Cold turkey

The price of a turkey in East Hampton, NY must be very high this year, so Mr. Richard Stone is selling (and probably already sold on November 19 to his broker) 200,000 shares of Nanox, cold turkey, at a value of $17.38 a share (according the the 144 form he emailed to the SEC).

This is about half of the shares he reportedly bought with cash on September 2019, pre-IPO.  His current holdings are a bit of a mystery, but the last 20-F states that he was a beneficial owner of a bit over 550,000 shares as of March 20, 2021 (includes options and warrants, outright and through intermediaries) 

Since the form was filed on November 19, a Friday, the stock lending/borrow fee has increased from about 7% to the current 57% (at Interactive Brokers).  It is not necessarily evidence of front running - when a large holder, who has lent his shares, sells, it typically takes a bit of time for the shares to become available to borrow from the new buyers.  The form was made public by the SEC on November 22, based on what I see in the webserver header.

Or just maybe Mr. Stone does not want to wait and see what will happen at the RSNA 2021 radiology conference next week.  See, Nanox started with a tweet like this in late October,

which has quickly transformed by the end of the month into this tweet:

 

What has Nanox never done before?  Tell the truth?

Mr. Stone is a Director of Nanox, and was a Director of Nanox predecessor since at least 2014.

Update:  In case it was not obvious, Nanox never traded below $18.30 a share as a public company, an all-time low it hit after Nanox disclosed a subpoena by the SEC on November 17.  Stock has fluctuated between that low and $20.57 since.

Update June 1, 2022:  Nanox filed a 6-K yesterday, stating:  "NANO-X IMAGING LTD (the “Company”) deeply regrets to announce that Mr. Richard Stone, a director of the Company, passed away unexpectedly on May 29, 2022. Mr. Richard Stone had served as a director of the Company since November 2019. Mr. Poliakine, the founder and chairman of the Board of Directors of the Company, commented, “It is with great sadness that we announce the passing of Mr. Richard Stone. He was a highly valued director of the Company and was an inspiration to all of us. Richard will be missed not only as a business colleague, but also as a friend and a true partner. We extend our deepest sympathies to the entire Stone family.”

Inflating the hedge

How does one know whether the market is approaching peak insanity?  Maybe it is the publication of an article like this.  The author argues that Nanox is a 

buy now and hold for the long haul 

stock because it is 

a way to hedge against runaway inflation.

That is completely nonsensical, of course, as Nanox has been telling investors that it plans to charge a FIXED fee per scan with its magical device, while its costs of manufacturing and other operating expenses will be subject to whatever inflation or deflation there is.  In other words, if Nanox were not a complete fraud, it would be the worst hedge against inflation.

Image by Marina Velmozhko at Pixabay

The author gets the rest of the Nanox story completely wrong, too. 

With an efficient way to produce x-rays, 

But Nanox has never proposed an efficient way to produce x-rays.  Its proposed x-ray tubes, it they weren't completely fake, will be just as inefficient as regular x-ray tubes, as the inefficiency happens at the anode, not the cathode.

The author claims that 

Nanox.ARC produces x-rays with silicon chips that use modest amounts of electricity. 

That is quite interesting, because no functional Nanox.ARC device exists, at least none was demonstrated at the August Business Update and the recent AI webcast (Nanox has changed the design of the ARC supposedly demonstrated about a year ago at RSNA 2020).  Moreover, even if it existed, it would use the same "amounts of electricity" as a regular tomosynthesis device for the same (actually, worse) image quality, as the proposed Nanox x-ray source would use the same amount of electricity as the current regular dental x-ray tubes.  And, of course, x-rays cannot be produced with silicon chips, at least not commercially (Nanox claims to use molybdenum in its proposed chip, which happens to be fake).

Finally, the author confuses Nanox.CART with Nanox.ARC and FDA approval with FDA clearance.  Nanox has never shown a picture or photo of Nanox.CART, the only Nanox device that has been cleared by the FDA (and even that clearance appears a result of fraud by Nanox, based on what can be glimpsed from the published 510k Summary).  Also, FDA approval is completely different from FDA clearance under United States law, and claiming FDA approval when a device has been cleared is illegal.  Nanox has never submitted Nanox.ARC for FDA approval (or at least it never told the public about it) - it claimed in a June press release that it had submitted it for clearance only.

The single source Nanox.ARC has already been approved by the FDA, but the company's first attempt to earn approval for a multi-source device didn't work out.

I also have an issue with the archaic term used for CT,

Computer-aided tomography,

but that's probably a topic for another post (simplistically, the key difference between the old tomography, now called tomosynthesis, and CT is that the former can't do axial slices).  Needless to say, the proposed Nanox.ARC is not a CT device but a tomosynthesis device, according to Nanox.  What is the difference?  CT has something like 10%-20%, and growing, share of the medical imaging market using x-rays, and is considered the gold standard in many if not most x-ray diagnostics scenarios, while tomosynthesis (other than specialized breast tomosynthesis, which the proposed Nanox.ARC cannot do) is never "usually appropriate," according to ACR, and has less than 1%, and declining, market share.  It gets worse - the "tomosynthesis" images that Nanox has shown so far have no diagnostics usefulness whatsoever.

To be fair, the author hedges at the end of the article:

A fuzzy timeline for resubmitting an application to the FDA for a multi-source device combined with a lack of revenue makes this an ultra-high-risk stock at the moment. Cornering the market for x-ray equipment could be so lucrative, though, that it's probably worth the risk.

Great visionary

I think the company's outgoing CEO should be revered as a great visionary.  According to today's press release, the company spent $665K in the September quarter on "Class-actions litigation and SEC matter." That was months ahead of the "SEC matter" subpoena received on November 8 (per results call today).  That is what I call a foresight!

Image by nvodicka on Pixabay

The Division of Enforcement of the U.S. Securities & Exchange Commission (the “SEC”) has notified the Company that it is conducting an investigation to determine whether there had been any violations of the federal securities laws. The Company has been providing documents and information and has now received a subpoena from the SEC requesting that the Company provide documents and other information relating to the development cost of the Company’s Nanox.ARC prototypes, as well as the Company’s estimate for the cost of assembling the final Nanox.ARC product at scale.

But somehow the company forgot to tell us about all that in its November 11 press release.  The stock has been dropping on "no news" since that November 8 date, of course.

Nanox celebrates the International day of radiology

Nanox celebrates.  

That is, Nanox CEO lies again on his blog.

First, he admits that Roentgen used a Crookes-type tube, which is a cold-cathode tube, when he discovered x-rays 126 years ago. not a thermionic or hot-cathode tube, as he has repeatedly lied in the past.  Then he correctly states:

Not many people know this, but for over 100 years the technology for generating X-rays has not changed.

Exactly right.  In fact, no one knows that for over 100 years the technology for generating x-rays has not changed, because it has.  With the invention of the hot-cathode tubes, or thermionic-emission tubes, by GE in 1913, the market share of cold-cathode tubes declined to basically nothing.  Other sources of x-rays were discovered and invented as well, such as the radioisotopes and the synchrotron.

So it is not completely true that 

In any X-Ray machine, the rays are still produced by thermionic emission technology...

but it is completely false that 

... that requires massive heating to develop the X-rays.

because the tiny Christmas tree lights, say 0.4W each, are hotter than the "hot" filament in a typical x-ray tube.

image based on Petr Kratochvil's work 

The real heat comes from the inefficient way of generating x-rays in any x-ray tube, be it cold-cathode or hot-cathode.  Electrons smash into the target/anode and only less than 1% of the energy is converted into usable x-rays, while the rest gets wasted as heat.  Yet, it is not a bigger problem than using, say, a 200W incandescent light bulb.

The outgoing CEO continues to lie:

Nanox developed the Cold Cathode X-ray tubes that are much smaller, and as per their name emit X-Rays at room temperature, which leads to considerable energy and cost savings.

Nanox has not developed any functional cold-cathode tubes - they are all fake and bigger than the regular dental tubes they are supposed to replace.  Even if they were real, they would not emit x-rays at room temperature, because the anode temperature can reach 5,000 degrees Fahrenheit.  And, of course, cold cathode does not mean cold or room temperature, it just means electron emission above the emission by the thermionic effect alone. The proposed Nanox tube, if ever made functional, will not bring any energy and cost savings -  just the opposite, as evidenced by all cold-cathode tubes in the past characterized by poor and unreliable performance and short life.

Mr. Poliakine then contradicts himself:

But even before Coronavirus, most of the people in the world did not have access to medical screening because they couldn't afford it or are too far away from a machine and a doctor. Nanox aims to change this.

That is a complete lie, of course, but you should forgive him, as a con-artist has often other things to worry about than remember what he wrote in his own blog more than a year ago:

In Israel, as in practically every country in the world, we have a real shortage of testing kits. Lung scans on the other hand are accessible, cheap, and the results are immediate - a critical factor in patient outcomes and in preventing the spread of the infection.

Lung scans, in practically every country in the world, are accessible, cheap, and the results are immediate, wrote Mr. Poliakine.  Lung scans are some kind of medical imaging, no? Typically, using x-rays, no?  Even CT (as shown in his March 2020 blog post)? 

Join us in our journey.

Sure.

For educational purposes only

The latest tweet by Nanox shows that its device can teach first graders the concept of an analog clock.  It has no x-ray tubes, and is for educational purposes only.

Too bad first graders are not allowed to attend RSNA 2021.

Concerns about the outgoing Nanox CEO

He apparently tweeted this, and someone caught him:

The tweet is now deleted.  "Nanon" and "ARK." Is he now busier swindling the Israeli state?  Or did I misunderstand the source of those $40 million?

Update:  The "ARK," of course, is the CEO's Freudian slip regarding ARK Fund's Israel Innovative Technology ETF (ticker: IZRL) - ARK is required to hold Nanox stock, even though Nanox is a fraud.