FDA Approves ChromaVision Device

ChromaVision Medical Systems Inc. shares rose 34% Thursday after the money-losing medical devices company won regulatory clearance to sell its computer-based device to help physicians detect early-stage cancer.

Shares of the San Juan Capistrano-based company rose $3.88, to $15.13, in heavy Nasdaq trading of 4.4 million shares, 78 times its three-month daily average.

The approval from the U.S. Food and Drug Administration gives ChromaVision clearance to market a system that it said can detect and diagnose early-stage cancer cells as well as infectious diseases and genetic conditions. The company plans five clinical trials, including tests to detect breast, bone and lymph node cancer, this year.

“I think it’s a very significant move for ChromaVision and their diagnostic technologies,” said analyst Joseph Garner of Emerald Research, who rates the stock a buy. “They have a total market available to them of about $300 million.”

Last year, ChromaVision reported a loss of $8 million, or 47 cents per share, in its first year as a public company. Garner said he expects the company to lose 58 cents per share this year, but said it could post its first profit in 2000 if its cancer-detecting system is successful. ChromaVision completed its initial public offering in August 1997, when the stock sold for $5 a share.

“This transforms the company from development to commercialization,” said analyst Jerry Anderson of Janney Montgomery Scott. “They can begin marketing products currently in their pipeline.”

Anderson said the system, which uses a microscope, computer and color-coded slide images of cells to detect disease, has been touted by the company to be potentially more accurate and less costly than existing tests.