Howtek, ISSI merge to form new CAD company

Jul 17, 2002

Film digitizer vendor Howtek has completed its acquisition of Intelligent Systems Software (ISSI), a mammography computer-aided detection (CAD) developer headquartered in Boca Raton, FL.

Publicly traded Howtek of Hudson, NH, issued 10.4 million shares of common stock in exchange for all the unissued and outstanding shares of ISSI, which was privately held. The merged company has been given the all-lowercase name icad, and will be the only publicly traded CAD vendor.

Kip Speyer, formerly ISSI president and CEO, became the CEO of icad. Scott Parr, Howtek’s CEO, is the new company’s president and COO. Bob Howard, Howtek ‘s founder, will be chairman.

Howtek was founded in 1984. ISSI was founded in 1997 by Maha Sallam and Kevin Woods. ISSI’s first product, the MammoReader CAD system, was cleared in January by the Food and Drug Administration.

The acquisition gives Howtek a way to diversify outside of its core digitizer business, which has been affected by the impact of digital image acquisition technologies. Merging with ISSI gives the company access to the more promising CAD market.

MammoReader already uses Howtek's MultiRad 860 film digitizer, and the CAD unit is distributed exclusively by Instrumentarium Imaging of Milwaukee. The new firm will continue to sell digitizers to OEM partners.

MammoReader consists of a processor/scanner station and a large-screen, digital review station. The system employs simple user interfaces and an AutoStudy configuration to bypass time-consuming data entry. A worklist shows the status of every case, from initial scanning to image analysis.

The unit’s scalable architecture allows high-volume centers and clinics to add scanner stations rather than complete systems. A printer is included to generate a hard-copy record of each case. MammoReader also includes a modem connection so software maintenance and troubleshooting can be handled remotely.

One potential cloud hanging over the company is a lawsuit filed by competitor R2 Technology of Sunnyvale, CA, which in June sued ISSI for patent infringement. Icad would not comment on the suit, but said in a statement that it believes the action is without merit, and that the company would "vigorously defend the lawsuit."

Speyer acknowledged that film digitizers may ultimately have a limited future in mammography CAD due to increased use of full-field digital mammography (FFDM) systems. But such a development could be years away.

"This is happening slowly," Speyer said. "Eventually, most mammography will be generated digitally. This will be good for us. It will be pure software, but it’s many years away. Film-based is 90% to 95% of mammography (currently), so the digitizer is important to us. People won’t abandon analog film mammography just to make the change."

Speyer said he is interested in seeing how the stock market treats a CAD company, and how it values CAD. He sees it as the future.

"This is ‘The Birth of a Nation’ here," he said, referring to the groundbreaking 1915 movie. "Cancer is insidious to diagnose and track. Early detection saves lives. This is very serious business, and now we have access to capital markets."

By Robert Bruce
AuntMinnie.com contributing writer
July 18, 2002