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Company Background Gamma Medica, Inc., (GMI) is a revenue-stage company that develops and utilizes advanced solid-state digital detectors in health care imaging systems with leading-edge technology. CEO Bradley Patt, Ph.D., co-founded GMI in 2001. GMI acquired in 2005 IDEAS of Oslo, Norway, and in 2006 Advanced Molecular Imaging of Sherbrooke, Quebec. GMI and GE Healthcare entered a joint venture in preclinical imaging in 2008, and then Gamma Medica acquired the entire business in 2011. GMI has 60 employees and leverages contract engineers, contract manufacturers, and distributors. Projected 2012 sales will be $24.7 million, comprising 75 percent preclinical, 20 percent clinical, and 5 percent industrial electronics.  Technology Overview  GMI’s FDA-approved Molecular Breast Imaging (MBI) device is installed in 20 clinical sites and uses mild immobilization of the breast between two digital, solid-state gamma photon detectors that image cancer lesions regardless of breast density. The patient is injected intravenously with a tracer amount of Tc-99m-sestamibi, avid for tumor cells, and imaging begins within five minutes. The company has lowered radiation dose to equal screening digital mammography.  Market Potential  Clinical revenues were $1.8 million in 2010, $1.9 million in 2011, $4.9 million projected in 2012, and growing to $50 million in 2015. GMI recalibrated several market analyses using actual equipment sales and constructed Rogers/Bass diffusion models to predict market potential. The company divided the market for breast cancer imaging into three segments: general screening, high-risk screening (dense breasts, BRCA genes, family history), and secondary diagnosis. The primary application for MBI will be screening of radiographically dense breasts (40 percent of European and American population; 70 percent of Asian population). The Mayo Clinic and GMI predict that MBI utilization will grow to 10.5 million high-risk screening and 5 million secondary diagnostic procedures per year.  Competitive Advantage  Women with radiographically dense breasts carry a sixfold increased risk for breast cancer. However, mammography fails to detect most cancers in these women. In a Mayo Clinic 1,700-patient dense-breast screening trial, digital mammography detected only 2 of 20 tumors, while MBI found 18 of 20.  MBI has a clear advantage in specificity over competing technologies: a Mayo Clinic 1,000-patient study demonstrated 91 percent sensitivity and 93 percent specificity in dense-breasted women, much better than mammography and with similar sensitivity to MRI but better specificity (fewer negative biopsies). The GMI LumaGEM® system is 1.5 to 2.0 times more efficient than competing MBI systems, which results in the lowest dose. Financial Overview  Gamma Medica has been supported by $13.2 million in grants, including NCI STTR and SBIR Bridge grants, $82.4 million in product sales, $18.2 million in venture capital, and $16.3 million in debt financing. GMI is seeking $15 to $20 million to grow its Clinical Division by developing a mobile gantry, to conduct dense-breast MBI screening trials required for PMA, to develop international distribution capabilities, and to promote reimbursement, accreditation, and ACR/SBI clinical use guidelines.  Intellectual Property  The GMI technology is protected by eight patents for electronic detector readout and MBI with mild breast compression. In addition, GMI has licensed exclusively all Mayo Clinic patents and know-how related to MBI. Commercialization Strategy  GMI has developed a commercially successful (19 installations) MBI system (LumaGEM®) for breast cancer secondary diagnosis. The company is expanding usage of MBI for breast cancer screening, treatment monitoring, and guidance of biopsy and surgery.  The cost of the MBI system hardware and procedure is less than one-third that of MRI. Average reimbursement is $450 (plus professional component and radiotracer cost) and most payors have positive reimbursement policies or approve MBI with prior authorization.  Pipeline Products  GMI is developing an MBI-guided biopsy procedure (2012 commercial release). The company expects to introduce a mobile gantry in 2013, and plans to combine ultrasound with MBI in 2014-15. The same detector technology can be applied to prostate, brain, and other small organ cancer imaging. Management Team  The seasoned management team has a combined 150 years of professional experience with 110 years in management, 100 years in health care, and 60 years focused on women’s health.  Bradley Patt, Ph.D., CEO, President, Co-founder of GMI & Radiant Detectors (sold to Seiko in 2005), Director of Photon Imaging, DxRay, & TheraCell. James Hugg, Ph.D., VP R&D, CTO: GE Healthcare and Global Research, Henry Ford Health, University of Alabama - Birmingham, British Petroleum, Shell. Debbie Thomas, VP Marketing: Aurora Imaging Technology, WebMD, SAP America. Sharon Smith, VP Sales: Aurora Imaging, Naviscan, Hologic, Procter & Gamble. Deborah Matthew, VP Operations: Paragon Business Systems, Delphi Information Systems.