A confused press release by Nanox points to fraud

Yesterday Nanox issued a press release and filed a 6-K about its premarket submission to the FDA for a device called Nanox.Arc.  The press release contradicts numerous claims made by Nanox in the past, and contains at least one red herring.

510(k) means the device is not novel

Nanox had repeatedly claimed in the past that the Nanox.Arc device is novel.  Here is another instance, not covered previously:

Nanox.ARC, in collaboration with its companion cloud-based software Nanox.Cloud, is a novel digital x-ray device intended to provide end-to-end medical imaging services ..., according to Nanox founder and CEO Ran Poliakine.

Here is another:

...to use the Nanox ARC system on site for developing novel early-detection and screening protocols to promote global preventive healthcare practices.

The problem is a that a novel device, by definition, cannot be cleared.  Clearance aka pre-market submission aka 510(k) submission is simply a submission made to the FDA to demonstrate that the device to be marketed is as safe and effective, that is, substantially equivalent, to a legally marketed device (section 513(i)(1)(A) FD&C Act) - definitely not novel.  The FDA explains:  

Novel devices include those brought to market through the premarket approval (PMA), humanitarian device exemption (HDE), and De Novo pathways, as well as a subset of those that are brought to market with 510(k) clearance or Emergency Use Authorization (EUA). Of the thousands of 510(k) clearances every year, the FDA considers only those devices with a breakthrough designation to be novel. In addition, in 2020, we are including first-of-a-kind devices authorized under our EUA authority as novel devices. Novel or innovative does not simply mean “new.” They address an unmet need, or may be safer or more effective than currently available alternatives. For FDA-approved and FDA-cleared medical devices, innovation, and safety are two sides of the same coin.

Nanox has not requested a breakthrough device designation.  The 510(k) submission therefore contradicts the claim that Nanox.Arc is novel.

510(k) confirms the RSNA 2020 demo was illegal

Nanox claims to have demonstrated Nanox.Arc version 2.0 at the "virtual" RSNA 2020 trade show last December.  Today's press release confirms the device had no clearance pending at the time of the demo.  This article explains:

A device that lacks FDA marketing clearance is considered "investigational," and therefore the company cannot promote, advertise or accept orders for it. The FDA considers such activities to be “commercialization of an unapproved device." The FDA does make some exceptions for trade shows, however,... [only if the device] is the subject of a pending 510(k) application. It cannot take orders or be prepared to take orders that might result in contracts for sale for the device unless limited to research or investigational use.”

So, since the submission was announced just yesterday, there was no clearance pending in December, which means the device was marketed illegally in December.

This can't be the first version of the "multi-source" Nanox.Arc

According to Nanox technology webpage, the first version of the multi-source Nanox.Arc looks like this:

That device is completely fake.  It is has no x-ray tube, no x-ray detector, no ability to scan - in fact, it is just a mock-up plus an LED light and a battery.  Version 1.5 on that webpage does not look less fake.

At RSNA 2020, Nanox CEO insisted that the design of the multi-source Nanox.Arc has been finalized (in its version 2) - he was just confused whether the device had 5 or 6 x-ray tubes:

The design was changed again in February 2021 - version 2.5? - and the device had no x-ray tubes or a detector.

The device, even if cleared, is not meant for shipping

The press release states:

We are excited to take this next step in our regulatory process as we move toward future versions of the multi-source Nanox.ARC, which will fulfill current and future contracts with service providers and collaboration agreements and allow us to achieve our global vision.

Apparently, the device, as submitted for clearance, is not meant to be delivered or commercialized.  So, why has then Nanox submitted a pre-market notification, that is 510(k)?  Why hasn't Nanox submitted a device that can actually be used? 

 

Nanox.Arc can scan only one human "body part"

The press release states:

Nanox.ARC is a 3-D tomosynthesis imaging system that produces scans of a human body part.  

Just one "body part?"  Which one?  There aren't many "body parts" that can be properly imaged in the supine or prone position using 3-D tomosynthesis.  None are considered "usually appropriate" by the American College of Radiology Appropriateness Criteria.

The "a" is a subtle change from the "the" on page 62 in the annual report, where Nanox claims:

 

Subject to receiving regulatory clearance, the first version of the multi-source Nanox.ARC that we expect to introduce to the market is expected to be a 3D tomosynthesis imaging system that produces a 3D reconstruction of the scanned human body part...

Not much use for a device that can image only one human body part, even if the device were available for free.  

Tomosynthesis is a failed modality

The press release claims there

 

exists a significant unmet medical need globally for a more accessible and cost-effective medical imaging solution

Presumably, a tomosynthesis device like the proposed Nanox.Arc could meet that need.  However,  tomosynthesis is a failed modality, with possible exception of digital breast tomosynthesis (DBT), which Nanox.Arc cannot do due to its design.  Tomosynthesis (also known as tomography, not to be confused with CT or computed tomography) has existed since the 1930s in one shape or another, but its share (DBT excluded) has been less than 1% of unit shipments of diagnostic x-ray devices in the United States and probably even less in the world (based on a preliminary and unpublished analysis of FDA's x-ray assembler data files).  Yes, it is cheap (maybe 10-20% more expensive than plain old x-ray devices - sometimes just a software update is required), but from diagnostic point of view, it is not much better than taking two or three plain radiographs, and it cannot compete with the "gold standards" such as CT or other non-x-ray technologies.

Nanox.Arc is not designed for easy setup and operation

The press release states:

The system is being designed for easy setup and operation with multiple alternately-switched X-ray tubes arranged around the patient.

However, the RSNA 2020 demo revealed that the device requires an external high-voltage generator.  Also, the annual report states that need for 

potential customers to invest in the required safety infrastructure, including customary X-ray shielding, to allow the Nanox.ARC to be safety operated.

The device, as demoed at RSNA 2020, is slow.  The scan of a simple "body part," a phantom hand, took about 45 seconds.  Imagine holding your breath or lying completely still for 45 seconds to prevent image blurring.

The single-source Nanox.Arc transformed into Nanox.Cart

The press release reiterates:

Nanox received FDA clearance of its single source Nanox Cart X-Ray System in April 2021

But that April clearance was initially supposed to be for the single-source Nanox.Arc (Prospectus, Page 1).  To this date, Nanox has never shown a picture or photo of the "Nanox Cart X-Ray System" anywhere.

Nanox has not developed a commercial-grade digital X-ray source

The press states that Nanox 

is developing a commercial-grade digital X-ray source designed to be used in real-world medical imaging applications

In other words, it has not developed it yet.  So what x-ray sources are used by Nanox.Arc, the one just submitted for clearance?  All signs point to regular (but poorly crafted) hot-cathode x-ray tubes.  

The press release never mentions any cold-cathode x-ray tubes.  The cold cathode is supposedly the core Nanox innovation, but the CEO is apparently unware that x-rays were discovered in 1895 using a cold-cathode x-ray tube. and that tube was completely driven off the market by the invention of the hot-cathode tube in 1913 by GE. 

Nanox announces FDA clearance of something

According to the press release, Nanox

single-source Nanox.ARC digital x-ray technology has received 510(k) clearance from the US Food and Drug Administration (the “FDA”).

Quite interesting, since the FDA, by law, cannot clear a technology, only a device.  It is also interesting that the mythical single-source device is nowhere to be seen on/in Nanox website, SEC filings, investor presentation, or any other marketing materials or white papers. .

an ugly device demoed at RSNA 2020

 

Nanox also confirms that it does not intend to deploy the device for which it received clearance:.

The Company remains on track and expects to submit a 510(k) application to the FDA for its multi-source Nanox.ARC and the Nanox.CLOUD in 2021. If cleared, the multi-source Nanox.ARC will be the Company’s commercial imaging system that it expects to deploy broadly across the globe.

That is really interesting, as 510(k) clearance is also known as pre-market notification, so it makes little sense to clear a device that it is not intended to be marketed.

But what is truly astonishing is that Nanox does not state in its press release that the device uses Nanox proposed "cold-cathode" x-ray source.  So does the device that just got cleared use a regular hot-cathode dental tube?

As of now, there is no public confirmation of the clearance by the FDA.  On Monday morning, the FDA should update its clearance database, and if the device got indeed cleared as Nanox claims, we will learn the product code, the name of the Third Party, and the date the Third Party recommended clearance, if there was any Third Party to begin with.  But we will have to wait for 30 days to read the Summary, where the predicate, intended use (extremities only?), and some tech characteristics will have to be made public...  And then Nanox will have some explaining to do - how do you enable early detection of cancer (also known as Nanox vision, or the oxymoronic "screening of symptomatic patients"), when all you are cleared to do is image broken wrists or feet?

Update April 4, 2021:  There is an argument floating around that an FDA clearance proves that the company is not a fraud.  The argument is flawed for at least three reasons:

1. Nanox claims that its Nanox.Arc device is novel.  A clearance, however, means that the company demonstrated that the device to be marketed is substantially equivalent to a legally marketed device.  Oops.  How can it be novel, if it is substantially equivalent to something already on the market?
2. A clearance is also known as pre-market notification.  But Nanox says that it has no plans to market/sell/ship/commercialize/deliver/deploy its single-source device.
3. Theranos, the fraud, also got clearance (in July 2015) for a device it did not intend to sell.  By January 2016, the federal government was after it.

Update April 5, 2021:  According to the FDA database, the device that was cleared is a cart - "Nanox Cart X-Ray System" - notice it is not named a (single-source) Nanox.Arc.  The product code is IZL (a mobile x-ray system).  There is no product code for a detector (MQB), so the device has no built-in detector, and so it cannot take images by itself (but should be able to use any $25,000+ cleared detector).  The clearance was recommended by a Third Party, Accelerated Device Approval Services, on December 28.  The summary should be released around May 1st.

An early easter egg

Nanox removed the link to its Mammography white paper from its webpage sometime in January 2021 (the paper was first published in late November 2020 in the company's RSNA 2020 virtual booth, and then a link to it was posted on the front webpage in December 2020).  There must be something very important there for Nanox to remove it. 

Maybe it is this:

The first application for [Nanox novel x-ray source] technology is breast tomosynthesis using Nanox’s small X-ray sources in an arrayed series.

Proposed stationary array head (design concept)

Doesn't look much like the multi-source Nanox.Arc, which is supposed to be the first commercial device using the proposed Nanox source, does it?

The paper itself is self-contradictory.  It claims on page 14 that the scan time of one 3D image in present breast tomosynthesis is 15 seconds - moving tube between shots.  But on page 17, the paper admits that the gantry of the 10-year old Hologic machine takes only a total of 4 seconds for the scan (this old intro confirms it).

Why is this important?  Fujifilm, the first potential licensee for Nanox source (see page 88 and II-3 in this registration statement), declined to license the technology when its rights expired in June 2020, but Nanox insists that Fujifilm is still its strategic shareholder and a Mammography OEM (presentation slides 3 and 35 from JP Morgan conference in January 2021).  Nanox also told the press in March 2020 that its Nanox.Arc can perform no-squish mammography, which, of course, it can't (not even in theory):

It could perform tests such as ... a no-squish mammogram for women.

More later.

Update March 31, 2021:  Nanox promoters insist that Fujifilm invested in Nanox.  According to Nanox draft registration statement filings with the SEC, that is not really correct.  For example, the December 2019 filing states that in May 2019, Nanox Gibraltar (that is not Nanox, but its predecessor) issued 1,583,710 ordinary shares to FUJIFILM Corporation for an aggregate purchase price of approximately $3.5 million, and in exchange FUJIFILM was granted a right to first negotiation for license - a right that FUJIFILM declined to exercise and it expired.  A draft filed in August 2020 mentions the same number of shares, but the prospectuses filed in August 2020 and February 2021 do not mention any Fuji shares.  It is rather strange that the number of shares remained the same between December 2019 and August 2020, as a January 2020 press release by Nanox implied that Fujifilm participated in another funding round.

Foxconn is joining Fujifilm, SK Telecom, and other private investors, who have previously invested in the project, as part of a round that is aimed to support Nanox’s development, commercialization, and deployment of its Nanox System.

The press release, issued just before the supposed submission for FDA clearance, is also remarkable because it proves that the Nanox device (presumably, the multi-source one) cannot be cleared. 

The Nanox System is composed of the Nanox.Arc, a novel digital X-ray device...

Novel devices, by the dictionary definition, are obviously not substantially equivalent to any device on the market. 

Update April 12, 2021:  Nanox promoters continue to insist that Fujifilm invested in Nanox, citing a crunchbase entry about the Series B round.   However, it appears crunchbase simply misread the tricky Nanox press release.  

Foxconn is joining Fujifilm, SK Telecom, and other private investors, who have previously invested in the project, as part of a round that is aimed to support Nanox’s development, commercialization, and deployment of its Nanox System.

See, the press release never states that Fujifilm invested or is about to invest in Nanox.  It says that Fujifilm invested in "the project" (that is, Nanox Gibraltar, a Nanox predecessor).  And it does not say that Fujifilm is participating in this round.  In any case, all subsequent SEC filings confirm that Fujifilm did not invest in Nanox - either in that round or thereafter.  As confirmed by the recent annual report, Fujifilm is neither a strategic investor in Nanox nor a Mammography OEM for Nanox, contrary to all investor presentations. 

see, for example, page 3 and 35 in January 2021 presentation at JPM conf.

Why Nanox.Arc has no chance for clearance

Nanox has a nice video on its front webpage titled "Understanding Nanox technology & vision"  It is extremely misleading, and, thus, extremely useful to regulators.  It proves that Nanox.Arc has no chance for FDA clearance, not this year and not ever.

How so?  Well, about 40 seconds into the video, the mesmerizing voice proclaims:

Years of dedicated development by Japanese and Israeli scientists have achieved a novel X-ray source and device that bring hope by being more affordable by orders of magnitude than the conventional X-ray technology used today.

Oops.  See, the FDA clearance pathway is only for a device that is substantially equivalent to a legally marketed device.  A novel device will be immediately rejected, as it fails the RTA checklist, and must go through either a De Novo classification request or a PMA approval submission.  Either one takes years.

Incidentally, according to the same segment in the video, the device below represents the X-ray technology used today:

Unfortunately, that is a sketch of an MRI device, which has nothing to do with X-ray technology - note the "chimney," which is actually part of liquid-helium cooling system (the superconducting electromagnets require very low temperature to operate).

Thanks to ThreadEnhancer @ AuntMinnie for the novel tip.

The video was published sometime in February or March, 2020, that is, after the supposed January 2020 submission for clearance of the single-source device.

Update:  The MRI device in the sketch is a stylized Siemens MAGNETOM.

Update (March 13, 2021):  The video, of course, is not the only place where Nanox explicitly describes Nanox.Arc as novel.

Update April 5, 2021:  Nanox got clearance for a Nanox.Cart (the ugly device).  Nanox.Arc (a multi-source one) still has no chance of clearance, unless Nanox admits that the device is not novel. 

How SK Telecom promotes its investment

If the lie is big enough, and if you repeat it, maybe people will start believing it.

Someone posted a link to the June 2020 press release by SK Telecom as a proof that Nanox is not a fraud.

The press release states:

Nanox developed the innovative Nanox System, which is composed of the Nanox.Arc, a novel digital X-ray device.

Oops.  Novel!  Apparently, nobody told SK Telecom that a novel X-ray device cannot be cleared by the FDA, because clearance requires a substantial equivalence to an already legally marketed device.  So being  novel, the device is clearly (pun intended!) not equivalent to anything on the market already, and so cannot obtain a 510(k) clearance. 

So, if SK Telecom did not lie about the novel thing, then Nanox regulatory strategy goes poof.  Because Nanox has been telling investors that it plans to 

submit an additional 510(k) application with respect to the multi-source Nanox.ARC, which, if cleared, will be our commercial imaging system

 

But how exactly is Nanox device novel?  Well, it is fake and non-functional.  That's its novelty.  The press release helpfully supplies its picture.

Only for angels (humans too heavy for this "body scanner") 

The table clearly can't support a human being.  The Arc is immobile and cannot move along the table (even though it is labeled BODY SCANNER on the side).  The whole thing is powered by a 12V battery (to light up a few LEDs for the photographer and the greedy investors and advisors).  There are no functioning x-ray sources or detectors in the device.  Nanox says on its tech webpage that this is version 1.0 of the device, and claims:

Cold cathode tubes allow the use of a single high voltage power supply and a ‎single high voltage supply line (connecting all the anodes in the system). Digitally ‎controlling each tube enables the system to be significantly reduced and saves ‎power supply cables, installation space, and so on.‎ ‍

Which could be true, indeed, if 12V is high voltage, if and those cold cathode tubes do not generate x-rays but simply multi-spectral light.

The press release also shows an animation gif of the levitating scan, that must generate antigravitons.  Nanox has not provided information as to which version of Nanox.Arc that is.

Roentgen discovered X-rays in 1895, Nanox discovered levitation in 2019.

Update:  Apparently at least one radiologist agrees about Nanox.Arc.