Bone Density Test Device OK'd

CompuMed said it received approval from the U.S. Food and Drug Administration to market its automated OsteoGram 2000, which measures bone density and can be used to help prevent osteoporosis.

The California-based company (CMPD), which develops computer-aided diagnostic technology, said it's the first device that lets doctors test bone density in their own offices, using standard x-ray equipment. The device can also monitor changes in bone mass over time, CompuMed said.

Doctors can now use standard x-ray equipment to take a film of a person's hand, then scan it into a computer for automated analysis.

"Since one in two women and one in five men in the U.S. today are likely to suffer hip, spine or wrist fractures caused by osteoporosis, and effective therapies exist that can dramatically reduce that risk, it is necessary for doctors to have the tools to manage osteoporosis in their own offices," James Linesch, CompuMed's president, said in a statement.

Osteoporosis causes bones to become fragile and prone to easy fracture. If left untreated, osteoporosis can progress painlessly until a bone breaks. Broken bones occur typically in the hip, spine, and wrist.

Over 100,000 facilities in the U.S. and over 1 million facilities worldwide already have the standard x-ray equipment required to perform the procedure, the company said.

CompuMed estimated that the potential worldwide market for devices such as the OsteoGram 2000, which consists of a desktop scanner, a standard PC and bone density analysis software, is worth over $2 billion. The machine will sell for under $10,000, making it the least expensive device of its type on the market, said company spokesman David Edelstein. The average price of such machines now on the market is $50, 000.

Shares rose 5/8, an 83 percent gain, to 1 3/8 in trading Tuesday afternoon.

Greater power to detect deteriorating bone mass is good news for makers of osteoporosis drugs, analysts said.

Between 25 million and 30 million people in the U.S. have osteoporosis, according to PaineWebber. About 80 percent of them are women and only about 5 percent will be diagnosed before breaking a bone, said Jeff Chaffkin, an analyst at PaineWebber.

Merck (MRK) makes the leading osteoporosis drug, Fosamax, which is one of its bigger products, Chaffkin said. In 1998 sales of Fosamax were $775 million worldwide, he said. About $505 million, or 70 percent of those sales were in the U.S.

Merck was a sponsor along the U.S. Public Health Service and the Hawaii Osteoporosis Foundation of a three-year study of the OsteoGram.

Chaffkin estimates that worldwide sales of Fosamax will be about $1 billion in 1999.

Other drugs that have been shown to re-build bone are Eli Lilly & Co.'s (LLY) Evista and American Home Products' (AHP) Premarin, an estrogen-replacement drug whose primary use is to treat symptoms of menopause.

"Any screening would be a big plus" for makers of osteoporosis drugs Chaffkin said. "Right now, there are relatively few ways to find out who's at risk," Chaffkin said. "It's clearly an advantage for Merck, because Fosamax is indicated for both treatment and prevention of osteoporosis," he said.

Lilly recently filed for approval to expand Evista's label to include an indication for treatment. Treatment is more difficult to get approval for because the trials are lengthy and have to demonstrate that the drug will have greater benefits for those who take it than those who don't, Chaffkin said.

CompuMed is also developing an automated test for arthritis. The company is also working with Johns Hopkins University Medical School to create the first device that can measure bone structure in three dimensions. The device will help assess the risk of future fractures and monitor bone changes over time, the company said.

Written By Stephanie O'Brien, CBS MarketWatch