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Mela Rallies on Likely Approval of Skin Cancer Device


The company has to work out final details with the FDA to win approval of MelaFind, a device that helps spot melanoma.

Mela Sciences (MELA) stock is rallying after the company said it's in the homestretch for winning US approval for its skin cancer detection system MelaFind. The product's label, however, would suggest fairly restrictive use, a sign that the Food and Drug Administration is still cautious about giving patients false hope that they're cancer free.

The company received what's called an "approvable letter," meaning that it likely will get final OK from the agency on condition that it reaches agreement on labeling and the packaging insert, training for the use of the device and a plan for a post-approval study.

The company says it agreed with the FDA on a four-paragraph label indication that specifies only trained dermatologists can use the product and emphasizes the device shouldn't be relied on for anything other than a doctor's decision to biopsy a suspect lesion. "MelaFind should NOT be used to confirm a clinical diagnosis of melanoma," according to proposed label language the company disclosed Monday.

The stock is up 64% to $5.23 in early trading Monday. The shares are still down 23% over the past 12 months.

"This is a victory for patients," Mela CEO Joseph Gulfo told investors on a conference call Monday morning. "We can't wait to join this fight against melanoma on the front lines."

That fight would start out slowly. Mela plans to roll out its device on a limited basis in the first quarter. Gulfo hopes to sell about 200 systems in the US during the first year of US sales. The product also is approved for sale in Europe. (See Mela Sciences Soars on EU Approval of Skin Cancer Device)

The company's quest to sell MelaFind in the US has been rough. In November, FDA staff wrote a scathing report recommending that the agency reject MelaFind. A panel of expert medical advisers to the US agency disagreed and recommended the product be approved. Mela and the FDA have been in discussions this year on how the company can win US approval.

Over the summer, a Congressional panel focused on the MelaFind application and questioned the FDA and its critics who say the agency is too cautious approving new products.

The FDA has been responsive to new melanoma treatments this year. It approved Bristol-Myers Squibb's (BMY) Yervoy and Roche's Zelboraf. Roche's Zelboraf and a companion diagnostic test were approved months earlier than expected.

Melanoma, the deadliest form of skin cancer, is getting more public attention as diagnosis and death rates rise. The yearly incidence of melanoma among young adult white women rose by half between 1980 and 2004, according to statistics provided by Mela. More than 70,000 new cases of melanoma are expected to be diagnosed this year and, according to estimates, will be almost 8,800 deaths from the skin cancer, Mela says. Early detection can be a life saver, however.

Investors bid up Mela's stock earlier this month when the company said it won EU approval for MelaFind. But US approval is key. Some analysts predict the product will reach several hundred million in sales if it's allowed to be sold in the US. Those estimates were made prior to news of the product's proposed US label, however.

Twitter: @brettchase
No positions in stocks mentioned.
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