All Approvals Are Not Created Equal

MELA Sciences' (Nasdaq: MELA  ) stock was up more than 55% yesterday as the company announced that it had been granted approval to market its skin cancer detector MelaFind in Europe. Whoop-de-do.

Whoop-de-do because the company was only a $56 million company on Tuesday. A 55% increase isn't adding that much value. MELA is still valued nowhere near where it was in the fall of last year.

Whoop-de-do because a CE Mark approval just isn't that big of a deal. While the drug divisions of the U.S. and EU regulators have fairly similar requirements, that's not the case for medical devices. Rigorous clinical trial data isn't required for the EU to sign off on the approval. For that reason, medical device companies like Medtronic (NYSE: MDT  ) and Boston Scientific (NYSE: BSX  ) almost always gain EU approval before heading before the FDA.

The EU system puts the onus for deciding whether the device should be used on the doctor. Frankly I'd rather see the market decide the fate of a drug or medical device than regulators, but either way the sales will ultimately be based on the clinical trial data.

So while the approval is nice, MELA will have to market the devices with the same data that it had when the Food and Drug Administration rejected the device the first time. A panel of outside experts was only slightly positive about the device's usefulness.

MELA plans to start selling the MelaFind in Germany, where there's a high rate of melanoma. Whether doctors will be convinced that the device is better than their eye at determining whether a biopsy should be done is still unknown. 

Like Delcath Systems (Nasdaq: DCTH  ) , which sits in the same EU-but-not-US-approved boat, an FDA approval is necessary for the survival of the company. An FDA endorsement will open up the largest market and could theoretically influence EU doctors to buy the machine. No whoop-de-do about it.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (3)

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  • Report this Comment On September 08, 2011, at 3:35 PM, reachsean1 wrote:

    so what was this article mean. is it a hit job , , it does not give me any idea about anything .

    like the rest of your stupid web site , you guys do not contribute anything to anybody .

    do you ?

  • Report this Comment On September 08, 2011, at 5:45 PM, BillCohen wrote:

    I saw that the author has a record of drug use (investigate online). That astounding find aside, the out-to-lunch Motely Fool execs should seriously supervise begin to review these intern writings before release. The lesson MF is: You must pay for real investigative journalists and writers.

    Not surprisingly, there is overwhelming support among the Dermatologist community here and overseas (check the list of institutions and private practice dermatologists who have actually studied the device and clinical data) who are in support of MelaFind and have even written to the FDA in support of approval for the device. Why leave the factuals out and laden your chaffy writings with whoop dees and...well you know the rest of your editorial repetoire for influencing tops and bottoms to your own likings.

    Researching this author whom Motely Fool obviously gave free reign to for writing such a sophomoric Op Ed piece reveals to professionals like myself that they are deliberately or inadvertantly trying to manipulate stock prices.

    Such jounalism is an excellent example to submit to the SEC.

    Recall Boston Scientific and Medtronic's beginnings? Check the history and then do your own research about Mela Sciences by starting here:

    http://www.globalacademycme.com/news/skin-allergy-news/singl...

    http://www.bing.com/search?q=MelaFind+approved&go=&q...

  • Report this Comment On September 08, 2011, at 6:30 PM, SamuelHasson wrote:

    After you get your PhD., M.D., MBA, plus 20 years experience in this field as others have done, then you have an opinion that is worth listening to. Otherwise, don't speak on behalf of those who are actually suffering. It's a shame that by virtue of this venue, you seem to know what you are talking about. Thank God the ones who know, the doctors and the patients, do not listen to one word.

    Also, managment should critically read what you write before publishing it. This freedom of speech for all can be a reckless principle to rationalize, especially when you relieve yourself from your responsibility because it's your job, not your job, discrimination, not discrimiation, blah, blah, blah, blah. Just do your job thoughtfully and stop this gross negligence at its knees!

  • Report this Comment On September 09, 2011, at 2:34 PM, Rnookkeeper wrote:

    "Frankly I'd rather see the market decide the fate of a drug or medical device than regulators, but either way the sales will ultimately be based on the clinical trial data."

    Hey, you missed-out on some great deals on DES, before it was withdrawn, not by lack of a market (one that loved the "morning after" concept), but by _regulators_ who didn't like deformed babies!

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