Hologic (HOLX) has taken a step forward to get its Selenia Dimensions three-dimensional (3D) digital mammography tomosynthesis system approved in the US. Recently, the Radiological Devices Panel of the US Food and Drug Administration (FDA) voted unanimously in favor of the device’s safety and effectiveness. In addition, they were of the opinion that benefits of the 3D system outweigh the risks from additional radiation exposure. Although the FDA is not bound to accept the panel’s recommendation, it generally does so.
Selenia has been developed on the Dimensions platform utilizing tomosynthesis technology to produce both 3D and the conventional two dimensional (2D) full field digital mammography (FFDM) images. The images can be used to screen and diagnose breast cancer. Selenia had received CE mark approval in Europe in fiscal 2008 and Canadian registration in March 2009, both for 2D and 3D modes of imaging. In the U.S., the device is approved to provide 2D images.
Breast Health is the largest segment at Hologic, which accounted for 45% of sales in the third quarter of fiscal 2010. This segment generated revenues of $189.3 million, 8.2% higher than the year-ago quarter, primarily driven by the increased installed base of Selenia. Of the total revenue, about 54% came from capital equipment while the rest was contributed by disposables and services. We expect this segment to generate robust growth in revenues if the 3D version of Selenia receives approval in the U.S.
Hologic, in August 2010, acquired Canada-based Sentinelle Medical, which primarily develops advanced breast imaging technologies used in MRI systems for the earlier detection and treatment of breast cancer. The acquisition should enable Hologic to further strengthen its position in the Breast Health market.
The company’s current portfolio consisting of the Selenia breast cancer screening system, Suros biopsy system and MammoSite radiation therapy will also have access to Sentinelle MRI breast coils. Apart from leveraging the existing distribution, Sentinelle will also be compatible with Hologic’s biopsy tools. Moreover, the two companies together will be better placed to target the growing market. The current MRI coil and CAD market, valued at approximately $100 million, is expected to double in the next three years.
We are currently Neutral on the stock.
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