Trials Advisor reported, the agency scrutinized payments made by Zimmer (ZMH) to parties testing its Dynesys spinal system ahead of a panel vote on expanded use of the device. That panel ultimately voted 5-1 against Zimmer’s petition, the Advisor noted, although it cited safety concerns (rather than financial conflicts) as the primary reason for its actions.
Going forward, the Advisor stated, the FDA plans to examine similar financial arrangements when deciding the fate of other breakthrough medical devices as well.
To be fair, Zimmer sought pre-market approval (PMA) for its Dynesys system through a rigorous process designed for truly revolutionary products. In contrast, IMGG has submitted its Dominion scanner for review under the less onerous 510(k) process designed for devices that are “substantially equivalent” to products already on the market. Based on comments made by IMGG during Tuesday’s conference call, however, the FDA may have preferred to see the Dominion – which the company itself portrays as one-of-a-kind – reviewed under tougher PMA guidelines instead.
“I think they’re trying to make it lean more towards a PMA-type application,” Janes said, when discussing the FDA’s new request for professional interpretations of the Dominion’s imagery. “There are some things I don’t quite agree with. (But) I’m 100% confident we’ll get through this.”
If the FDA actually demands a full-blown PMA review for the Dominion, however, IMGG could face a long and expensive battle ahead. On average, Rosen estimated, device makers spend four to five years – and $15 million to $20 million – securing approval of breakthrough products through the PMA process.
With its limited resources, IMGG fully intends to keep pursuing clearance for its Dominion scanner through the 510(k) process instead. Although IMGG still hopes to win approval of the device in the near term, the company has already indicated that it will keep trying – regardless of the timeline – until it ultimately succeeds.
“If they accept our submission – and move forward with that submission – we could have it approved by the end of the first quarter,” Janes stated on Tuesday. “A 510(k) doesn’t just get rejected outright … You can file a 510(k) forever.
“We’re going to move forward,” he emphasized. “And we are going to get this approved.”
Investor Pain
Some IMGG investors have given up on the company already, however.
Since IMGG first disclosed its latest regulatory setback on Monday, the company’s stock has lost more than one-third of its value. The shares – which fetched almost $2 apiece at the height of investor optimism in mid-November – plummeted almost 25% during Tuesday’s session alone. The shares ended the day at just 45 cents, their lowest closing price since the big run-up began last fall.
Loyal IMGG investors were desperate for relief even before that massive plunge. When IMGG hosted its previous conference call, back in December, the company’s stock still fetched around $1.20 a share. With management virtually silent since that time, however, IMGG had fallen below 75 cents on concerns about the company and its device.
During Tuesday’s conference call, IMGG shareholders – including Janes himself – blamed recent articles by TheStreetSweeper for at least part of that decline. In recent weeks, TheStreetSweeper has raised multiple concerns about IMGG and its Dominion scanner. Lately, it has dwelled on IMGG’s failure to share images produced by its new scanner in particular.
“Our stock took a big hit,” one shareholder complained. “We have a lot of money invested, (and) you were nowhere to be found.
“How much would it hurt us to show them some kind of images?” he continued. “We’re with you, (but) they need some kind of proof.”
In response, Janes reiterated an earlier promise to share Dominion-generated images on the company’s official website. At the same time, however, he said that the company has higher priorities – topped by preparing its FDA response – right now. Ultimately, he portrayed IMGG critics as mere short-sellers looking to profit on declines in the company’s share price.
Janes also took a critical view of ordinary investors who, worried about the company, liquidated long positions in the stock as well.
“Good riddance!” he declared. “We’re better off getting rid of that type of fickle investor in the first place.”
Since TheStreetSweeper first began scrutinizing IMGG, the company has lost more than $300 million of its market value. Shareholders who sold IMGG after reading TheStreetSweeper’s original report escaped a 65% hit to their investment. TheStreetSweeper itself (including board members and employees) never took a financial position – short or long – in the company’s stock at all.
* To contact Melissa Davis, the author of this story, please send an email to editor@thestreetsweeper.org.
The picture at Imaging3 (IMGG.OB) just got a whole lot uglier.
IMGG dropped a bombshell on investors this week, when it revealed a major setback in its lengthy battle to secure regulatory approval of its Dominion 3-D scanning device. For months, IMGG has indicated that the company simply needed to resolve one minor issue – involving the Dominion’s label – in order to satisfy reviewers at the U.S. Food and Drug Administration. During a conference call with shareholders on Tuesday, however, IMGG reported that it has now fielded more than a dozen questions from FDA staffers who are evaluating the company’s device.
Although IMGG portrayed most of those concerns as minor in nature, the company admitted that two of them call for image interpretations that could take some time to complete. Nevertheless, IMGG expressed confidence that it could find a radiologist – among its own shareholders – to carry out the evaluations soon.
“I have good relationships with many radiologists, many of (whom) are investors, so I don’t think I’ll have a problem finding someone to do a quick review,” CEO Dean Janes stated during Tuesday’s conference call. “It means I’ll probably have to ask a friend, a radiologist, to stick his neck out and do some opinionated work.”
With that assistance, Janes predicted, IMGG should be able to respond to the FDA’s requests by the end of next month.
But at least one expert voiced concerns about that scenario. Charles Rosen, a California spine surgeon who last year appeared on a short list of candidates for the office of U.S. Surgeon General, said the FDA could see possible conflicts in the proposed arrangement. If the radiologist evaluating IMGG’s images owns stock in the company, Rosen noted, he stands to profit by delivering a favorable review.
“It’s up to the FDA – which has changed in the last year or two for the better – to accept only independently validated opinions,” said Rosen, founding director of the Spine Center at the University of California-Irvine. “And it’s pretty clear that this would be a conflict of interest.”
FDA Crackdown
Lately, the FDA has been paying more attention to such issues. In an “unprecedented move” last November, Clinical Trials Advisor reported, the agency scrutinized payments made by Zimmer (ZMH) to parties testing its Dynesys spinal system ahead of a panel vote on expanded use of the device. That panel ultimately voted 5-1 against Zimmer’s petition, the Advisor noted, although it cited safety concerns (rather than financial conflicts) as the primary reason for its actions.
Going forward, the Advisor stated, the FDA plans to examine similar financial arrangements when deciding the fate of other breakthrough medical devices as well.
To be fair, Zimmer sought pre-market approval (PMA) for its Dynesys system through a rigorous process designed for truly revolutionary products. In contrast, IMGG has submitted its Dominion scanner for review under the less onerous 510(k) process designed for devices that are “substantially equivalent” to products already on the market. Based on comments made by IMGG during Tuesday’s conference call, however, the FDA may have preferred to see the Dominion – which the company itself portrays as one-of-a-kind – reviewed under tougher PMA guidelines instead.
“I think they’re trying to make it lean more towards a PMA-type application,” Janes said, when discussing the FDA’s new request for professional interpretations of the Dominion’s imagery. “There are some things I don’t quite agree with. (But) I’m 100% confident we’ll get through this.”
If the FDA actually demands a full-blown PMA review for the Dominion, however, IMGG could face a long and expensive battle ahead. On average, Rosen estimated, device makers spend four to five years – and $15 million to $20 million – securing approval of breakthrough products through the PMA process.
With its limited resources, IMGG fully intends to keep pursuing clearance for its Dominion scanner through the 510(k) process instead. Although IMGG still hopes to win approval of the device in the near term, the company has already indicated that it will keep trying – regardless of the timeline – until it ultimately succeeds.
“If they accept our submission – and move forward with that submission – we could have it approved by the end of the first quarter,” Janes stated on Tuesday. “A 510(k) doesn’t just get rejected outright … You can file a 510(k) forever.
“We’re going to move forward,” he emphasized. “And we are going to get this approved.”
Investor Pain
Some IMGG investors have given up on the company already, however.
Since IMGG first disclosed its latest regulatory setback on Monday, the company’s stock has lost more than one-third of its value. The shares – which fetched almost $2 apiece at the height of investor optimism in mid-November – plummeted almost 25% during Tuesday’s session alone. The shares ended the day at just 45 cents, their lowest closing price since the big run-up began last fall.
Loyal IMGG investors were desperate for relief even before that massive plunge. When IMGG hosted its previous conference call, back in December, the company’s stock still fetched around $1.20 a share. With management virtually silent since that time, however, IMGG had fallen below 75 cents on concerns about the company and its device.
During Tuesday’s conference call, IMGG shareholders – including Janes himself – blamed recent articles by TheStreetSweeper for at least part of that decline. In recent weeks, TheStreetSweeper has raised multiple concerns about IMGG and its Dominion scanner. Lately, it has dwelled on IMGG’s failure to share images produced by its new scanner in particular.
“Our stock took a big hit,” one shareholder complained. “We have a lot of money invested, (and) you were nowhere to be found.
“How much would it hurt us to show them some kind of images?” he continued. “We’re with you, (but) they need some kind of proof.”
In response, Janes reiterated an earlier promise to share Dominion-generated images on the company’s official website. At the same time, however, he said that the company has higher priorities – topped by preparing its FDA response – right now. Ultimately, he portrayed IMGG critics as mere short-sellers looking to profit on declines in the company’s share price.
Janes also took a critical view of ordinary investors who, worried about the company, liquidated long positions in the stock as well.
“Good riddance!” he declared. “We’re better off getting rid of that type of fickle investor in the first place.”
Since TheStreetSweeper first began scrutinizing IMGG, the company has lost more than $300 million of its market value. Shareholders who sold IMGG after reading TheStreetSweeper’s original report escaped a 65% hit to their investment. TheStreetSweeper itself (including board members and employees) never took a financial position – short or long – in the company’s stock at all.
* To contact Melissa Davis, the author of this story, please send an email to editor@thestreetsweeper.org.
