My husband, Steve, and I went to the annual meeting today. It was very worthwhile going. For the sake of speed, I will summarize my notes in the order I took them.
First, as to general impressions, both the Chairman of the Board, Mr. Boyd, and the CEO, Lew Meyer, make excellent impressions. As an attorney, I am used to characterizing people as "good" or "poor" witnesses or somewhere in between. Both these men were "excellent."
There was an awful lot of good news, but a few points of concern.
For example, insurers are still not jumping up to cover the cost of the scan. And, the company is focussing on trying to educate the public and insurers. This is going to be a very, very hard sell.
With regard to the calcium detecting software developed by GE, GE is not the only one developing such software. Toshiba and Siemen's are, too. But, Mr. Meyer felt that their software will never touch the clarity of the Imatron scanner. Nevertheless, this is a point of concern, no doubt about it.
With that said, I must reiterate that the meeting was very positive. There are now about 60,000 shareholders. At the meeting, the vote carried to increase the number of shares by 1,000,000 for the purpose of stock options to board members and directors. Personally, I like the idea of encouraging insiders to do better work. Mr. Meyer admitted that the number of shares outstanding is large, but that's just the way it is, folks.
A slide presentation was made which was extremely impresssive. There has been a lot of improvement in the technology over the past year. The scan, of course, reveals the degree of risk.
The company has 28 patents now. Between '95 and '97, $25,000,000 was spent on R & D --- $15,000,000 by Siemen's and $10,000,000 by Imatron.
Current uses for the scanner include heart, lungs, brain, colon, kidneys, etc. But, the big sell is on heart because that is where the most money is. Although the uses are there, it is very hard, for example, to find a doctor who actually uses it for anything other than heart. There is a study going on now for use to detect colon cancer.
There are "many" scientific papers lined up to be published in the next year. Look for one very soon from a leading New England type medical journal -- Can we all guess which one!
The slide presentation showed the difference between PET scanning and UFEBT. PET detects plaque when it is 60 percent developed, but UFEBT detects it at 20%.
Also exciting is the fact that the 1998 U.S. budget contains $10,000,000 for a study on ultra fast scanning. Why? Ultimately, to decrease Medicare spending.
Also, the National Heart, Lung & Blood Institute is conducting a $54,000,000 ten-year study screening 18,000 people. The study will start next year.
Mr. Meyer spoke about the GE alliance and pointed out that it is non-exclusive so that Imatron can continue to have its own sales force. He also pointed out that this is a "corporate alliance" of interest to "the highest levels" of GE.
GE Medical will have 50 cardiology dedicated sales professionals marketing the scanner. This is unlike Siemen's which used a sales force targetting radiology.
Also, Imatron will benefit from GE Credit which will offer attractive financing for buyers.
And, on a basic level, the GE agreement provides a tacit endorsement from GE itself.
Mr. Meyer said he has had more discussion with GE in the last two weeks than he had with Siemen's in 5 years.
Back to the issue of R & D, the resolution of the scans has improved fourfold over the past year. We saw the pictures. It's true.
The power supply has been made much smaller.
The scanner has obtained ISO 9001 certification and CE mark certification. (my notes here are not great -- it was dark and I was writing as fast as I could -- hope I got the "CE" mark stuff right)
Mr. Meyer said you cannot ship into many European countries if you don't have these certifications.
Now to the acquisition of 51% of Positron corp. The Positron technology measures radioisotopes in the body. Steve says he remembers this is related to diagnosing cancer.
Positron will be relaunched as a Nasdaq company. There is a good synergy between the Imatron scanner and the Positron product.
Mr. Meyer referred to the Positron product as "The Gold Standard of Nuclear Medicine."
PET scanning is useful in detecting heart problems, cancer, neurological diseases, epilepsy, bronchial problems, Alzheimers, cystic fibrosis, Parkinson's, stroke assessment, etc.
Imatron's goal is to finance Positron and to help that company grow so that Imatron's stake is reduced to 19% - 21%. This will create equity in Imatron without increasing the number of Imatron shares outstanding.
The goal for sales of Imatron scanners in 1998 is 26 machines. One was sold in the first quarter. Mr. Meyer alluded to the fact that 6 were sold in the second quarter. And Mr. Meyer felt fairly confident that the 26 goal for the year would be met. In fact, he said that 1/2 of the machine goal has already been booked.
The question was asked -- What is the most scanners you can ship in one year? Answer = 60.
Imatron has 60 engineers working on new products. They are expanding their customer service.
Perhaps the biggest news -- other than the favorable sales outlook -- is the planned sale of Heartscan. By selling Heartscan, Imatron will remove a "loser" from its bottom line and hasten its profitability. The company is "currently" in discussions with potential buyers. Mr. Meyer appeared fairly confident this sale would materialize although he left open the possibility that it would be a partnership and not a sale.
Another reason he favors a sale is to eliminate a perceived conflict of interest. Potential buyers of the scanner are deterred by the purchase by Heartscan of scanners from Imatron at a reduced price. They believe they cannot compete.
Mr. Meyer opined that the transaction would occur "very soon."
Revenues were predicted for 1998 of $52,000,000. They were $39,000,000 in 1997. If the $52,000,000 is reached in '98, Imatron will be a profitable company.
Someone asked about the 5 patents that Imatron gave to Siemens. The question was "why." Mr. Meyer said it was to pay off a loan owed by Imatron to Siemens and that the technology was not critical. He said those particular patents were not particulary important.
He opined it would take another company 5 to 7 years to make a scanner similar to Imatron's and by then, Imatron will have improved its own significantly.
Someone wanted to know if machines already in use can be retrofitted. The answer was yes.
And, I also heard Mr. Meyer say that no more machines were being given away.
All that having been said, I must add that I was writing very fast and may not have gotten everything exactly right -- especially the scientific information. I am sure on my numbers as to the number of scanners sold and expected to be sold, however. And, I believe most of the other information is correct.
If anyone else was there and sees I've got something wrong, please correct me.
All in all, if I had more cash, I would buy more.
Good luck everyone.
Maxine |
