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Mela Device Approval a Win With Conditions

Stocks in this article: MELA CYBX

IRVINGTON, NY ( TheStreet) --Congratulations Mela Sciences (MELA). The campaign of legal and political pressure paid off. The U.S. Food and Drug Administration reversed course and granted conditional approval for the company's MelaFind skin cancer detection device.

Mela shares were up $1.92, or 60%, to $5.07 in Monday trading.

Critics like myself who doubted this day would ever come, especially without a new pre-approval study, were wrong.

Well, sort of wrong, since Mela Sciences can't begin selling MelaFind until it reaches agreement with FDA to resolve a list of open issues in the "approvable" letter. These include reaching final agreement on the device's final labeling, a user guide, the details of a training program for doctors and the design of a post-approval clinical trial.

On a Monday conference call, Mela CEO Joe Gulfo sounded uncertain about when FDA would actually approve MelaFind and was careful to downplay launch expectations if and when the company does begin selling the device.

Gulfo said final negotiations with FDA on the outstanding MelaFind issues were substantially complete but then he acknowledged that these discussions with the agency were still going "back and forth" and therefore not complete. He declined to offer a guess on when FDA would issue a final approval for MelaFid but he did say the company hopes to start selling the device in the first quarter of 2012.

Before Mela launches MelaFind, the company is also going to conduct additional "beta tests" with doctors to make technical and usability improvements to the device Gulfo said.

When MelaFind is finally launched in the U.S., sales will be restricted to dermatologists who must first complete a training course on the device's use. Mela initially hoped to market MelaFind more broadly to general practitioners.

MelaFind's label describing how the device should be used is four paragraphs long and includes various restrictions and warnings on the types of lesions to be tested and how to interpret results. Gulfo, on Monday's call, acknowledged the MelaFind label is longer and more complicated than the company had envisioned when it submitted the device for FDA approval.

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