Amanda Pedersen 1

June 8, 2017

6 Min Read
Will Superior FDA Labeling Ease Hologic Investor Concerns?

FDA approved a new label for Hologic's Genius 3-D mammography technology, designating it as being superior to standard 2-D mammography for routine best cancer screening of women with dense breasts. It is the first system of its kind to recieve such labeling.

Amanda Pedersen

Hologic's Genius 3D Mammography system won FDA approval in 2011, but a newly approved physician label gives the system supier status over standard 2-D mammography for routine breast cancer screenings of women with dense breasts.

While concerns about market challenges and certain recent business developments may have made some analysts uneasy about Hologic in recent months, a new FDA label approval could ease those concerns.

Timothy Wells, director of industrial design at Hologic, will join other design experts on the panel "Disrupting the User Interface," at MD&M East on June 14, 2017, in New York City.     

The company's Genius 3D Mammography exam is now the only mammogram FDA has approved as being superior to standard 2-D mammography for routine breast cancer screening of women with dense breasts. Between 40% and 50% of women ages 40 to 74 have dense breasts, Hologic noted.

The Genius exam first received FDA approval in 2011, and the newly approved physician labeling is based on clinical studies proving the exam improves invasive breast cancer detection while reducing unnecessary recalls among women of all breast densities, including those with dense breasts, Hologic said.

Hologic's Genius 3D Mammography exam consists of a 2-D and 3-D image set, where the 2-D image can be either an acquired 2-D image or a 2-D image generated from the 3-D image set, according to the company.

Bye, Bye Glory Days

During the company's second quarter earnings call in May, which was transcribed by Seeking Alpha, several analysts raised questions about the company's slower growth in 3-D mammography as the market has matured. As Qmed reported previously, 2015 was a particularly stellar year for the business.

"If we rewind to 2015, it was our U.S. breast health division that drove growth behind the rapid adoption of Genius 3D mammography," Hologic CEO Stephen MacMillan said during the call. "As this growth driver slowed last year, surgical emerged to pick up the slack."

Hologic CFO Robert McMahon acknowledged during the call that incremental placements of 3-D units continued to moderate during the second quarter as the company pursues smaller, more price-sensitive customers. At the same time, he added, booking trends remained solid, and the company's backlog is healthy.

Recent commercial payer decisions should also help to solidify an even broader market adoption over time, McMahon said. More than 75% of American women in Hologic's target patient population now have incremental insurance coverage for 3-D, he said.

According to Canaccord Genuity's Mark Massaro, the FDA label expansion affirms the company's best-in-class status for its 3-D tomosynthesis offering. In a report issued this week, the analyst called the label expansion an incremental positive for Hologic.

In this image from a case study, courtesy of Hologic, the company points to a malignancy that was missed with conventional 2-D mammography, but detected with Hologic's 3-D mammography system.

Both the U.S. and global market for the technology remains largely underpenetrated, and Massaro said he expects to see gradual gains in penetration from 2-D to 3-D over the next several years."It also reduces our concerns about material competitive challenges," he said.

What's Spooking Smaller U.S. Hospitals?

"I think the simplest way to think about what we're seeing in the U.S. at this point is we've largely gotten all the big hospitals and the big institutions," MacMillan said.

Now the company is trying to target community hospitals, which tend to be smaller and more price sensitive. Those customers also may be "slightly more spooked," by healthcare reform uncertainties, MacMillian said.

"I think with some of the smaller hospitals, they're probably just being a little more cautious," he said, adding that this is not something he is overly concerned about. "But I do think we're kind of at that point in the curve where it's getting a little slower, and a little harder, to keep going and getting much more."

An Evolving Competitive Landscape

Increased competition in the space also could be hampering Hologic's efforts to reach smaller prospective U.S. customers. In January, FDA approved a software upgrade for the Aspire Cristalle digital mammography system from Fujifilm Medical Systems, which enables the company's U.S customers to use 3-D mammography. GE Healthcare also introduced the Senographe Pristina, which was designed to allow women to control compression during their mammogram using a remote.

MacMillan acknowledged both competitors, but said GE's Pristina is "yet another version of 3-D that is still no better than their 2-D."

While he does not see GE's Pristina as a huge threat to Hologic's market share in 3-D mammography, MacMillan said the increased competition may have caused some prospective customers a reason to delay their purchasing decision.

MacMillan also said Hologic does not plan to lower its prices, even as competitors are taking a much more aggressive approach to pricing.

"And frankly, we could probably move a few more gantries if we went down, but we've worked really hard over the last three-plus years to maintain pricing discipline which, when you have the best-in-class product, we want to do," MacMillan said. "I think that combined with growing insurance coverage, we continue to feel very good about where the market will go over time, but I think the big - the huge ramp-ups - I think, are behind us."

McMahon also said Hologic is "still gaining more than its share of the installed base," and its average selling prices are up slightly on a year-over-year basis.

The company has also made strides toward diversifying its product portfolio, most recently with its $1.65 billion acquisition of Cynosure, an aesthetic technology maker.

Age: It's Not Just a Number

Separately, Hologic reported that a new subgroup data analysis from an earlier retrospective multicenter study is now available. Researchers led by Elizabeth Rafferty, MD, analyzed the performance of tomosynthesis in specific age groups. They found that the addition of tomosynthesis to digital mammography significantly raised detection rates for invasive cancer for women between the ages of 40 and about 70. At the same time, the advancement significantly decreased recall rates for all age groups, with the largest performance gains seen in women in their 40s.

"The fact that tomosynthesis offers specific benefit to women in their 40s is not surprising, but the magnitude of that benefit was unexpected," Rafferty said. "We needed a better screening tool, and tomosynthesis fills that void."

Between the substantial increase in cancer detection and fewer false positives, Rafferty said the study should address any concerns that have lingered over screening this population of women.

Earlier this year, a Danish study sparked a fierce debate in the breast cancer community over mammography false positives. 

Amanda Pedersen is Qmed's news editor. Contact her at [email protected].

[Image credit: Hologic Inc.]

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