September 29, 2007

Knobias Clip Report (9-28-2007)

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NASI: Opens Higher Following First Procedure w/ClearPath-HDR Device

Shares of North American Scientific, Inc. (NASI) got an opening boost in Friday’s session after it announced the use of its ClearPath-HDR device in a patient for the first time. For use in Accelerated Partial Breast Irradiation (APBI) treatment plans, ClearPath-HDR combines the ease-of-use benefits of balloon brachytherapy products with the customized dose planning benefits of the multi-catheter brachytherapy procedure into one device. This combination also allows doctors to take advantage of a shorter five-day APBI treatment plan, compared with the six to eight weeks required for external beam treatment plans. In addition, ClearPath is implanted through a single incision and is designed to minimize radiation exposure of nearby healthy tissue. The Company estimates that the ClearPath systems will serve an addressable market of more than $500 million.

“This first human clinical experience with ClearPath-HDR is a significant milestone,” said John B. Rush, President and Chief Executive Officer of North American Scientific. “We believe our ClearPath technology is favorably distinguished from other products on the market, including balloon brachytherapy, interstitial catheters and external beam radiation due to its important benefits to the patient and physician. ClearPath can make APBI a possibility for more patients that were previously not considered good candidates for treatment with balloon brachytherapy products due to breast size and/or tumor location. With its ease-of-use, functionality and few treatment limiting requirements we believe ClearPath has the potential to encourage the use of APBI, a less invasive, more focused treatment option for many afflicted with breast cancer.”

North American Scientific manufactures and sells products for the radiation oncology market. Its Prospera(R) brachytherapy seeds and SurTRAK(TM) needles and strands are used primarily in the treatment of prostate cancer. The Company also develops and markets brachytherapy accessories used in the treatment of disease and calibration sources used in medical, environmental, research and industrial applications.

The new ClearPath-HDR device for treatment of breast cancer is, like its competitors, designed to connect to a source of high-dose-rate radiation which is administered in a specially shielded room in a hospital. It faces competition from Cytyc Corp. (CYTC), SenoRx, Inc. (SENO) and Cianna Medical. The MammoSite RTS device from Cytyc, currently the market leader, uses a balloon and catheter system to place the radiation source directly into the post-lumpectomy cavity. A device developed by SenoRx also uses a balloon and catheter system to deliver the radiation dose. The SAVI device manufactured by Cianna Medical does not use a balloon and is comprised of an expandable bundle of catheters.

The primary competitors in the brachytherapy seed business include: Nycomed Amersham PLC (through its control of Oncura), C.R Bard, Inc. (BCR), and Theragenics Corporation (TGX). Several additional companies currently sell brachytherapy seeds as well. SurTRAK strands and needles are subject to competition from a number of companies, including Worldwide Medical Technologies, Inc.

For the third quarter ended July 31, 2007. the Company reported revenues of $3.4 million and a net loss from continuing operations of $0.10 per share, compared with revenues of $3.0 million and a net loss in 2006 of $0.10 per share. As of July 31, 2007, the Company has an accumulated deficit of $144.6 million; cash and cash equivalents of $1.8 million; borrowings under a line of credit of $1.4 million; and no long-term debt.

The Company recently divested its NOMOS Radiation Oncology business, which develops and markets IMRT/IGRT products used during external beam radiation therapy for the treatment of cancer. The purchase price was $500,000 cash at closing, plus assumption of certain obligations and liabilities.The divestiture allows the Company to utilize financial resources for the marketing and development of its brachytherapy products.

A notice from The Nasdaq Stock Market indicated last week that the Company does not comply with the minimum $10 million stockholders’ equity requirement. In addition, the Company does not comply with the minimum $50 million market value of listed securities for continued listing. The Company will submit a plan that it believes will allow it to achieve and sustain compliance.

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