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Biotech Stock Mailbag: Mela Sciences

BOSTON ( TheStreet) -- Housekeeping item: The next Biotech Stock Live Chat is scheduled for Thursday, Sept. 15 at 12 p.m. ET. Please join me and bring all your biotech stock investing questions.

Mela Sciences (MELA) received a CE Mark, or regulatory clearance, to sell its MelaFind skin cancer-detection device in Europe this week.

Via Twitter, @VexTrades says, "Greetings from vacation in Lake George, NY. Great news for $MELA, and the bashers are still out in full force, headed by @adamfeuerstein"

@TimMcFadden2 asks, "Come on Adam, MELA is blowing up today. Still sticking to your guns on its demise?"

Bob S. emails, "How much sales will a CE mark for MELA garner?"

Let's clear up the confusion this CE Mark announcement caused:

A CE Mark is not the European regulatory equivalent of an FDA medical device approval. The lead sentence from a Reuters story Wednesday on medical device regulation in Europe sums it up best:

"Pacemakers and electric toasters have little in common, yet in Europe the same regulatory framework covers both and a growing number of doctors think the system is no longer up to the job."

Mela was able to garner a CE Mark for MelaFind because the only regulatory hurdle is basic patient safety. Clinical trials that determine patient benefit or efficacy of a medical device are generally not required in Europe for a CE Mark. The standards for most (not all) medical device approvals are higher in the U.S., which is why you see so many medical device companies seeking approvals or clearances in Europe first.

Mela, of course, knows all too well how tough the FDA can be. The agency has refused to approve MelaFind, with FDA reviewers sharply criticizing the accuracy of MelaFind's skin-cancer detection results. FDA reviewers have also raised concerns about the potential for misdiagnosis of skin cancer that could result if MelaFind were used incorrectly.

"FDA's Mission is to Protect and Promote the Public Health and the FDA review team has significant concerns this device has not been studied adequately for its current indications for use and therefore puts the health of the public at risk," FDA reviewers warned in their MelaFind review released last year.

Barring a miracle or major (and scandalous) political intervention, MelaFind is not going to receive U.S. approval any time soon. Mela's CE Mark in Europe is the consolation prize, which does allow the company to sell the device to European dermatologists. Convincing European doctors to buy and use MelaFind is a much more challenging task given the dark cloud hanging over the device due to the FDA's concerns.
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