Stockprowler.com | 8/14/00

Stockprowler's pick this week is…

Imatron Inc. (Nasdaq:IMAT)

Corporate Web site: http://www.imatron.com
Shares Outstanding: 101.2 million
Public float: 86 million
Insider Ownership: 15%
Institutional Ownership: (44) 4%
Market Capitalization: $215.1 million
Closing Price Friday: $2.12

Last year, for over 150,000 Americans, the first, last, and only symptom of heart disease was a fatal heart attack. Coronary artery disease is the leading cause of death among men and women in the United States. In this year alone, 1.5 million Americans will suffer a heart attack and about 500,000 will die. Often referred to as "the silent killer," coronary artery disease typically remains undetected in many individuals until a major cardiac event occurs. San Francisco based Imatron Inc. has developed an Electron Beam Tomography (EBT) scanner which combines advanced science and technology to create a truly innovative diagnostic imaging system. Imatron's patented electron beam technology and unique system architecture allow images of the heart to be acquired in as fast as one-twentieth of a second. The scanner's incredible scan speed produces motion-free images of the beating heart that assist physicians in the early diagnosis and management of heart disease. The Imatron EBT scanner, used as a diagnostic test, can identify individuals who exhibit coronary atherosclerosis even in the sub-clinical stage. Numerous studies have reported that coronary artery calcium is a marker for atherosclerosis, which is recognized as the leading cause of coronary artery disease.

Since 1959, studies have documented the high prevalence of calcium deposits in the coronary arteries of individuals who have experienced cardiac death, acute myocardial infarction or other obstructive coronary artery disease. The presence of calcium in living patients can be detected by several methods including fluoroscopy. Studies have shown that imaging by Imatron EBT is superior to conventional risk factor analysis in the detection of sub-clinical coronary artery disease in addition to predicting future cardiac events. Imatron EBT is a non-invasive imaging technique that consists of 30 to 40 ECG triggered contiguous scans taken in a single breath-hold. ECG triggering initiates a 100 millisecond sweep of the electron beam on a single target ring generating the x-ray exposure for each image. Imatron EBT has significant advantages compared to helical or spiral CT scanning in the detection of coronary artery calcification. High spatial and temporal resolution, 100 millisecond scanning speed and ECG triggering provide sharp images that allow the diagnostician to detect even minute amounts of calcified plaque in the coronary arteries. The significance of the fast 100 millisecond scanning rate needs to be emphasized since blurring due to sensitivity from the complex motion of the beating heart during each cardiac cycle is to be avoided. The imaging must be performed rapidly during a small fraction of that cardiac cycle and at a specific point during the cycle when motion is at a minimum. EBT was designed specifically to examine the heart and offered the first opportunity to "freeze" cardiac motion by not only taking images in a short time but also taking images in synchrony at each tomographic level to a pre-set phase of the cardiac cycle. This allows minimization of intra-plane motion as well as optimization of three-dimensional image registration. Readers may view actual clinical images by clicking here.

In a recent Ohio Heart article, Dr. John A. Rumberger has stated, "using EBT we have established quantitative measures of coronary artery calcium as intimately related to atherosclerotic plaque as compared with histologic, angiographic, and intravascular ultrasonic standards. Based upon these data and data from scores of laboratories throughout the world using EBT my colleagues and I recently [Mayo Clinic Proceedings, 3/99] put forward some guidelines for clinical utilization of EBT calcium scoring. Most clinical EBT sites in the United States have adopted these guidelines."

Dr. Rumberger goes on to say that, "A number of manufacturers of mechanical scanners notably Siemens, Toshiba, General Electric, and Picker have introduced "cardiac packages" for their CT devices. These "body" scanners have different cathode/anode architectures, scan times as low as 300 msec and as high as 750 msec, image in a "step and shoot" or "spiral" mode, do or do not employ various electrocardiographic "triggering" and/or retrospective "gating" sequences, and use different post-processing reconstruction algorithms to produce images of the heart. Curiously ALL have suggested that their assessment of coronary artery calcium "scores" are "just as good" as those extensively validated to pathologic and clinical standards established by EBT. However, a "perception of the truth" and "the truth" are not the same thing. In fact there are NO current peer reviewed published papers that support these claims. I have personally seen various pamphlets or comments on various Web sites that directly suggest our published EBT calcium scoring standards are directly applicable to any or all of the "spiral" CT methods. In some circumstances, when these "perceptions of the truth" are sent to the public or to various physician referral groups they may even imply that they too are "Ultrafast CT". I have spoken to cardiologists and referring physicians who did not know that their patients were NOT imaged using EBT.

I wish to indicate that I personally find offensive, not to mention untruthful, the use of my name and/or data from cardiac EBT as suggested to be "equivalent" or directly applicable to these various spiral or helical body CT methods. These mechanical scanner methods do not even necessarily equate amongst themselves. The suggestion in some abstracts of a "correlation" of calcium scores between EBT and any current slower mechanical scanner does not equate to individual precision in most circumstances. The utilization of a scoring algorithm that is "similar" to that verified over the past decade by EBT does not indicate similar accuracy and reproducibility.

EBT coronary calcium scoring data, analyses, and subsequent diagnostic and prognostic data cannot be simply assigned to equivalency for purposes of clinical diagnosis using these mechanical radiology/body scanners. Merely sharing a moniker of "x-ray computed tomography" with EBT does not imply validity and certainly calls into question the integrity of the expanding claims made by the mechanical spiral manufacturers. Until independent validation with pathologic, angiographic, and clinical standards can be established using spiral CT scanners for purposes of coronary artery imaging, the practice of suggesting they are "just as good" as EBT must be stopped. The current claims are unsubstantiated, unfounded, and irresponsible. As an active member and leader of Cardiovascular Imaging activities for both the American Heart Association and American College of Cardiology I shall continue to advise and warn my clinical colleagues regarding improper current "claims" using non-validated methods for purposes of coronary artery imaging." Ohio Heart, May 25, 2000

On July 5, 2000, the Society of Atherosclerosis Imaging (SAI) issued a strong and compelling statement urging the widespread clinical utilization of EBT stating that:

The primary purpose of EBT is to find early heart disease (coronary plaque) prior to the development of a major blockage. This test is uniquely qualified to do this and should not be compared to stress testing for this purpose, which is abnormal only when there is already advanced coronary disease.
Results are 100% specific for presence of coronary atherosclerotic plaque. There are no false positive EBT results for determining the existence and severity of early coronary heart disease.
EBT is a cost effective alternative to conventional stress testing in many common clinical situations. In addition, EBT is very effective in determining who does not need further testing.
SAI also supports the concept of increasing patient awareness and the availability of access to testing by the public, including screening of middle-aged individuals for coronary disease, which is largely preventable and the cause of 1 out of every 2 deaths in the US.

Recently, former Illinois Senator Paul Simon, underwent an EBT diagnostic scan. "The scan took 10 minutes, but the results were startling: My doctor told me I was headed for a heart attack or stroke. As a result, last January 5th I had a 6-way by-pass operation." Coronary calcium quantification by EBT is becoming widely accepted by the medical community as the definitive marker of sub-clinical atherosclerosis, or heart disease. The American Heart Association (AHA) listed Coronary Artery Scanning as one of the "Top Ten Research Advances for 1999" and in the July 25, 2000 issue of its publication Circulation validated the accuracy of Imatron's EBT scanner in the prediction of heart disease. According to the article,"EBT coronary artery scan sensitivity, the ability to correctly detect the presence of obstructive disease, was a remarkable 97%." Imatron's proprietary EBT technology is currently in use at over 130 major medical facilities and imaging centers around the world including including the Mayo Clinic, Cedars-Sinai Medical Center, Abbott-Northwestern Hospital, Mount Sinai Medical Center, University of Iowa, National Institutes of Health, UCLA Medical Center, St. Francis Hospital, Stanford University, University of Pittsburgh Medical Center, Edward Cardiovascular Institute, Michigan Heart Imaging, Ohio Heart, University of Illinois, Arizona Heart Institute, Alfried Krupp Krankenhaus, Essen, Landeskrankenhaus in Graz, Austria, Cardiology Research Centre in Moscow, Russia, FAU Erlangen-Nurnberg in Erlangen, Germany, Beijing Hospital in China, HeartScan Imaging, Cooper Clinic, HealthScan of La Jolla, LifeScore of San Diego and HealthScan of Plano (Dallas). Imatron EBT is quickly being recognized as the "Gold Standard" for the detection and quantification of coronary artery calcification.

On July 25, 2000 Imatron announced record revenues and net income for the second fiscal quarter of 2000. Revenues for the three months ended June 30, 2000 were $15.5 million, an increase of 87%, compared to revenues of $8.3 million for the same period in fiscal 1999. Net income for the three months ended June 30, 2000 increased $3.0 million to $1.0 million, or $0.01 per share, compared to a net loss of $1.9 million, or $0.02 per share, for the same period a year ago. Revenues for the six months ended June 30, 2000 were $26.9 million, an increase of 99%, compared to revenues of $13.5 million for the same period last year. Net income for the six months ended June 30, 2000 increased $6.3 million to $1.3 million, or $0.01 per share, compared to a net loss of $5.0 million, or $0.05 per share, for the six month period one year ago. Second quarter revenues increased 37% and net income increased 321% from the Company's first quarter of this fiscal year ended March 31, 2000. As of June 30, 2000, the Company reported cash and cash equivalents and short-term investments of $10.1 million, working capital of $26.4 million.

Public awareness of this exciting new technology is growing rapidly… patients are now asking their doctors about the availability of the EBT scan. In addition, Imatron is reportedly prototyping a "Scan-Van", a mobile EBT unit in a van that will make this technology available throughout the U.S., not just in the major cities. IMAT closed Friday at 2 1/8 on 427,300 shares traded.

Good trading… Stockprowler