MELA Sciences Management Discusses Q3 2013 Results - Earnings Call Transcript

Nov. 6.13 | About: STRATA Skin (SSKN)

MELA Sciences (MELA) Q3 2013 Earnings Conference Call November 6, 2013 4:30 PM ET

Executives

Richard Steinhart - SVP, Finance; CFO and Treasurer

Robert Coradini - Interim CEO

Rose Crane - Incoming CEO and President

David Stone - Chairman

Analysts

Joshua Jennings - Cowen and Company

Jeffrey Berg - Health Care Insights

Operator

Good day, ladies and gentlemen, thank you for standing by and welcome to MELA Sciences 2013 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions). As a reminder this conference call is being recorded.

I would now turn the conference to our host, Mr. Richard Steinhart, CFO. Sir, you may begin.

Richard Steinhart

Thank you, Eric. I'd like to first read the Safe Harbor language. This presentation includes forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. These statements include, but are not limited to our plans, objectives, expectations and intentions and other statements that contain words such as expects, contemplates, anticipates, plan, intend, believes, assumes, predicts, and variations of such words or similar expressions that predict or indicate future events or trends or that do not relate to historical matter. These statements are based on our current beliefs or expectations, and are inherently subject to significant known and unknown uncertainties and changes in circumstances, many of which are beyond our control.

There could be no assurance that our beliefs or expectations will be achieved. Actual results may differ materially from our beliefs or expectations due to financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the company and the medical device industry in general, as well as more specific risks and uncertainties facing the company, such as those set forth in its reports on Forms 10-Q and 10-K filed with the US Securities and Exchange Commission, the SEC.

Factors that might cause such a difference include whether MelaFind achieves market acceptance or becomes commercially viable. Given the uncertainties affecting companies in the medical device industry, such as the company, any or all these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. The company urges you to carefully review and consider the disclosures found in its filings with the SEC, which are available at www.sec.gov and www.melasciences.com.

I'd now like to turn the conference over to our Interim CEO, Bob Coradini.

Robert Coradini

Thank you, Richard. Good afternoon and thank you for participating in today's call. This is Bob Coradini, Interim CEO and Director of MELA Sciences, and effective next Monday, your new Chairman. Joining me are David Stone, Director and Outgoing Chairman; as well as Rose Crane, our newly appointed incoming President and CEO, and who starts next Monday; as well as Richard Steinhart, our CFO.

On today's call, Richard will be providing a review of the third quarter financials. Then I will provide an overview of recent activities, as well as our evolving strategy. I will then turn the call over to Rose, for some brief introductory remarks, and we will wrap up and open the call for questions.

First of all, I must say that I am extremely excited to welcome Rose Crane as MELA Science's new incoming President and CEO. I am happy she could join the call today. I had the pleasure of working with Rose at J&J. So I know first hand, what a terrific leader and executive she is.

Secondly, as you may know already, last week, we successfully completed a stock offering, that yielded net proceeds of approximately $5.5 million. The offering puts us in a much stronger position, to fund the continued commercialization of MelaFind, as well as our technology development efforts. We are pleased, investors saw the potential of our company, technology, and products, to afford a sustainable business, based on information that MelaFind can provide as a tool for dermatologists.

Let me now turn it over to Richard to give a summary of the financial results.

Richard Steinhart

Good afternoon and thank you Bob. I will now run through some of key issues that impacted our reported results in the third quarter of 2013, and a few items that will affect results going forward.

As reported in the third quarter, revenue rose approximately 56% to about $108,000 from approximately $69,000 last year. At the close of the third quarter, we also had deferred revenue, both current and long term of approximately $373,000, compared to about $151,000 at the close of the third quarter in 2012. As a reminder, because we entered into contracts with multiple elements of delivery. We are required to defer a significant portion of our MelaFind placement fee, and book it ratably over the term of the contract, despite the fact that we generally receive the entire cash payment on installation.

As a result, deferred revenue reflect the timed recognition of the placement fee revenue over the term of the user agreement, which is usually two years.

Correspondingly, the cost of revenue for the third quarter 2013 was approximately $1.9 million, compared to approximately $569,000 in the same period of 2012. The current quarter includes non-cash depreciation of MelaFind systems, totaling approximately $559,000, and a non-cash impairment charge of approximately $1 million, for MelaFind systems placement locations that are not providing to be sufficiently productive from the [user] standpoint.

Over the coming quarters, we anticipate working to redeploy these systems into environments that meet our new focus on larger, high volume, and higher profile medical centers, hospitals and teaching environments.

Cost of revenue is made up of direct costs associated with placement of MelaFind systems in doctors offices, the cost of consumables, technical support costs, and depreciation expense for MelaFind systems, that are placed in the field, which remain a company's property.

Third quarter 2013 research and development expense declined to $857,000 versus approximately $1.4 million in the third quarter of 2012, reflecting the benefit of our cost reduction plan, offset by reorganization costs and resources being redeployed from our R&D activities, to support our new strategy.

Selling, general and administrative expenses were $3.5 million for the third quarter 2013, flat with the same period last year. Some incremental sales and marketing expenses and reorganization costs, were largely offset by the cost reduction plan. Q3 2013 G&A also reflected approximately $70,000 charge for employee termination benefits, related to the restructuring we announced in August.

Finally, our Q3 results included a one-time charge of about $1 million, of which approximately one half was non-cash, for the retirement of our venture debt. With that behind us, we have cleaned up our balance sheet and have essentially no debt.

Our net loss for the third quarter 2013 was approximately $7.4 million or $0.17 per share, versus a net loss in the third quarter 2012 of $5.4 million, also $0.17 per share. Again, this year's loss included approximately $2 million in one time charge, that were mostly non-cash, to cleanup our balance sheet and set the stage for a new strategy.

MELA Sciences' cash and cash equivalents were $2.6 million at the close of the third quarter 2013, and this excludes the proceeds of the approximately $5.5 million we raised in the registered direct offering in October.

I would now like to turn the call back to Bob, who will provide details about our strategic initiatives underway, and then we will later open it up for questions.

Robert Coradini

Thank you, Richard. In my four months as Interim CEO, I have worked with the team to understand and develop avenues, to unlock the value of our technology. In speaking with key opinion leaders in the dermatology field, we have developed deeper insights on the value of our optical imaging technology. Feedback, we are now using to reshape the strategy of the company, and usage of MelaFind.

We have also realigned our marketing strategy and priorities, to focus on multi-spectral, high quality academic, and other high profile installations, rather than a focus solely on the quantity of device installations.

For this reason, we are electing to cease reporting data on the number of installations at this time. It has become a distraction, that is proving to have no bearing on value creation, and in fact, unproductive machine deployments, can have a very negative impact on perceptions in the dermatology field.

Said another way, we are focusing on few major deployments, with some of the leading hospitals and teaching institutions, rather than a large number of small practice deployments, that neither raise our visibility nor generate any meaningful level of usage.

At the same time, we have taken a variety of actions to better manage our costs. As a result, we now have a new plan of action to reposition MelaFind before potential customers. While also initiating research on other dermatological applications of our core imaging technology. In essence, we are embarking on a new and exciting phase of the MELA Sciences story.

Coming into July, we anticipated that Q3 sales would be challenged, given the 2Q trend, and the impact of the seasonal summer slowdown. We saw the third quarter, as an opportune time, to learn what was working and what was not, and to reconnect with our customers. It was also a time to launch deeper assessments of our technology, processes and clinical data. Though a demanding process, we are pleased with what we found.

While we were able to grow revenue by 56% for the quarter, albeit from a small base, the strategic review and transition of our sales and marketing focus, hampered our quoted results.

From our analysis, we came to realize, a value proposition was unclear, and that our pricing and revenue model were confusing, labor intensive, and ultimately, unworkable. It was very difficult to obtain data from our systems, because of a personnel time and effort required to visit each machine and download it's records, but we have already begun to develop a solution, that will be incorporated in our next generation device.

As many of you know, MelaFind is the only FDA, Pre-Market Approved or PMA, automated, optical diagnostic device for melanoma detection. What we discovered, is that the technology was misunderstood, and it is not about providing the answer, but being a tool to aid dermatologists in their fight against melanoma, especially in caring of a high risk patient, who come back to see their dermatologist multiple times per year.

We recently revealed data, that suggest that doctors who use the data provided by MelaFind, achieve better diagnostic results, and greater efficiency, than those who do not use the device. We also revealed new data, that suggest that MelaFind helps dermatologists make better decisions, as well as find melanomas at early stages, even in young adults, in whom melanoma is often difficult to detect.

Our study strongly suggests, that no matter how good a dermatologist is, using MelaFind makes them better, and patients like it too. Patients have a high regard for their dermatologists, when they get to see what their physician sees. Also, many patients want to be a part of the decision-making process, as it relates to their own healthcare, and we believe MelaFind is a valuable tool in that process.

In sum, we use the third quarter to develop a new and improved marketing model, including a new pricing model, new selling strategies based on relationship selling, and a new value proposition.

To summarize our recent progress, we have one, established a new strategy and operating plan; two, restructured our business and implemented significant cost reductions; three, expanded our leadership ranks with several new appointments; four, deleveraged and de-risked the company, by retiring a high plus venture debt in September; and five, expanded our visibility and our outreach within the key dermatological community, and in their events.

With regard to our leadership, I have long felt that it is the quality of our people that makes a successful organization, and we have acted aggressively to build out our team in the past few months.

Of particular note, today we announced the appointment of Rose Crane as our new incoming President and CEO. Rose is a former senior executive of Johnson & Johnson, with whom I worked closely, while I was there. She was recently a partner and head of commercialization at Appletree Partners, where she was responsible for assessing and recommending pharmaceutical products, medical devices and healthcare services for the Appletree portfolio.

Previously, she was President and CEO of Epocrates, a health technology company, where she developed the strategic plan to advance growth, and took the company public in an oversubscribed offering. Rose was Group Chairman of Over-The-Counter/Nutritionals at Johnson & Johnson, the largest worldwide OTC company. She also spend 20 years at Bristol-Myers Squibb, including as President - US Primary Care, where she managed an operating unit with annual sales of $7.5 billion. Rose is an industry veteran, with an excellent track record of growing organizations, driving corporate development activity, and successfully building commercial platforms.

We are extremely excited to have her leadership and operational expertise leading MELA Sciences. We are confident she will build momentum in building our business and eventually establishing MelaFind as a standard of care in the fight against melanoma.

In addition, we also added veteran medical device commercialization expert, Frank DeBernardis, as a consultant to lead the revamping of our sales and marketing, and business development function. Frank has over 35 years in marketing and sales experience in the medical device industry. He is a pro. He was a sales manager at Medtronic; sales and marketing at PhysioControl and at Meadox Medical.

And we are very pleased to have added Tony Dimun to our board. Tony is a serial entrepreneur, with more than 30 years of successful operational, business development and financial experience.

Finally, to expand our reach within the dermatology community, we formed a team of senior leader group, as well as the user advisory board. We also appointed Dr. Darrell Rigel, Clinical Professor of Dermatology at New York University, as Chief Medical Advisor to our Board of Directors.

In the area of corporate and product exposure, we have accelerated and expanded our exposure to all the dermatology community, with presentations, demonstrations, and the publication of scientific data. This includes one, posting our first clinical advisory meeting among key opinion leaders, and users at the annual all-clinical dermatology conferences in Las Vegas.

Two, we also presented clinical findings and (inaudible) a host of presentations. Three, live demonstrations of MelaFind at the American Society of Dermatologic Surgery Annual Meeting in Chicago, early October. Four, participating in the Washington D.C. Dermatological Society's Fall Clinical Conference this October; and five, exhibiting MelaFind at the German Skin Cancer Congress in Essen, Germany, in September.

So as you can see, we have accomplished a lot in a few short months. We are pleased with our progress. It is now my pleasure to introduce Rose Crane, our incoming President and CEO for a few comments. Rose?

Rose Crane

Thanks Bob and good afternoon. I am very excited to join MELA Sciences at its inflection point. I am particularly excited about the technology, which is what really got me here. And I have also had a personal attachment to MELA (inaudible). My late husband Doug, was a high risk patient, who passed away from a non-melanoma skin cancer. And while MelaFind is not indicated or designed to see or analyze the cancer that Doug had, I do recognize the importance of improved diagnosis, and particularly, early detection. And I can surely imagine, with other high risk patients and the families go through when dealing with the diagnosis of melanoma.

I want to use my experience to help bring new patient centered insights, to complement the dermatologist's focused approach of the company. The execution of the repositioning strategy has begun, and is being well received by leading dermatologists, in institutions both here in the US and Germany, and I fully expect it will provide us with the dynamic and durable roadmap for a strong and profitable future.

I am excited about the opportunity and have tremendous confidence in MELA Sciences, our leadership team and all our employees. I look forward to meeting and speaking with our investors in the coming months.

And I will now turn the call back to Bob. Bob?

Robert Coradini

Thank you, Rose. As you can see we are evolving into the next chapter of the MELA Sciences story. So let me provide an overall perspective of recent progress we have made, in repositioning MELA Sciences.

When I was appointed Interim CEO in June, it became clear that our business model could only work with high volume usage on each and every unit. Usage, that did not match the utilization we were experiencing. We had learned that we had a product that performed well clinically, but not economically.

In right-sizing our organization early August, a necessary prudent action for future success, we had to weather the disruption that stemmed from a significant number of positions we took out of the business. We reduced field headcount, starting first with poor performers, followed by voluntary exits. We reassessed the hiring profile of many of our salespeople, and recognized that we needed to attract, retain and develop those reps, who had the skills, experiences and physician relationships required to be successful, selling a sophisticated medical product.

We also had to deal with marketing programs, which, though effective at generating consumer excitement, does not translate into bringing the right kind of patients into the practice that had a MelaFind device. Our national footprint was too small to benefit from the marketing and PR we were generating.

Given these factors, we knew that it was best to pull in and learn why our launch had not gone well, and have had to reposition MelaFind. We talked to our customers, all the user advisory panel meeting. Talked to reimbursement consultant and then talked to our customers again. Needless to say, we learned a lot.

We have learned the following; one, MelaFind is a serious medical tool, to assist in diagnosing a serious medical disease. Two, MelaFind can give physicians far more information than a simple binary high or low outlook. Three, we believe that MelaFind has the ability to give the pathologists who [read] the biopsy, more information, than he or she currently has about a biopsy lesion. This was an incredible important finding.

The biopsy and the slide readings are often completely independent events. The doctor sees the patient, and in something of a vacuum, the pathologists sees the excise tissue. We believe, MelaFind data can link the two, and give the pathologists more information about a lesion, that he or she has ever had in the past. MelaFind may even play a very valuable role in the preparation of a sample for biopsy, improving the end result and also saving valuable time.

The insight that we have gained over the past several months, have helped shape and evolve a new strategy for success. The key word here is evolve. MELA Sciences, along with our flagship product MelaFind is evolving. We are transforming the company around to power the information we provide. Our value proposition is not just the machine or the algorithm, but our technology capabilities, to see, capture and provide information, which can assist dermatologists, and possibly pathologists in their work.

We are refocusing the company on the value of this information. The potential of our technology, and how our data may improve patient outcomes, as well as the efficiency and accuracy of the process.

We are also looking at future applications, and what we may be able to do with the technology. Imagine, that we could see the margins of lesions in the operating room, and how that will improve surgery results and procedure times. Imagine if we can look at product cases, and see if lesions are changing over time. Imagine, this data could be transmitted wirelessly, securely, stored in the cloud, and linked into electronic medical records, ethically. Imagine, if we could send images and metrics to pathologists, along with the tissue samples, to help them do their job better and with greater efficiency.

We are making substantial progress in improving and streamlining our commercial efforts. Namely, we plan to utilize and develop our key opinion leader relationship, to drive further evolution and development of our strategy.

There are several areas of this plan I would like to highlight; one, we have planned to present more data and insight on the capabilities of our technology, and the advantage it offers, and to work alongside the opinion leaders within the dermatology community at leading institutions, similar to our experience in Germany.

Two, we are focusing on placing [units] with key opinion leaders and their universities to gain exposure, experience and run clinical protocols.

Three, we are engaging with numerous key opinion leaders in dermatology and pathology, to seek their feedback on how MelaFind's imaging can enhance their practice and procedures.

Four, we are increasing the cadence of clinical presentations using MelaFind, and demonstrating it's value at major medical meetings through posters, papers, publications and podium time.

Five, we are developing a pharmacoeconomic model, which will support appropriate reimbursement levels.

Six, we are exploring new sales messaging, which would emphasize the use of MelaFind imaging and metrics, to better manage our high risk patient, consistent with our indicated regulatory labeling.

Seven, we have hired several independent sales agent, with longstanding relationships with the opinion leaders in teaching sectors.

Eight, we are developing and testing new pricing models, involving a variety of delivery, installation and monthly fees.

Nine, we are overcoming the perception that MelaFind gives only a high-low reading, as to whether a lesion is malignant by teaching MelaFind users, that the product is a tool for managing the high risk patients.

10, we are developing new ways of explaining the value of images and the value of history of patient data.

In sum, we are working hard to evolve our messaging, change our pricing model, gain key opinion leader support, and evolve the dermatologist and pathologist community, in a collaborative way.

In conclusion, having come to this new understanding for our pioneering technology, we are more enthusiastic than ever before. We have made significant strides in the last several months, and we expect to make even more progress in the months ahead. There is nothing here, that cannot be managed, the technology behind MelaFind is robust, [approved] and its need is clear.

We have an invigorated team, which has been strengthened by recent additions. We are exploring the transition of MelaFind from a melanoma scoring technology to a dermal imaging and metrics clinical tool, and we are transforming MELA Sciences from a technology orientation, to focus on optically gathering data, that may improve dermatologists results, enable better patient care, improve efficiency, and reduce healthcare costs.

We have a strategic vision and team in place, and are beginning to execute on our strategy. As a result, I believe that we are at an inflection point in our growth trajectory. I remain confident, that MelaFind can and will be the standard care of dermatologists in their fight against melanoma.

Separately, before I open it to questions, I would like to thank the MELA Sciences team for their full support and confidence, while acting as Interim CEO, and a special thanks to David Stone, our Former Chairman and member of our Board of Directors, for his contributions. And finally, a welcome to our new Incoming CEO, Rose Crane, who I know before from my J&J days, and who I look forward to working again with. It has been a great experience these past several months, and the horizon ahead is limitless, with possibilities in diagnosing skin disorders. We are evolving, welcome to the new MELA Sciences.

We can now open up for questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from Josh Jennings of Cowen. Please go ahead.

Joshua Jennings - Cowen and Company

Hi. Thank you for taking the questions, and Rose, congratulations on the position. I guess, first, (inaudible), I guess it's not really a one question in terms of how we should be looking at kind of near term growth potential, with this revised strategy, and understanding the outlook that you shared with us throughout the call on the longer term opportunity and in the technology platform, what it can do for dermatologists in terms of diagnosing early stage melanoma. But just in the near term, can you just give us some details about how you are thinking about your salesforce, where you are now, and with the strategy of looking at larger centers, research focus centers, what does that to -- in terms of near term opportunity, to really drive revenue growth after 2014 and into 2015? Thanks a lot.

Robert Coradini

Hey Josh, thanks, this is Bob here. So let me see if I can try to answer. Then I think David Stone, our Chairman, might want to say a few words as well. But a couple of things; first, the way I would look at this, and hopefully today's call is just one indication. I shared with you -- we like to tell you when it's done, not what we are doing. So the best way to keep track of what we are doing is to look at our press releases, the data we publish, the institutions we announced that are coming on board. Some of this will take a little time in the sense of, we will have systems and institutions, but it takes time to get the press releases, with all the lawyers and everyone that have to get involved, but I would look at the things we announced as the track of what's going on.

In terms of our sales reps you asked, we are putting strategic reps, both -- whether they are company hires or they are these sales agents that we are employing, that have strong experiences around key medical institution clusters. So you can kind of figure out if you have been tracking, where these leading teaching and medical institutions are in dermatology, where they'd be.

So for example, if we expect one in Boston, and yes, we have one in Boston. So that's all I am going to say on this call, give you a little time to figure out where we have them, but this is our strategy, and really Josh, what we are planning on doing is, telling our investors a lot more where we are, when we get to our 10-K report, because by then, it will become hopefully very clear with some of the data, the studies that we are doing, as to where MelaFind is going, especially with the key sets of meetings in the early part of 2014, starting with the derm clinical meeting, followed by the Maui Derm, followed by the South Beach, followed by the [Compact] DDG Meeting in Europe, and you can follow the series up to the AED Meeting in March.

David, I don't know if you'd like to add a few words?

David Stone

Sure Josh. Thanks for the question, it's a great one. I am very intrigued with the results we are seeing so far, as Bob has refocused the company from a strategy that was informed by viewing MelaFind as essentially a consumer product. We knew were launching a system, with now reimbursement in place, and so a decision was made to focus on the cosmetic reoriented dermatologist, reduced the (inaudible) into her patients, and having to pay from their pocket. This is a system, where a very simple, easy to use, easy to make money kind of affecting that by work, and we got some dermatologists who break (inaudible) and give that a try. But it's really a much more sophisticated tool, that provides long information, that meets medical interpretation. It's not a consumer product for the (inaudible) market.

And as we have shifted from salesforce that was sort of pharmaceutically oriented, used to detailing botox for example, and drug (inaudible) to new salespeople, who have relationships with medically oriented derms and research centers. Then the update from the key opinion leaders has been really impressive, and we are hearing that they appreciate the company willing to work with them, and talk with them, and frankly, we are replacing 15 places, where doctors wanted a system for (inaudible) that one, they were at the focus of the previous strategy. So I think you will see that sell-through more in the kind of people who are associated with both the technology and the places that (inaudible) talked about in medical meeting, then in the numbers initially. But if we can get systems into centers where they see a lot of high-risk patients, they are going to have a lot more opportunity to use the system on a daily basis, and that will ultimately follow-through the utilization data, and that's going to come through in the sales reports, moving further into the reposition.

Joshua Jennings - Cowen and Company

Thank you.

Operator

(Operator Instructions). Our next question comes from Jeffrey Berg of Health Care Insights. Please go ahead.

Jeffrey Berg - Health Care Insights

Hello. Good luck with the changes in the directorships and right to chairmanship, Bob, and certainly to those things (inaudible). It's not quite on the website yet, but I realize, we have just announced, so I am looking forward to seeing those comments, certainly that is a strengthening of the management of the company. Wish you well with that.

Two questions, Bob, you did mention that the other dermatological physicians that you are contemplating, are looking for indications using the company's core imaging technologies. I don't know if you can elaborate on that, but I would be interested if you have any specifics? The other question [soaks] through the study I have done recently, looking at melanoma drugs, and certainly there are only limited ones for advanced line, a little better implementation of new initiatives, and given certainly Ms. Crane's background in pharmaceuticals, do you envision any affiliation with the company that has the drug for melanoma, in some collaborative way or doing marketing or something to that effect?

Robert Coradini

Jeff, thank you very much and thanks for joining the call. Great questions. You are a very smooth listener. I did mention other dermatological conditions.

First, let me take a step back and say, one of the things that really impressed me, again, my background has been with starting at GE Imaging, where I started my early medical career, before I moved to Johnson & Johnson, was the power of lifting side of an image, and the evolution of those images, and if you remember in the early days of ultrasound, the images people used to call fuzzygrams and they weren't quite sure -- they weren't sure which applications they will find them in. And as time progressed, as the images became clear, as they understood what they were seeing, things started to match that themselves, and one thing it started to see is in pregnancy and gestation, the baby being developed in the womb; and then if you start to see what was the sex of the baby, was it a little boy or a little girl. And now ultrasound progressing in gynecology and obstetrics, to go far beyond, where you can actually see the beating heart, you can see the valves, you can see other structures, you can see the spinal canal, I mean, there is a whole host of things that go on, and all the different medical disorders, in terms of the used development.

But within stages in gynecology, it moves the ultrasound into cardiology into other areas as well.

We have here, in our core technology, instead of using sound, we use light. So instead of ultrasound, think of it as ultra optics, that we can start to see into the skin, we see into a depth, because different wavelengths, into a depth of up to 2.5 millimeters, we can go down there, slice by slice, based on the different frequencies of that, and this is what our IP, our intellectual property covers. In that, sending these signals down, the signals bounce back, we detect them, and in those signals we believe, is information. Now it's still at an early stage of understanding what that information is, but in some of the pieces, we can see things such as hair follicles. We can see things such as other cancers, if indeed a pigmented, and the question is, what if they are not pigmented, you can't see them.

Well my answer to this, having grown up in GE Medical Systems, is what would they do if they couldn't see things in ultrasound. Use a contract agent. So, maybe there is a contrast agent we could use, I don't know. We are at such, at an early stage Jeff, of where we can go with this technology, but it's not just the ability to see, it's the information that comes back that we have the most excitement about. And so, we need to do all work, we need to do the feasibility trials that occur, but the nice thing here is, when you put a system like MelaFind in the hands of the leading medical and research institutions, and not as David Stone mentioned earlier, cosmetic derm that are seeing the cosmetic patient for a certain position. When you are in a leading teaching institution, you start to have those researches push the technology. This is not a drug, this is an imaging device, an imaging device that gives metrics and information. And so again, those are not indicated label uses, we have to do them under research protocols, but we are very excited and very pleased, and yes we have begun.

Jeffrey Berg - Health Care Insights

Well that does not really answer, but elaborate items and studies with Israeli companies using ultrasound measures for non-invasively measured blood constituents, (inaudible) then the hematocrit, red and white blood cells, again, non-invasively and it's an optical method. Something, you probably would take a look at as well?

Robert Coradini

Well I know, I treat it better Jeff, we need to follow-up there. And you mentioned something. I too have spent a lot of time in Israel, and I am very impressed with the quality of the information and the knowledge that exists in Israeli institutions. As you know Jeff, I was one of the key people involved in the Biosense acquisition for Johnson & Johnson, an acquisition that we paid a significant sum, for a technology at the time in electrophysiology. People liked that, but it was a cartoon, and didn't really hold a full clinical value. And yesterday, if you looked at Johnson & Johnson, Biosense Webster is one of the leading companies in electrophysiology and their CARTO system is clearly one of the leading products, using the Biosense technology.

So I believe, that there are some things we can do. I am hoping I will be able to get back to Israel. Although, Rose will be the new incoming President and CEO, and hopefully she will let me do some strategic travel and go look around, and you mentioned about melanoma drugs. That's another area that we need to some more work in. It's still early and premature, but Jeff as you pointed out, there is a lot of opportunities there, and we just have to stay focused and make progress. And I think we made a lot of progress in the third quarter, and I am looking forward to make even progress in the fourth quarter.

Jeffrey Berg - Health Care Insights

Thanks so much.

Operator

And I am showing no further questions.

Robert Coradini

Okay, thanks. Well then in closing, well we thank everyone who have joined us on today's call. We hope we have shared with you, that we are excited about MELA Sciences, our core technology, and with MelaFind, our first flagship product in offer. So have a great evening. We look forward to updating you on our progress in future calls. Thanks.

Operator

Ladies and gentlemen, that does conclude today's conference. Thank you for your attendance. You may all disconnect. Have a great day.

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