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San Diego: Perfecting Paradise, Copyright 1999 by Heritage Media Corporation


San Diego-based Digirad is a textbook example of how a company paid close attention to market conditions and was able to carve out a unique product opportunity. Digirad's proprietary technology is based on solid-state semiconductor technology, which was developed in-house and originally used in defense technology applications. The company focuses on the medical imaging market and its flagship product is a compact, high performance, mobile gamma camera for nuclear medicine imaging.

Digirad originally concentrated on defense-related technology. The company was successful in obtaining numerous grants from the Department of Defense, the National Cancer Institute and the U.S. Department of Energy, but realized that its core technology could go far beyond just defense-based applications. Digirad developed solid-state detector technology that works at room temperature. This was a major technological advance as crystal sensors used by the military, for example, functioned when supercooled in liquid nitrogen. Digirad developed new ways to enhance the output from the detectors and combine them in large arrays for high resolution. This opened the door to a wide variety of product applications.

The company's innovative technology soon caught the eyes of venture capitalists. In 1994, Kingsbury Associates, a prominent San Diego venture capital firm, invested the first seed money in Digirad. The company has since raised on its own more than $33 million in equity financing.

The funds have helped Digirad create the world's first solid-state nuclear medicine gamma camera, known as the Digirad 2020tc Imager(tm), which will be rolled out in 1999. The federal Food and Drug Administration (FDA) granted market clearance for the imaging device that only has a 50-pound imaging head. The imaging head attaches to a computer and is mounted on a cart to allow mobility of the imaging system. Since the 2020tc Imager(tm) is portable and lightweight it allows clinicians to transport it where not previously possible. All other conventional stationery gamma cameras weigh at least 3,000 lbs. or more and use old-fashioned bulky vacuum tubes (and this technology is more than 60 years old!). These large vacuum tubes convert the gamma rays to light flashes and then to electrical signals. Digirad's solid-state camera replaces the vacuum tubes with detectors and semiconductors that convert the photons directly to a digital output.

Additionally, Digirad's gamma camera can be moved to locations around the hospital and even to physicians' offices. Because of the camera's size and flexibility, it allows doctors to obtain additional clinical images not possible with the conventional vacuum tube-based cameras.

In nuclear medicine procedures, doctors inject patients with small amounts of radioactive materials that are taken up by body tissues or organs. The Digirad camera images the movement and location of these materials, which assist in diagnosing cancer, various types of cardiovascular disease or other abnormalities within the body.

Digirad believes that its products will have a positive impact on the health care bottom line. Currently, after someone has an abnormal mammogram, they are often sent to get a biopsy. About 800,000 breast biopsies are performed each year in the United States - 90 percent of which are negative, at a cost of $3,000-5,000 per biopsy. A nuclear medicine study can detect the breast cancer and provide more direct information to help potentially reduce the number of unnecessary biopsies, which helps reduce health care costs -- cancer specialists, for instance, can detect breast tumors that don't show up on conventional mammograms, especially when breast tissue is very dense.

In addition, cardiologists are using nuclear imaging to determine the extent of heart damage when someone is having, or has had, a heart attack. It's estimated that about 40 percent of the five million Americans who go to emergency rooms each year with cardiac symptoms are not having a heart attack. Conversely, about 50,000 of those having heart attacks are mistakenly sent home. Nuclear imaging can distinguish between these possibilities.

Digirad's ability to evolve and develop new products is not only going to help the company increase sales (the market for gamma cameras in nuclear medicine is over $700 million a year), but it will also be making a major contribution to medicine and other fields. Health care costs are expected to continue to increase over the next five to ten years. Digirad's cost-effective solid-state technology can provide faster diagnoses leading to more effective treatment. The company is confident that its core technology will revolutionize the gamma camera market in the same way that other solid-state innovations changed industries such as computers, televisions and radios, and expects the technology can be applied to areas outside the world of medicine. These will not only help produce new sources of revenue, but enable the company to make a significant contribution in a wide variety of markets.

One such area is materials analysis - the detector can be used to look for cracks in airplane engines, oil well logging, nuclear weapons surveying, environmental monitoring and geological surveying. The imager can be used, for example, as an industrial X-ray for food processing, and for airport baggage scanners for weapons detection. Digirad's core technology could also make it easier to inspect nuclear facilities in countries where access time is limited.

Digirad's solid-state innovations bode well for the company, which is well positioned to enter the 21st century as a leader in this exciting new technology.

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