According to the terms of the deal, Hologic will pay $30 million in cash and $25 million in a three-year secured note.

Trex has been for sale since its parent company, Thermo Electron Corp. (Waltham, Mass.), decided to spin off or sell its non-core businesses in February. Trex’s poor financial performance in recent quarters has fueled speculation among industry watchers as to who would make a bid for the company.

“Since the current operations of Trex are not yet profitable, we expect this transaction to initially be dilutive to earnings,” said Hologic Chairman and CEO David Ellenbogen. “The goal of Hologic is to position Trex to generate sales of $200 million in 2001.”

Ellenbogen agreed with analysts who thought those sales estimates were very conservative.

Trex has two major sites which will remain in their current locations. Trex’s 62,500 square foot Danbury site handles R&D, manufacturing and marketing of mammography systems, while its 156,000 square foot facility in Littleton, Mass., works in general radiography areas. Ellenbogen said both plants will remain open and staff sizes will increase under Hologic ownership.

The proposed acquisition does not include Trex’s dental imaging business, Trophy Radiologie (Vincennes Cedex, France). Ellenbogen said Hologic has no interest in the dental market.

Clearly, Trex’s mammography line was what drove the acquisition. Ellenbogen feels the addition of Trex’s product line sets up Hologic as the leading company in women’s healthcare.

“Trex’s mammography products go well with our bone densitometry product line and clearly put us in a commanding position worldwide in the field of capital equipment for women’s health,” Ellenbogen added.

The acquisition would double the size of Hologic and expand the company’s growing interests in the medical imaging market. After starting as a bone densitometry firm, Hologic acquired FluoroScan in 1996, Direct Radiography Corp. in 1999 and now Trex.

Ellenbogen said he has spoken with Trex for as long as three years about possibly acquiring the company. At one time, Hologic was located in Waltham, the home of Thermo Electron.

Trex has spent significant resources in recent years on the development of its much-storied full-field digital mammography system. An application for clearance was submitted to the FDA and then returned to Trex in December 1998. That submission since has been withdrawn from the FDA.

In May, Hologic hired Roman R. Janer, a former Trex executive, for the newly-created position of vice president of mammography. Hologic also revealed it is developing a flat-panel digital mammography plate in-house under its DRC subsidiary.

Ellenbogen estimated that Trex holds 35 to 40 percent share of the mammography market, roughly the same as GE Medical Systems (GEMS of Waukesha, Wis.). GEMS currently is the only company with FDA clearance on a full-field digital mammography system.

The acquisition is expected to close in mid-September. Hologic’s fiscal year begins Oct. 1.

According to the terms of the deal, Lunar shareholders received 0.322 shares of General Electric Co. (Fairfield, Conn.) stock for each share of Lunar held. In a wire report, Lunar said fractional shares as a result of the conversion calculation will be paid in cash. When the acquisition was announced in June, it was estimated at $150 million.

Lunar is a $91 million company that posted $7 million in net income in FY2000, ending June 30.

“We are going to maintain Lunar as a separate business within GEMS with its own identity and focus,” said Omar Ishrak, Ph.D., general manager of GEMS Global Ultrasound business. The Lunar business now comes under GEMS’ ultrasound business.

As part of the takeover of Lunar, GEMS has appointed Terri Bresenham as the general manager of the Lunar operations, reporting directly to Ishrak. Most recently, Bresenham served in GEMS’ PET division and has served as its director of women’s healthcare prior to that.

Ishrak said all Lunar operations will remain in Madison. Bresenham said GEMS is in the process of reviewing Lunar’s product line to determine what fits best with GEMS’ products. Lunar makes a mini C-arm, while GEMS has a C-arm line in its OEC Medical Systems (Salt Lake City) subsidiary.

The acquisition marks GEMS’ full entrance into the bone densitometry market. GEMS officials said the company has been scouting the market for as long as three years. GEMS has an existing agreement to market the X-Posure X-ray bone densitometry system from Pronosco (Vedbaek, Denmark) under the GEMS name.

The acquisition and Bresenham’s appointment continues GEMS’ path of developing its women’s health offerings.

GEMS bolstered its used equipment business through the acquisition of the privately held Access Medical Equipment Group Inc. (Farmingdale, N.Y.) for an undisclosed sum. Access bills itself as the “world’s largest buyer and seller of preowned diagnostic imaging equipment” and says it has bought and sold more than 10,000 diagnostic imaging systems since its founding in 1988. GEMS is looking for the 30 employees of Access to spearhead the multivendor side of the Gold Seal Exchange preowned equipment business.

“Access has expertise in the area of multivendor equipment, which is not inherent to the current Gold Seal program that GEMS runs,” said Anna Schneider, general manager of GEMS’ Gold Seal program.

GEMS expects the buy to grow its used equipment business by 20 percent.

Current plans call for Access to remain in its Farmingdale site. Schneider said GEMS is maintaining the Access management and has named Access’ Scott Harryman as manager for Gold Seal Exchange with responsibility for direct sales. John Reed will be managing director for the strategic accounts group with responsibility for building relationships with large hospitals. Schneider will continue as the general manager of the Gold Seal Direct business.

GEMS also moved to finalize the relationship between GE Marquette Medical Systems and Web-based cardiology applications developer Micro Medical Systems Inc. (Sioux Falls, S.D.) through the purchase of Micro Medical’s parent company, Life Diagnostics Inc. The two companies have been working closely since 1998 and decided to formalize that relationship through acquisition.

Norm Drake, CEO of Micro Medical, said the acquisition won’t change much in the daily operations at Micro Medical, because the company has been working closely with GEMS. The relationship dates back to November 1998 when GE Capital made an equity investment in Micro Medical.

“At that time, we entered into an exclusive distribution agreement with GEMS for our CardioNet and EchoPro cardiology database software products,” said Drake. “Since then, those two products have been melded into one product called Catalyst and that was launched by GEMS in 1999.”

GE Marquette officials felt Catalyst was a logical extension of its MUSE cardiology procedure management system by offering a large database, image management capabilities, structured reports and access to test results.

Micro Medical has 63 employees, which GEMS plans to keep on staff.   

According to the agreement, GEMS will pay a lump sum to each Life Diagnostics shareholder at the closing of the transaction. Beyond that, each shareholder will decide to have certain contingent payments made in one discounted payment at closing or in payments spread over three years.

The amount of the share price for each shareholder will depend on the number of shareholders that opt for contingent payments. Life Diagnostics expects 25 percent of its shareholders to opt for the discounted contingent payments at the closing, in which case they will receive $3.10 per share. If 75 percent of the shareholders elect to receive payments over time, those shareholders will receive $1.36 per share at the closing and an additional contingent payment of up to $2.59 per share payable over three years.

Philips will spend much of the next several months formulating the logistics of the relocation, which will culminate in the summer of 2001.

Jack Price, president and CEO of Philips Medical Systems North America, informed employees of the move during a company meeting on Aug. 4. He said the goal is to build a world-class North American presence and expand the company’s position beyond its traditional medical imaging products.

Price told Medical Imaging that Philips knew for quite some time that it needed to upgrade its Shelton headquarters. As the company mulled its options over the last six months, Price said the decision to move to the ATL campus came in early August.

One lure was the Seattle area’s reputation as a cultivating ground for information technology-related (IT) firms and dot-com companies.

“We feel that with a large amount of our future in that [IT] area, [Seattle] is an excellent environment to have an organization and have that potential base of employees,” Price said.

Additionally, ATL’s campus “provides us an opportunity to consolidate our medical activity in North America into one headquarters,” he added. “Beyond that, we see that there can be some positive synergies from a communications point of view. Hopefully, as we go forward, we will find some operational areas where we also can enjoy synergies.”

There are three buildings on the ATL campus and a fourth building currently is under construction. Plans for the new facility began before Philips’ announcement, so ATL now will accelerate construction to complete the project by the end of 2001, a year ahead of schedule.

Pamela Dunlap, ATL’s senior vice president of finance and CFO, said the fourth building is slated to be a dedicated engineering facility.

“The original target is 100,00 square feet. That may go up to 150,000 [square feet.],” she added. “We want to make sure we do it right the first time to accommodate any additional internal growth we may have.”

ATL has approximately 1,600 employees based at its 57-acre Bothell campus. The site hosts ultrasound system manufacturing, as well as the division’s administrative, engineering and R&D functions. ATL also has a scanhead manufacturing operation in Reedsville, Pa.

A decision on where Philips will locate on the campus has not been made.

Geographically, Price admitted that there is a “slight negative” in moving from the East Coast to the West Coast, because Philips will move three more hours away from its parent company, Royal Philips Electronics (Amsterdam), and Philips’ two major medical imaging equipment manufacturing facilities in the Netherlands and Germany.

Price said there are no current plans to expand manufacturing capabilities in Bothell beyond ATL’s ultrasound production.

At the time of the announcement, Price said it is too soon to estimate how many of Shelton’s approximately 350 employees would relocate with Philips, how many new hires may be necessary or how much the relocation may cost the company.

“We are just in the process of scratching the surface employee-by-employee to make sure we understand what their mobility issues are,” Price said. “We won’t know who will move until we see how many people are ‘moveable’. That’s the real issue.”

Philips is offering resources to help employees with their relocation or career transition.

“This [move] was never taken on as a downsizing effort,” Price said. “It was trying to find a way to develop some operational synergies with our colleagues at ATL and develop a North American campus.”

He added that the move will not impact customer relationships.

Not surprisingly, ASPs were invading Nashville in full force. InPhact (Nashville) was on its home turf, preaching its pay-per-exam ASP message with its RadWeb product. InPhact says a hospital or clinic pays a fee per procedure, which produces a savings compared with a large capital outlay required to purchase and maintain a PACS.

Late last month, InPhact signed a $5 million deal with Agfa Corp. (Ridgefield Park, N.J.) for InPhact to use Agfa’s ADC and Impax equipment for its ASP model.

Emageon (Birmingham, Ala.) is pushing “extreme performance and scalability for $5” in its ASP offerings. Emageon offers a DICOM archive service that will be integrated into the ASP model from GE Medical Systems (GEMS of Waukesha, Wis.). According to Emageon, a full roll-out of the combined offerings is expected in 2001.

Stentor (South San Francisco) promoted its Version 1.0 of iSyntax software to distribute lossless images, which currently is on-site at 14 hospitals in the country. The iSyntax product was originally licensed from the University of Pittsburgh Medical Center Health System in 1998 and, in 1999, the company received FDA clearance to market it.

Konica Medical Imaging Inc. (Wayne, N.J.) was telling AHRA attendees about a recent deal for Howtek Inc. (Hudson, N.H.) to supply its MultiRAD 450 and 850 digitizers for Konica’s NetStar image management solutions.

Konica recommends a phased approach to PACS implementation. Randy Mattingly, Konica’s senior product manager, feels Howtek digitizers work well in the phased approach, because the lower cost of the Howtek products allows facilities to purchase them as needed.

Fuji Medical Systems USA Inc. (Stamford, Conn.) displayed new improvements to its Synapse PACS offerings, including the software-only installation option. According to Fuji representatives, a software-only PACS product minimizes the hardware investment a facility needs to make, while allowing frequent updates provided by the OEM. Earlier this year, the company completed its first software-only installation at St. Louis (Mo.) Children’s Hospital.

Fuji also exhibited its computed radiography (CR) line, including dual-sided CR reading capabilities to improve CR image quality.

Also in the CR realm, Orex Computed Radiography Ltd. (Nesher, Israel) promoted its new company name and new market focus. In the days when it was Digident, the company focused primarily on the dental imaging and CR market. Now, Orex is expanding into the general CR market.

Orex’s PcCR 1417 has a 14-inch by 17-inch imaging plate and allows CR technology to attach to a personal PC. Company officials are looking to garner market share by offering the PcCR 1417 in the $30,000 price range.

Digital archiving firm InSite One (Wallingford, Conn.) struck a deal with RealTimeImage (Atlanta) at AHRA to license RealTime’s iPACS streaming technology and integrate it into its InDex digital image storage and retrieval service.

iPACS uses Pixels-on-Demand technology to minimize download times by rendering the most important aspects of an image first. In a demonstration, Gene Rubel, vice president of medical imaging for RealTime, showed the ability of the iPACS to zoom in effectively on large digital, online images. The technology is aimed at letting referring physicians review images from a home PC.

On the digital radiography (DR) side, there were few surprises. GEMS, Canon Medical Systems (Irvine, Calif.), Nucletron BV (Veenedaal, The Netherlands) and others exhibited digital X-ray technology. Cares Built Inc. (Keyport, N.J.) displayed its Clarity 7000 digital X-ray system, saying the company is expecting to see strong growth in its DR market sales in the coming year.

Market research firm Frost & Sullivan (Mountain View, Calif.) unveiled its latest report that estimates the worldwide contrast media market at $3.4 billion in 1999. In 2006, revenues could reach $4.22 billion, driven by a growing need for strategic partnerships and geographic expansion.

Mahpara Qureshi, senior industry analyst for Frost & Sullivan’s healthcare group, said the demand for new agents and applications of existing agents has challenged companies to seek strategic partnerships in the marketplace. Those collaborations could include R&D companies and other manufacturers that dominate certain regional markets. The end result would be an introduction of new products in the marketplace and penetration of overseas markets.

Within the contrast media industry, the report sees prices in the X-ray segment spiraling downward, thus curbing revenue growth. At the same time, a healthy forecast is predicted for MRI contrast media.

Ultrasound and MRI contrast products have experienced notable improvements in recent years, with MRI agents able to target specific tissues, such as the liver and lymph nodes. Ultrasound contrast media enhancements include longer life and stability in the body and the potential for use in functional imaging, which would allow these products to compete with nuclear imaging products or radiopharmaceuticals.

Qureshi writes that for any one product to be successful in the marketplace, manufacturers will have to overcome end-user resistance to try new offerings. Because of the dearth of long-term data on contrast media, many clinicians tend to rely on materials that have established clinical safety records.

This, in turn, puts the responsibility on the manufacturer to prove the efficacy and safety of products by engaging more end-users to utilize contrast agents and demonstrate how newer media are better than older materials.

Under the pact, Jomed’s tender offer was set to begin on or about Aug. 21 and conclude in mid- to late September. Both companies’ boards have approved the proposal.

For Jomed, the addition of EndoSonics would be an extension of its current product line of stents for interventional cardiology.

EndoSonics develops, manufactures and markets intravascular ultrasound (IVUS) imaging products, angioplasty catheters and functional assessment products to assist in the diagnosis and treatment of cardiovascular and peripheral vascular disease.

The company posted sales of $48 million in 1999, up 9 percent from 1998. EndoSonics had a net loss of $1.1 million, compared with a net loss of $7.8 million in 1998.

For the first half of 2000, EndoSonics’ total revenues held relatively steady at $26.1 million, compared with $26 million for same period of 1999. The company posted a six-month net loss of $2.5 million, compared with net income of $3 million in the year-ago period.

Jomed had sales of $39.5 million last year and net income of $1.9 million.

Jomed President and CEO Tor Peters said the potential addition of EndoSonics would improve Jomed’s existing international sales and manufacturing organizations and provide access to an established U.S. sales force to penetrate the U.S. market.

EndoSonics and Jomed have been business partners in the past. In April 1999, the companies received the European CE Mark to develop jointly the Josonics Flex intravascular ultrasound-guided stent delivery system.

Marconihcp.com is operated by Marconi Medical Systems’ Health Care Products unit (Marconi HCP of Mayfield Village, Ohio) and targets the medical imaging supplies and accessories market, which the company estimates at $2.6 billion. The site currently does not include Marconi’s medical imaging scanners and equipment.

Marconi already has lined up several group purchasing organizations (GPOs) and hospital networks to link to the site and expects such partnerships to connect Marconihcp.com to 90 percent of the 5,900 acute-care hospitals in the United States.

“We look to use [Marconihcp.com] as a commerce vehicle to interface with our dot-com GPO partners,” said Karl Wolcott, Marconi HCP’s vice president and general manager.

“We are looking to move a lot of volume to our site as soon as they are prepared to go live,” Wolcott said. “We have a schedule worked out with them through December.” Marconihcp.com plans to have all the sites connected by January 2001.

Marconihcp.com is designed to give imaging customers constant access to an up-to-date digitized catalog that features more than 32,000 products from more than 300 manufacturers and suppliers.

“We are looking to move $10 million to $15 million of business between now and the end of the calendar year,” added Wolcott. “That will be mostly purchases which come from customers in the lower and middle-tier of the market who traditionally would call in and purchase a product.”

Those customers would include clinics and physician offices.

Wolcott estimates that Marconi HCP conducts approximately 30 percent of its sales volume through electronic data interchange (EDI). With the advent of Marconihcp.com, he said the amount could become as great as 50 percent — and perhaps as much as 60 percent — through EDI or the Internet by this time next year through the five customer groups associated with Marconihcp.com.

The two companies say that Blue Plus CCD is a new full-frame CCD technology that is 70 percent quantum efficient in the green to red portions of the spectrum, substantially boosting signal strength with no increase in sensor noise. That technology, combined with a more efficient scintillator plate, is expected to improve detection efficiency and to reduce patient dose by 50 percent.

Blue Plus CCD initially was developed by Kodak for low-light astronomy and other low-light applications.

All previously installed Swissray digital radiography systems can accommodate the new technology.

According to TMG, hospitals spent nearly $600 million on PACS-related items in 1999. Growth in the PACS market is expected to reach 7 to 10 percent per year for the next five years.

Mitchell Goldburgh, general manager of TMG, said that even though the number of installations is rising, the rate of installations has remained flat due to the market’s inability to absorb technology into clinical operations. TMG also reported that few hospitals that are running a PACS are completely filmless. The study found that 91 percent of the respondents are still using film for diagnosis, with ultrasound and CT being the most often filmless modalities.

“As a result, there was generally poor correlation between staff productivity and the percentage of filmless operations, reflecting the need for work process re-engineering to be developed in order to capture efficiencies,” TMG reported.

The new report from Theta Reports reviews the current state of the digital X-ray market, including the companies involved, their products and the new applications on the rise. In addition to DR manufacturers, Theta includes digitizer makers; CR companies; and mammography, fluoroscopy and dental products.

According to the report, the DR market will “gain only gradual acceptance by healthcare providers at least at first” due to economic concerns.

The report states that there are currently 200 DR systems installed worldwide, creating a current market of about $70 million. That market is expected to grow to $2.2 billion by 2004.

The move comes after a May decision in which the board of directors approved a restructuring plan which laid the groundwork for the sell-off.

The shareholder approval allows the company to reinvest the proceeds from sales into a new business or liquidate the company through a distribution to shareholders.

“We intend to move quickly to implement the plan and we are determined to maximize stockholder value through the sale process or the reinvestment of the sale proceeds,” said Joseph A. Paul, president and CEO of the company in a statement released July 21.

No timetables were provided for the sale of the centers.

Company officials would not comment on the future plans of the company or the status of the divestitures.

The US Diagnostic situation is the latest in a string of ill-fated imaging center operators. In April, imaging center operator Medical Resources Inc. (MRI of Hackensack, N.J.) filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court to fund the conversion of $75 million in senior notes into common stock. In June, DC DiagnostiCare Inc. (Edmonton, Alberta, Canada) reported a net loss of nearly $150,000 for its second quarter and revealed that since late April it has been conducting a strategic review of its operations to maximize shareholder value.

According to the proposal, Cytogen will acquire Advanced Magnetics by providing $8.75 in Cytogen stock for each share of Advanced Magnetics stock for an estimated value of $60 million. The transaction is subject to a collar of $8.55 to $11.56 per share and is expected to close in the third quarter.

The deal would combine two companies that are sprouting in the imaging agent market. Cytogen markets the ProstaScint prostate imaging agent and the OncoScint agent for ovarian and colorectal cancers. Advanced Magnetics received an approvable letter from the FDA in late June for its Combidex agent to image the spread of cancer in the lymph nodes. The company also manufactures Feridex I.V., an MRI contrast agent for the detection of liver lesions, and the GastroMark agent for gastrointestinal imaging.

Richard Krawiec, Cytogen’s vice president of investor relations and corporate communications, said Combidex could be on the market by the first half of next year, assuming it receives final approval from the FDA in a timely manner.

Cytogen CEO H. Joseph Reiser, Ph.D., said that Advanced Magnetics’ working capital should provide the combined company with ready funding for the commercialization of Combidex.

On July 10, the MIDAC reviewed the biologics license application (BLA) for LeuTech, an injectable radiopharmaceutical for the localization and imaging of infection. According to a statement from Palatin, the MIDAC decided unanimously to recommend that the FDA approve the product after reviewing data from a Phase III clinical trial led by Samuel Kipper, M.D., medical director of nuclear medicine at Tri-City Medical Center (Oceanside, Calif.).

“We have collaborated closely with the FDA throughout the LeuTech development and testing process and will continue to do so as we address any remaining issues,” said Palatin COO Charles L. Putnam in a prepared statement.

The company anticipates final FDA approval on LeuTech by the end of 2000 and to begin shipping by early 2001.

The trial involved 203 patients at 10 medical centers across the country. LeuTech demonstrated a 91 percent sensitivity in detecting disease. The product also demonstrated a 96 percent negative predictive value, making it a reliable screening method for appendicitis.

The study also found no change in the diagnostic efficacy of the product when used with pediatric patients. Half of the images acquired using LeuTech were achieved within eight minutes and 90 percent came within 47 minutes.

According to researchers, the probability of correctly diagnosing appendicitis was 6 to 13 times greater with the addition of LeuTech to the diagnostic process.

The MIDAC’s decision is the latest twist in an eventful period for Palatin in the development of LeuTech, which went into Phase One and Phase Two clinical trials in November 1997 for diagnosing appendicitis. LeuTech also currently is in Phase Two evaluation for bone and joint infection, post-operative infection and prosthetic joint infection.

Palatin has a distribution agreement with Mallinckrodt Inc. (St. Louis) for Mallinckrodt to market and distribute LeuTech in all markets, except Europe.

Mallinckrodt is in the process of being acquired by Tyco International Ltd. (Pembroke, Bermuda), but there is no word on how that may affect the LeuTech distribution deal.

In June, Palatin’s CEO Edward J. Quilty resigned from the company to focus on other personal and business interests. At the time, Quilty said that over the last five years, “we have positioned Palatin for a successful launch of LeuTech along with Mallinckrodt following FDA approval. It is an appropriate time for me to leave.”

Quilty was replaced by executive vice president and CTO Carl Spana, Ph.D.

In March, Palatin halted a proposed acquisition of Molecular Biosystems Inc. (San Diego) after progress on LeuTech and its PT14 product for male sexual dysfunction lessened the need for a marketable product.

Growing interest in the interventional radiology market has been seen at recent conferences, such as the Society for Cardiovascular and Interventional Radiology (SCVIR of Fairfax, Va.), and Frost & Sullivan feels that trend will translate into market growth in the coming decade. According to the new report, the interventional radiology market is expected to grow to $5.5 billion by 2006 with interventional CT seeing the most growth, accounting for more than $2.3 billion in 2006.

The report said new technologies like image fusion and hybrid modalities will bring more interest to the interventional market.

But there is a certain amount of uncertainty in this segment of the market, according to Frost & Sullivan analyst Ryan Goulding.

“The future of interventional radiology will likely witness a fluxing of utilization patterns,” he said. “Current interventional pathways are quite amenable to change, given that a more cost-effective route can be found.”

Frost & Sullivan also released a report on the U.S. radiopharmaceutical market, which put the segment in the $883 million range in 1999, but predicts growth up to the $1.6 billion mark by 2006.

Spreading the word on the benefits of radiopharmaceuticals is key to the future growth of the market. The report says “growth potential in this field is enormous, but if the benefits are not communicated clearly, advances in this field may fade away in the wake of better known but less effective treatments.”

One of the biggest challenges this market faces is the limited supply of isotopes in the United States. While there are thousands of isotopes used in daily tests, the vast majority of these are produced overseas and imported to the U.S. market at a significant cost. To fuel stronger growth, U.S.-based reactors need to produce isotopes and make them more readily available to the U.S. market.

The report states that radiopharmaceuticals have the potential to become the leading specialty in cancer diagnostics, including treatment with new isotopes being developed as an alternative to narcotics for controlling bone cancer pain.

Terason began taking orders in July for the 10-ounce, 128-channel device that is roughly the size of a transducer. The Terason 2000 — which received FDA 510(k) marketing clearance in November 1999 — plugs into a laptop, palmtop wearable PC via a FireWire connection and reproduces the images on the computer screen.

The system supports color power, color velocity, spectral Doppler and steered CW Doppler. It also supports curved arrays, linear arrays and phased arrays. The system is configured for all major ultrasound applications, including cardiology.

J. Kerr Spencer, Terason’s senior vice president of marketing and sales, said U.S. distribution will be handled directly by Terason and through regional dealers. The company also plans a collaborative marketing program with an as-yet undisclosed Web company to sell the Terason 2000 over the Internet.

Terason also is in the process of signing distribution agreements in the Asia/Pacific Rim region, as well as Europe. The company was set to ship demonstration units to its distributors in Europe and Japan in August in order to facilitate the regulatory approval process there.

Spencer said that Terason expects to garner most of its early sales from Europe, Asia and the Pacific Rim, where healthcare providers are attracted to less expensive ultrasound systems.

“We think [the market] for this type of ultrasound is outside of the U.S., at least in the first two years,” he added. “By definition, the U.S. is a very low-volume, high-priced market. People will buy $200,000 to $300,000 [ultrasound] machines. That doesn’t happen in Europe, Asia and the Pacific Rim very often.”

In less than a year, the Web-based software maker eTrauma.com Corp. (Deerfield Beach, Fla.) has gone from a basic concept to a solid business with more than 20 installations. And the news got better in August.

eTrauma.com began operating less than a year ago, when Stephen Roy and Dan Hodgeman were at a tradeshow and met Kishore Tipirneni, M.D. Tipirneni was an orthopedic surgeon marketing a software program that allowed users to view medical images via the Internet. The idea was not to use the images for final diagnosis, but to give on-call physicians another piece of clinical information before coming to the hospital to make a decision.

“When RemoteImage was developed, it was intended to be used in a clinical setting by the ER doctor to communicate with the on-call orthopedic surgeon,” said Hodgeman. “It can obviously benefit anyone who will remotely view X-rays and CT images, but Kishore is a practicing orthopedic surgeon and his wife is an ER doctor. He was often forced to make decisions based on information communicated to him over the phone by an ER doctor or technician without seeing an image at all. So, he created this software mostly just for his own use, but he decided to market it.”

Tipirneni did not have the time to market the software effectively and in June 1999, Hodgeman and Roy started eTrauma.com, bought the software from Tipirneni and named him CTO of the firm. Late last year, while showing the software at a tradeshow, eTrauma caught the eye of some major medical equipment manufacturers, including Smith & Nephew Inc. (Memphis, Tenn.). Just when eTrauma.com was struggling to get the word out about their new service, Smith & Nephew expressed an interest in marketing the RemoteImage software worldwide.

Last month, the companies jointly announced that Smith & Nephew has acquired a minority interest in eTrauma.com, as well as the worldwide sales and marketing rights to the RemoteImage technology.

Financial details of the transaction were not disclosed.

While the dot-com market for radiology is growing by the day, eTrauma.com thinks it has a nice market niche. Since its inception, RemoteImage software has been marketed to orthopedic departments instead of radiologists.

The system uses a scanner from Vidar Systems Inc. (Herndon, Va.) and DICOM receiver software that converts images into JPEG format. The images are sent to one of two servers that eTrauma has set up for temporary storage. Hodgeman said images are only stored for 24 to 48 hours and are not archived to reduce costs. Patient confidentiality is addressed through encryption and password protection.

Loosely termed “Black Blood” MRI, the new processing technique uses specially designed software to block out the blood flow from MRI images and provide a clearer view of the arterial plaque and its risk of causing heart problems. According to researcher Zahi Fayad, Ph.D., assistant professor in the radiology and cardiology departments at Mount Sinai, MRI is a perfect imaging modality to scan for arterial plaque because of its sensitivity to chemical structure.

An MRI image showing the buildup of plaque in the coronary artery (arrows, right panel). A large plaque with variable signal intensity due to its composition is present (inset box). Courtesy of Zahi Fayad, Ph.D., Mount Sinai School of Medicine.

“We decided to use MRI because it is non-invasive, but also because it is a high-resolution technique that could look at the vessel wall itself and potentially differentiate the different types of plaque that exist there,” Fayad explained.

After animal trials were completed, the initial human trial of this technique took place at Mount Sinai. It involved eight patients without heart disease and five people with hardening of the arteries. By eliminating the blood flow through a software technique called inversion recovery, the patients’ level of plaque and arterial walls were measured more clearly. The results found that in healthy patients, the average thickness of the artery wall was less than 1 millimeter. In patients with heart disease, the wall was typically 4 millimeters.

From this initial study, Mount Sinai plans to extend the patient population for the trial and include both patients at high risk, as well as patients in the asymptomatic population. Fayad said researchers are considering coordinating a multi-center trial to test the efficacy of the new technique.

“We’re also doing some further technical development and improvement of the technique, so we can acquire images faster without need to suspend respiration,” he said.

Mount Sinai is working closely with GE Medical Systems (GEMS of Waukesha, Wis.) in developing the technique on a dedicated cardiac MRI scanner. Fayad said the technique also could be applied to most high-end MRI systems.

The ultrasound company’s revenues remained flat at $119.8 million, compared with $119.9 million in the second quarter of 1999. Net income slid to $1.4 million, down from $4.7 million in the year-ago quarter.

For the six-month period, revenues dipped to $231.4 million, compared with $238.9 million in the first half of 1999. Net income declined to $3.3 million, down from $10.3 million in the year-ago period.

The company expected earnings to be lower than a year ago, primarily due to “significant” increases in sales and marketing expenses to launch and promote new products. However, Acuson blamed price erosion in the domestic cardiology market and the stronger dollar — which hurt international results — for falling short of analysts’ estimates on the company’s net income.

In the second quarter, U.S. sales totaled $85.2 million — or 71 percent of total sales — compared with $85.7 million in the second quarter of 1999. International sales increased slightly to $34.6 million, up from $34.2 million in the year-ago quarter.

On the positive side, the company said revenues for the KinetDx Ultrasound PACS solution were “up sharply” from the first quarter, while production shipments of its Cypress echocardiography platform began on June 9. The company plans to increase shipments of the KinetDx and Cypress in the second half of this year.

Syncor International Corp. (Woodland Hills, Calif.) has announced an upcoming two-for-one stock split. Shareholders of record at the close of business on July 26 will receive one additional share for every share of Syncor stock held on that day. Syncor currently has 12 million shares of stock outstanding.