Sept. 27 (Bloomberg) -- U-Systems Inc., the Silicon Valley maker of a cancer test for women with dense breasts, said it’s seeking to partner with a larger medical-imaging company after winning U.S. regulatory approval for the ultrasound technology.
A company with a women’s health unit would help Sunnyvale, California-based U-Systems and its 35 employees sell the somo-v ABUS breast-cancer ultrasound, Chief Executive Officer Ron Ho said in a telephone interview. The device, approved by the Food and Drug Administration last week, is the first ultrasound for the 40 percent of women who have thick connective and glandular breast tissue that normal mammograms can’t properly distinguish.
“All the mainframe imaging companies are very interested,” Ho said, without being specific. “Discussions regarding potential partnerships are taking place.”
Siemens AG, the sales leader behind General Electric Co. in the global market for medical-imaging equipment, would be a logical suitor, according to Vijay Kumar, an analyst at ISI Group in New York. In addition, Hologic Inc., which developed the first 3D mammography system, acquired a separate company from U-Systems’ founder Bob Wang in 2006. U-Systems, which generates less than $10 million in annual revenue, said its first-of-kind ultrasound may be a $1 billion opportunity.
“Given this is the first approved product, it will definitely pique one of the larger guys’ interest,” Kumar said in a telephone interview. “It probably would be Siemens given their historical partnership.”
The companies became partners in 2008 so cancer screeners could use U-Systems’ 3D technology with an automated breast scanner made by Siemens. Munich-based Siemens also is a distributor of U-Systems’ older products, according to Kumar.
Lance Longwell, a spokesman for the Siemens Healthcare unit, said in an e-mail that the company doesn’t comment on rumors or market speculation.
The U-Systems device won FDA approval on Sept. 18, for screening in combination with standard mammography for women who have a negative mammogram result and have no symptoms of breast cancer. The device will be priced at about $200,000, or about half the cost of a digital mammography system, Ho said.
New York and Connecticut are among five states that have passed laws requiring health-care providers to inform women with dense breast tissue of screening options following a mammogram. California Governor Jerry Brown signed a law last week, which takes effect in April.
The other two states are Texas and Virginia, according to the grassroots organization Are You Dense, which was started by a Connecticut woman who developed advanced breast cancer after years of traditional mammograms failed to detect the disease. Dense breasts have larger amounts of connective and glandular tissue, making it more difficult to interpret whether cancer is present using mammography, a low-dose X-ray, the FDA said.
Hologic was at the U.S. Capitol this week to promote its 3D mammography product, approved by the FDA in February 2011, and to push for better compensation for health-care providers and lower co-payments for patients that use the machine. New technologies face payment hurdles until they prove their effectiveness in the marketplace, said Meg Eckenroad, vice president of women’s health and professional relations at Bedford, Massachusetts-based Hologic.
“It’s important for the patients,” she said. “Sometimes they’re paying for preventive services and sometimes they’re not.”
President Barack Obama’s health law requires insurers to cover breast cancer mammography screenings every one to two years for women older than 40. Without its own specific reimbursement scheme, some women are paying for the 3D service when they shouldn’t be, Eckenroad said.
Eckenroad wouldn’t comment on whether Hologic may acquire or become partners with U-Systems. Hologic generated $1.8 billion in the year ending Sept. 24, 2011, including about $825 million from breast health products, according to data compiled by Bloomberg. The company agreed to pay $220 million in 2006 for R2 Technology Inc., a business controlled by U-Systems’ founder that had $45 million in 2005 revenue.
Hologic may not be in the best position to partner with U-Systems, as last month it completed a $3.7 billion acquisition of diagnostic test maker Gen-Probe Inc., Kumar said.
“They don’t have the balance sheet,” Kumar said.
General Electric, based in Fairfield, Connecticut, sells mammography machines as well as a system to highlight areas of unusual blood flow as a supplement to inconclusive tests.
General Electric generated $142 billion in revenue last year, $18 billion from its health-care unit, according to data compiled by Bloomberg. Siemen’s brought in $103 billion in the year ending Sept. 30, 2011, including $17 billion from health.
To contact the reporter on this story: Anna Edney in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Reg Gale at email@example.com