MELA Burdened By Statistics Issue: Analyst

IRVINGTON, NY (TheStreet) -- MELA Sciences (MELA) claimed success in a clinical trial of its experimental skin cancer detection device only by altering the statistical method used to analyze the data in violation of an agreement with U.S. regulators, charges an independent healthcare analyst in a report issued last week.

In response, MELA says it is confident in the statistical analysis of the data supporting MELAFind, disputing the report by Biologic Equity Research (BER), which has a sell rating on MELA based on the belief that MELAFind will not be approved in the U.S

MELAFind is a computer-enhanced imaging device that takes high-tech pictures of suspect moles and lesions to assist doctors in the early detection of melanoma, the deadliest form of skin cancer.

The U.S. Food and Drug Administration is convening an advisory panel on Nov. 18 to review the accuracy of MELAFind in diagnosing early-stage melanomas. The timing of the advisory panel is a bit unusual in that FDA told MELA last March that MELAFind was not approvable. MELA protested the FDA's rejection, submitted responses to the agency's concerns and demanded an advisory panel be held.

To this day, MELA has not disclosed fully the reasons why FDA issued a "not approvable " letter rejecting MELAfind. The BER report, however, relies on its own analysis to suggest that MELA struck out with FDA because the agency's medical device reviewers discovered the MELAFind pivotal study failed to reach statistical significance despite the company's claims to the contrary.

At Monday's close of $6.95, MELA shares are trading about where they were in March after the FDA's initial decision on MELAFind was announced.

MELA claims that a phase III study of MELAFind met its primary endpoint by detecting accurately 112 of 114 eligible melanomas for a "sensitivity" rate of 98%. The lower confidence bound of the sensitivity analysis was 95.1%, which met the FDA's standard for statistical significance in the study spelled out in a binding agreement with MELA, the company says.

The binding agreement between MELA and FDA covering the conduct of the MELAFind study required the company to analyze the data using a statistical method known as the "exact mid-P" test.

Clearing the 95% hurdle for the lower confidence bound using the mid-P test is important because that means if the phase III study were repeated, there would be a 5% chance or less that MELAFind's sensitivity to detect melanoma would be below 95%.

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