Importance of using the right terminology

Nanox and its promoters want you to believe that FDA clearance, also known as premarket notification or 510(k), and FDA approval are the same thing.  Here is what the Code of Federal Regulations, the US administrative law, states:

Submission of a premarket notification ... and a subsequent determination ... that the device intended for introduction into commercial distribution is substantially equivalent ... does not in any way denote official approval of the device. Any representation that creates an impression of official approval of a device because of complying with the premarket notification regulations is misleading and constitutes misbranding. ( 21 CFR Part 807.97 ) 

So, Nanox is misleading and misbranding on slide 3 of its investor presentation:

And on its investor calls.

And one more thing.  Notice the device is "intended for introduction into commercial distribution."  But Nanox claims it does not intend to introduce into commercial distribution the device it has submitted, the single-source Nanox.Arc, according to its latest prospectus.

Subject to receiving regulatory clearance, the first version of the Nanox.ARC that we expect to introduce to the market will be a 3D tomosynthesis imaging system [not the single-source device].  If cleared by the FDA, we expect to commercialize the multi-source Nanox.ARC and we may seek alternatives for commercialization of our single-source Nanox.ARC. (page 79)

If the device was not intended to be marketed in January 2020, then the premarket notification was redundant, and the Third Party should have immediately rejected it, if it knew that the device was not intended to be marketed.  Did the Third Party know what Nanox was writing in its draft registration statements filed with the SEC?  And that is one of the reasons why the submission was likely fraudulent, if Nanox submitted anything to anyone for clearance.

Update April 5, 2021:  Nanox got clearance for a Nanox.Cart (the ugly device).  So, what were the Third Party and the FDA told?  More hints when the FDA published the summary document, around May 1st...    

Side by side

Nanox tweets "It's time to move forward. It's time for Nanox."

Maybe it is the Twitter limitation, but it is not clear what Nanox meant to write.

On the left, we have Hologic EPEX digital x-ray system, introduced in 1999.  On the right, we have a device that simply cannot take Chest PA, the most common medical x-ray image worldwide, even if it weren't fake.

Is Nanox finally admitting that the latest version of its multi-source device, the one that Nanox is promoting here, is the equivalent of an ancient x-ray machine?

The Hologic system had an introductory list price of $395,000.  Nanox says free, $10,000, or tens of thousands of dollars, depending on the day.

Please let me know, if you know the clearance, or 510(k), number for the Hologic device.  The Nanox device has not been submitted for clearance, according to Nanox.  Therefore, it cannot be promoted.  "For demonstration purposes only" does not really cut it, but that's for the FDA to decide, of course.

Update:  Here is how one more modern and cleared x-ray machine looks like (list price is below $10,000, I believe, detector excluded).  X-ray is not x-ray, it seems.

Foolish misdirection

Nanox stock is up more than 15% today.  The catalyst may have been a nice promo that claims that Nanox, the healthcare disrupter, is about to receive FDA clearance within a month and start distributing its new X-ray device.

Quite interesting, given that Nanox claims that it has not submitted its magic device for FDA clearance yet.  Nanox claims instead that it has submitted another, a "single-source," device that it does not intend to market or ship or distribute or offer for subscription or service.    

Here are some of the factual inaccuracies and false implications in the promo:

• Nanox has a new kind of X-ray
• X-rays are kind of boring
• [X-ray devices] are very expensive
• MRI devices use or create X-rays
• A CT scanner costs about a million, 2 million, 3 million dollars
• Nanox has made a radical new discovery
• The traditional X-ray devices and CT scanners create X-rays by heating the machine up over 1,000 degrees Fahrenheit, might be 2,000 degrees Fahrenheit
• X-rays devices and CT scanners are incredibly hot machines and have to be cooled down
• The expense in X-rays devices and CT scanners is in cooling the devices down
• Nanox can create X-rays without having to manufacture all this heat and cool the machine down
• Nanox proposed machine is far cheaper (to manufacture), $10,000 instead of a $1,000,000
• Nanox will radically disrupt the market, and is also going to expand the market
• We are going to see a lot more X-rays
• The proposed Nanox machine (a rudimentary tomosynthesis device) can generate images that are comparable to MRI images or CT images, not just to traditional X-ray or tomosynthesis images.

Update (March 13/14, 2021):    thedudemd  @ Stocktwits disagrees that the factual inaccuracies are factual inaccuracies and argues that 

a)  "Traditional xray tubes used in cts do get incredibly hot; so much so that scanners automatically shut down if tube gets overheated,"  and   

b)  "ct scanners do cost millions of dollars."

Tubes or devices/machines?  The Fool contributor said that the traditional x-ray device or traditional CT scanner was being heated up over 1,000 degrees Fahrenheit, which is clearly not true.  These systems operate at room temperature.

But let's talk tubes.  Both the traditional and the proposed Nanox tubes use the exact same inefficient mechanism of generating x-rays, whereby nearly 99% of the heat is generated at the anode and nearly 99% of the energy used to generate x-rays gets wasted as heat.

Interestingly, the filament in the tiny incandescent Christmas tree lightbulb gets even hotter - 2,200 degrees Kelvin to 3,200 degrees Kelvin -  or 3,500 degrees Fahrenheit to 5,300 degrees Fahrenheit!  Each one filament operates at about 2.5 V consuming about 0.4 W, and there are hundreds of them on the tree.  Christmas trees must get incredibly hot and burn up instantly, no?

  

Photo by Jason  Krieger from FreeImages.com

Regarding costs - maybe the latest and greatest CT scanner could cost over $2 million, but you can buy a used one for $80,000, as described here and here.   Of course, the proposed fake five-source Nanox.Arc is in no way comparable to even the oldest, cheapest and abused CT, as it cannot generate axial slices, even in theory.  Moreover, it is not even submitted for clearance, according to Nanox.  The device that Nanox claims to have submitted for clearance is a single-source device that cannot be cleared.

Update June 3, 2021:  The Nanox single-source device that got cleared was the Nanox.Cart.

A reason

There are many reasons why I suspect that Nanox did not submit anything to anyone for FDA clearance, or if it did, it did so fraudulently. 

Here is one.

It is February 7, 2020. The month of January had been very exciting at Nanox because the team finally submitted the super-secret single-source device for FDA clearance, after getting it to work and completing extensive testing with it at Hadassah.  No more need for fake videos showing fake tests of fake devices.  Right? Everybody is excited and still celebrating - even the lawyers and the assistants know what Nanox has achieved - they are getting rich! So what does Nanox do? It files a draft registration statement with the SEC and states on page 1: 

As a first step, we plan to submit a 510(k) application for a single-source version of the Nanox.Arc to the U.S. Food and Drug Administration (the “FDA”) in January 2020.

Plan to submit?  But it is February 7 already!  It should read "we submitted!"   How come whoever wrote the filing forgot about the submission?  On page 1, not buried on page 146 or something...

And what else do we learn in that draft registration statement on page 9?

We have not produced a working prototype of the Nanox.Arc

Wait, what?  How can you do testing, if you don't even have a working prototype?   Where did all the numbers and images in the submission come from?  How did Nanox write these sections in the submission without a working device:  Specifications , Substantial Equivalence Comparison, and Performance? 

Note that regulations require that all

510(k) submitters must include a statement certifying that all information submitted in the 510(k) is truthful and accurate and that no material fact has been omitted. 

So, did Nanox file a false draft registration statement with the SEC, or did Nanox made false statements to the FDA, or maybe both?

Note:  The fake video of the fake device titled "Nanox ARC  -  Raw chest scan demonstration," that was later "updated," was initially encoded on February 25, 2020.  Here is a snapshot.

Update April 5, 2021:  Nanox got clearance for a Nanox.Cart (the ugly device, not the one shown here).  So, the draft registration filing was erroneous or the clearance submission was fraudulent.  More hints will be revealed in the summary that will be published around May 1st.  

Another weird press release

 According to the today's press release,  

Nanox is Scaling up Semiconductor Fabrication Plant in South Korea in light of Increased Demand

and

Nano-X Korean Inc, ... boosts construction to support key source manufacturing in light of growth in global demand

So, Nanox already has a fabrication plant, but is now scaling it up, and actually boosting the construction of a new plant, to meet increased demand for its products?

Turns out, none of the above.

The press release explains down below that the plant or FAB is only in the planning stage, and no construction has began.  It is just a piece of barren land and a nice design.  The CEO further hedges that there is no demand, but just a "growing interest in demand," whatever that means.  Clearly, demand is zero, as the product has no regulatory clearance (it is, in fact, fake, after all).  He also seems to admit that the company is "undergoing a smooth transition from development to manufacturing."  Meaning, there is no manufacturing.

Investors also learn that Dr. Ilung (IU) Kim is now a Chairman of Nano-X Korean Inc.  He had previously been introduced by Nanox as a President of SK Telecom (Hong Kong Office) just before his RSNA 2020 testimony disappeared.  He was not considered an executive officer or part of the management team as late last last month, based on the prospectus and latest (January) slide deck.  In a press release by another company, he was introduced in February as the president of SK Telecom, ICT committee.  Eli Reifman, the convicted felon, claims to be a marketing manager at that company.

So, Dr. Kim states:

Scaling up the production line to meet market demand is one of our main priorities, as we would like to see the Nanox.ARC systems tested and operating globally as soon as possible

But, again, how can a production line be scaled, if it does not exist yet.  Why do you need a production line, if all you need a is a few units to be tested?  Didn't Nanox assemble 10 such systems in November, per investor call, and all of them have now vanished, per latest investor call?

Nanox claims in its prospectus to be manufacturing the chips of the cold cathodes in the clean rooms at University of Tokyo in Japan using its own equipment, but that is a lie because the University prohibits commercial use and all the equipment belongs to the University.  So, the novel cold-cathode x-ray source is just a figment of Nanox imagination, as of today, yet Nanox claims that the device it has submitted for clearance uses that source.  I wonder what the FDA thinks of that.

Update March 11, 2021:  The Kim/Reifman connection was first pointed out to me by Steve @ Yahoo.  

Update March 22, 2021:  TerraPharma1 @ Twitter found the FAB project on the website of the reputable Korean architectural and construction management firm Samoo C.M.  Turns out the actual design/plan is different from what Nanox and its promoters have been posting.

The parcel covers about 10,000 square meters, while the building is about 4,000 square meters, per Samoo.  Nanox claims to have paid $6.2 million for the land, per Prospectus, page F-34 (which seems on the high side - who sold the land to Nanox?). The project is supposed to be completed in October this year.  The parcel is located at about 37.1527, 127.2995 , closely in line with the coordinates first published by BH @ Yahoo.com in February.

Numerous discrepancies are visible - The Nanox and Samoo designs are essentially two different designs:

• a long ramp A in Samoo vs very short one in Nanox.
• a cut in section B in Samoo vs no cut in Nanox, and section B is shorter than then middle section in Samoo vs taller than the middle section in Nanox
• section C is same height as middle section in Samoo, but shorter in Nanox.  Shape is different.
• section D is equal height to the middle section in Samoo, but taller in Nanox

If Nanox were serious about getting 150,000 nano-Spindt cold-cathode chips (for the supposed 15,000 ARC units), it won't be building a new fab anyway.

Update April 19, 2021;  Someone posted on twitter the info about the permit for the building granted on April 15.

After OCR and google translate:

경기도 용인시 처인구 원삼면 학일리 원삼 일반산업단지 산업-2

허가구분               신축허가          허가/신고일              20210415

건축면적(m2)            2208.43          대지면적(m2)             11124

연면적(m2)              4810.1

주용도                 공장              기타용도

착공구분         미착공       착공예정

실착공일

사용승인구분                 사용승인일

Industry-2, Wonsam General Industrial Complex, Hakil-ri, Wonsam-myeon, Cheoin-gu, Yongin-si, Gyeonggi-do

Permit Category New Construction Permit Permit/Report Date 20210415

Building area (sq meters) 2,208.43  Site area (sq meters) 11,124

Total Area(sq meters) 4810.1

Main use Factory other use

Start of construction Classification Not to be started Construction scheduled to start

Actual date of arrival

Use approval category Use approval date

Update October 15, 2021:  The Nanox design appears closer to what is on the ground so far.  Images below are snapshots from recent TV footage.

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. 

Nanox explanation of the FDA timeline makes no sense

According to the latest prospectus and Q4 results call, the recent timeline of Nanox 510(k) submission goes like this:

• December 28, 2020:  The Review Organization recommended [Nanox single-source device] to the FDA for clearance
• January 1, 2021:  [Nanox] received an information request from the FDA through the Review Organization
• January 4, 2021:   [Nanox] responded
• January 30, 2021:  [Nanox] received additional information request(s) from the FDA
• March 2, 2021:  [Nanox] submitted a [complete and] comprehensive response.

If all of the above were true, Nanox should have received clearance no later than yesterday, March 8, 2021.  The explanation as to why is in two FDA guidance documents - 510(k) Third Party Review Program and FDA and Industry Actions on Premarket Notification (510(k)) Submissions: Effect on FDA Review Clock and Goals.  

Essentially, Section 523(a)(2) of the FD&C Act requires the FDA to make a final decision whether to clear the device or not within 30 calendar days after receiving a recommendation from the Review Organization.  Note that the final decision is confusingly termed "initial classification."  Any requests for additional information stop the clock until a complete answer is received.  So assuming the FDA got the recommendation on January 1, and then the clock stopped for 4 days or so and then for another 32 days or so, while FDA awaited for the complete responses, then the 30-day calendar deadline expired on March 8, 2021.

But Nanox press release says:  

The Company is in direct communication with the FDA and continues to expect that it can obtain U.S. regulatory clearance of the single source Nanox.ARC this year  (?!?!?)

And during the call, on March 2, the CEO rambled about "quite soon," "30 days" from the day of the call, and even "a couple of weeks" from the day of the call.  If Nanox disclosures were correct,  then it should have been within "a week."

So, in summary, Nanox is lying to investors about the status of its submission for clearance of the single-source device.  In fact, there are reasons to believe that Nanox may not have submitted anything to anyone for any clearance, or if it did, it was fraudulently.

And, of course, Nanox CEO did not miss the opportunity to confuse investors again by talking about approval (aka PMA) on the call vs clearance  (aka 510 (k) or pre-market notification).

We continue to believe that we will receive FDA approval of both our single source and multi-source device still within this year

According to Nanox own disclosures, the company has not submitted for approval but for clearance.  Or maybe this was a Freudian slip?  Any device that fails to get clearance is automatically classified as Class III, and would require a submission for approval, in which case Nanox has to supply sufficient valid scientific evidence that provides reasonable assurance that the device is safe and effective for its intended use or uses.  That translates into years and millions of dollars in human trials.  Not happening this year.

Update April 5, 2021:  Nanox got clearance for a Nanox.Cart (the ugly single-source device), within 30 days of the call, just as the CEO said.  Outstanding FOIA requests may eventually shed light on the actual FDA timeline. 

Cost confusion

How much does the fancy Nanox.Arc 2.0 cost to manufacture?

The original press release says $10,000, and it can do, among others:

• Real-time 3D imaging 
• Multi-spectral layering 
• Digital sync with treatment tools

CEO reiterated $10,000-$15,000, except for the first 100 units, on the Q4 2020 results call.

But Slide 41 in the January 2021 presentation says:

Costs tens of thousands of dollars

So, $10,000 or tens of thousands dollars?

Neither.

Any functional device that can do real-time 3D imaging, even basic tomosynthesis, will require a built-in detector that costs well over $100,000.

If we remove the real-time requirement and are willing to strap and completely immobilize the patient for over 4 minutes while taking the 45 projections for the tomosynthesis, then we can maybe possibly, however unlikely, get to $20,000, using the lowest-cost DR detectors, and assuming extra cheap hot-cathode dental tubes, HV generator, PC, etc.

Update:  The combined selling price of the three "analog" systems (which are actually quite digital, in fact) that are supposed to be replaced by Nanox.Arc 2.0, as shown in that slide, is less than $500,000, not "Millions of dollars" as the slide claims (actually, less than $400,000, if one leaves out the redundant Canon/URS U-arm machine)

Update:  Why is cost important?  First, the company has about $200 million in cash only, which will barely cover production and deployment of about 1,000 "working" non-fake machines.  Second, payback becomes moot (in the same presentation, Slide 27, the company claims $27,000 in estimated "minimum" annual revenues per machine) 

Update:  Of course, even if Nanox.Arc 2.0 were not fake, its design does not permit taking a Chest PA image, which is the most common x-ray procedure (but it can be easily done with either the Canon or the Shimadzu machine on the slide) 

Yes, We sCam!

 

Nanox tweets an interesting excerpt today, stating that the company 

has already made 25 of its ARC systems at a partner facility in Israel.

It is interesting, because the CEO and CFO forgot to mention that number three days ago at the investor call, even though they were asked what exactly happened to the 10 prototypes that were supposedly being assembled for partners during the investor call in November 2020.   The latest prospectus, filed February 12, 2021, states on page 1 that the company has only 1 working prototype (even if true, it is likely the ugly single-source device, not shown, here: added March 25, 2021).

Here is the cropped photo from the tweet, showing the supposed 25 systems:

It actually shows 8 Nanox.Arc "systems" only, and none of them is functional (3 don't even have a rudimentary skeleton Arc).

Just another day at Nanox - yes, we scam!

Thanks to K @Yahoo for the slogan idea.

Update (March 12, 2021):  Only one of these 8 unfinished and fake devices looks like the latest version of Nanox.Arc (even though it is very hard to see from this perspective) - 3 don't have an Arc and the other 4 have the black half-arc skeleton of Nanox.Arc 2.0.

Update (March 25, 2021): Another photo surfaces (posted by TerraPharma1 @ Twitter, likely coming from the company - CEO collages it) from the supposed March 16 "company event at the factory [that] celebrated many more devices at the production floor" (Slide 11 and 15:11 into Oppenheimer presentation on March 17, 2020).  Not even one of these devices is completed (to reiterate, the CEO claimed on the November 2020 results call that the company was assembling 10 devices, and latest Prospectus dated February 2021 says only one working prototype, likely the ugly single-source device, even if true) 

Here is the actual March 5 photo (edited by Bloomberg):

And, just so we keep everything together, the one posted by John Nosta @ Twitter
 

Nanox CEO caught lying again

According to Nanox CEO, 

SK Hynix is one of the largest MEMs manufacturers in the world. 

That is an outright lie.  Here is the ranking of the top 30 MEMs manufacturers in the world.  SK Hynix is nowhere to be seen.

Source:  Yole via EETImes.eu

Quick credibility check

It is easy to spot that Nanox' management is not familiar with this simple thing called the truth.  Here is a quick example.  Today's press release announces:

With [the RSNA 2020] demonstration, we brought X-ray technology, which had not seen material technological advancements since its discovery more than 120 years ago, into the 21st century.

But Nanox own technology white paper states:

Modern X-ray and the evolution of radiologic modalities started in 1913 by introducing tungsten filament to the cathode part of the “Coolidge” tube, which supplied far better reliability than the preceding technologies. Over a hundred years later, X-rays continue to be generated by electrons supplied by heating tungsten filaments. The history of radiology is the history of the “Hot Cathode” invented by Mr. Coolidge.

1913, by the way, was just 108 years ago.  And X-rays were discovered in 1895, according to the same paper.

So, which one is it?    Did X-ray technology see a material technological advance after the discovery of X-rays but prior to RSNA 2020, or not?  The white paper says, yes, in 1913, when the hot-cathode technology introduced by GE completely obliterated the cold-cathode technology that Roentgen used and that Nanox now pretends to use.  The press release says no way!  Which one (press release or white paper) should we believe?   Which one (Coolidge or Poliakine) advanced X-ray technology?

Update:  By the way, Nanox cannot say that this is a simple mistake or misunderstanding, as Nanox claims that the Chair of its Advisory Board is Morry Blumenfeld, who was a GE employee.

You can't have it both ways

Even the best artists (scam artists included) slip sometimes - they are human, after all.  Let's take a listen to what the CEO has to say in the Nanox "vision" video released in late November ahead of RSNA 2020:

"Our mission is to democratize medical imaging, to make it way more available.  There are simply not enough machines today - it is too expensive - expensive to buy, expensive to maintain, expensive to operate, and therefore not very practical." (starting at 47s)

So, medical imaging  is not practical and accessible today?  

Here is what he wrote in his March 30, 2020 blog post:

In Israel, as in practically every country in the world, we have a real shortage of [COVID-19] 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.

He can't have it both ways.  Chest (or lung) radiographs represent the majority, about 40%, of all imaging procedures performed worldwide, according to the World Health Organization (Communicating Radiation Risks in Paediatric Imaging, page 16).  The CEO states that they are accessible, cheap, and with immediate results in practically every country in the world.  So, it seems there are enough medical imaging machines, they are not expensive, and they are easy to operate and quite practical, no?  Poof goes Nanox vision!

In his blog post, he also states that Nanox machines

can be installed not only in medical facilities but also in offices and even retail locations, so people don’t need to drive hours to get to a scanning machine.

But Nanox now admits that is not possible - Nanox proposed machines leak radiation - and any potential deployments of those proposed machines, in the unlikely event that they ever become real, is at risk due to:

the inability or unwillingness of potential customers to invest in the required safety infrastructure, including customary X-ray shielding, to allow the Nanox.ARC to be safety[sic] operated (page 17, prospectus)

 

The production Nanox.Arc has no detector?

So John Nosta puts a tweet out that shows that Nanox.Arc has no detector, and therefore, cannot make any images.  Stock goes up 15%.

Here is the fake, non-functional device that (supposedly) goes into production, with no clearance or any regulatory approval pending, in all its glory:

John Nosta is the same evangelist who in August 2019 posted the photo of the completely-fake 12V-battery-operated Nanox.Arc 1.0 that could emit electromagnetic waves, but only in the visible spectrum.  According to Nosta, it could fit in a suitcase (it must be a gigantic suitcase!)  and would emit "lower" radiation (which is correct, as visible light is lower in the energy spectrum than x-rays, but can't penetrate most human organs and is therefore useless for diagnostic purposes).  

Update:  In case it is not clear, here is where the detector goes in Nanox.Arc 2.0 (which is the finalized production-ready design, per CEO investor presentation post RSNA 2020 demo).

Cropped snapshot from the Making of Nanox Arc video 

Update:  Added zoomed view of Nanox.Streak and Nanox.Thread:

Update:  Apparently some people are confused where this picture was taken, and believe it is at Foxconn, where the volume production was initially supposed to take place.  The picture was taken in Israel, however (notice the green EXIT sign above the door in Hebrew יְצִיאָה - thanks google translate!).  

Due, in part, to travel restrictions as a result of the COVID-19 pandemic, we expect to manufacture a small number of Nanox.ARC units in Israel on a purchase order basis that will be used for the acceptance tests under our MSaaS agreements, demonstrations, regulatory approvals and for the initial global deployment, among other purposes. (page 5, prospectus)

Update:  Added a link to Nosta's August 2019 tweet and a few words about it.

Update:  Ok, ok, this could be the detector.  Added a question mark to the title of this post...

Update April 21, 2021:  Based on inspection of the latest Nanox video, the device in Nosta's tweet has no detector.  What looked like a possible detector in the view from this angle is likely just a part of the support frame.

zoomed-in snapshot from the new video

Nanox is faking it and stealing

Nanox posted a promotional video today titled "NanoxCLOUD Demo Flow" and then removed it (after some comments on it emerged).  It appears Nanox stole some sample CT images made 15 years ago from a French DICOM viewer vendor and used them to make the video, in violation of the owner's terms of use which prohibit commercial use.  A snapshot from this video has previously appeared in Nanox investor presentations, but the resolution was too low to make any conclusions. 

Here are two shapshots of interest (red ovals for the fun stuff).

Update February 19, 2021:  Note that the findings in the diagnostic report, obtained with the help of Artificial Intelligence (AI), mention "T2 hyperintense white matter lesions," which is mAgIc, since it is impossible to see such lesions in an x-ray or CT scan (white matter hyperintensities are lesions in the brain that show up in an MRI scan as areas of increased brightness when visualized by T2-weighted magnetic resonance, I am told, see also)

Update February 23, 2021:  Nanox is apparently telling people that this video was not supposed to be published.  Unfortunately, Nanox has already shown the stolen images in the past.  Here is Slide 33 from Nanox September 2020 presentation to investors.  What do you see in the lower right corner?  Stolen images.

The individuals behind the Nanox pump

I was referred to a writeup by a self-described stock marker nerd and writer for the The Motley Fool (thanks Nibbler @AuntMinnie).  

While this thing probably deserves a complete reply here, let's just focus on four lines there:

• Ma = brightness
• KvP = speed of electron emission 
• both are positively correlated w/radiation exposure 
• specifically: KvP of 40 & Ma of 1.5 for $NNOX vs. typical levels of 50-60 & 3-5 respectively 

By looking at each of these lines, anyone with basic understanding of how X-rays are generated, detected, and used in diagnostics should immediately realize that the individuals who authored and edited that piece have no idea what they are writing about, or pretend to have no idea.

Tricky terminology

Nanox has a problem with the terminology it is using - is it innocently incompetent or intentionally misleading?  

Nanox typically, but not always (see below), claims to have submitted for FDA clearance (aka 510(k)) rather than FDA approval (aka PMA).  In its draft registration statement filed July 30, 2020, the company states:

In response to the feedback we received from the reviewer, we are conducting standard functional and safety tests to support the 510(k) application, and expect to submit the results from these tests in the third quarter of 2020. (page 1)

Just two weeks later, that statement became:

As part of the review process, in March 2020, we received an additional information request, referred to as a major deficiency letter, from the Review Organization which, among other things, required us to provide additional data and other information to complete the application and to address certain deficiencies highlighted by the reviewer, including the results of certain performance tests. In response to the feedback we received from the Review Organization, we have conducted additional product testing and expect to submit the results from these tests, along with our response, to the Review Organization, in the third quarter of 2020. (page 1)

Ok, feedback sounds less ominous than a request for additional information, but why, oh, why did Nanox have to mention a major deficiency letter?  Why didn't it just put a "deficiency letter," without the "major?" See,

FDA refers to PMA ... deficiency letters as “major deficiency letters” and 510(k) ... deficiency letters as “additional information letters” or “requests for additional information.” (page 2)

And, yes, the reviewer - the Third Party - can send "requests for additional information," according to the overview published by the FDA. 

So, again, why not just write "a request for additional information?" Why confuse anyone reading the filing (and Prospectus) with the addition of the "major deficiency letter," which would imply seeking FDA approval rather than clearance?

Here is an excerpt from the busy Slide 3 titled "Nanox at a glance" in Nanox investor presentation dated January 14, 2021 stating that Nanox expects FDA approval, although this appears to refer to an upcoming submission of the fancy multi-source device (in which case, approval is impossible in Q1 2021, because it takes years of human trials, unlike simple clearance within 90 days).

Update April 5, 2021:  Nanox got clearance, in the beginning of Q2 2021, for a Nanox.Cart (an ugly device).

Asking stupid questions

So, a stupid question arose today in a discussion about what would be a plausible defense by a scam artist.

Question: Did Nanox CEO graduate from Bezalel Academy of Art and Design, or not?

Checking English-language internet sources left me confused.  This one says he only attended the Academy, that is, he did not graduate.  Another one says he received a Degree in Industrial Design there.

In a November 2020 blog post, the CEO states:

When I submit my bio (prior to lectures or interviews), my educational background often surprises people. I do not have a degree in machine engineering, computer engineering, or in any type of engineering for that matter. I studied arts and design at the Bezalel Academy of Arts in Jerusalem.

So, he did not graduate, after all?

According to a Muddy Waters report,

Charismatic CEO Poliakine appears to have no formal training in radiology, physics or medicine—or to have even finished college. His only academic credentials seem to be a two-year stint he spent at the Bezalel Academy of Arts and Design. Our investigators contacted a Bezalel administrator who confirmed that he did not graduate (page 42)

In his blog post he essentially describes himself as a modern Leonardo Da Vinci, "the great artist and innovator," but with the inclination to ask stupid questions:

This is something I do all the time: go into new areas and ask stupid questions. I have no choice: I am not an established scientist or a researcher with formal education. So I go in and ask the kind of questions that people who’ve been in this field for a while would not consider asking. 

Essentially, he is paraphrasing Meredith Perry of the fraud uBeam (now, SonicEnergy).  The problem in the real world, of course, is that if people take time to answer all the stupid questions, there is no time left for anything else.

It is a great defense, though  - I did not know what I was signing or talking about - I am an artist.  And an artist is allowed to pretend to be something more:

I am a technologist. I want to tell you about the technology of Nanox... (02:05 in the RSNA 2020 demo)

 

And then to lie outright that Wilhelm Roentgen used a hot filament to discover X-rays (Nanox own technology white paper, published just a few days prior, states that the hot filament was introduced by GE's Coolidge, many years after Roentgen's discovery)... 

The dictionary seems to define technologist as an expert in a particular field of technology, not just an artist.

The Swedish Nanox - Luxbright

Luxbright is a publicly-traded stock in Sweden that claims to have developed a ZnO "whiskers" cold-cathode x-ray tube.

Luxbright tubes (made in China)

If these tubes look like the ones Nanox shows on its website, it is probably because they are the same cheap low-power (hot-cathode?) Chinese tubes.

Nanox tubes (made in China?)

Luxbright claims in its financial reports to have a customer, MARS, that is in clinical trials for a spectral CT.  It also claims in a press release to have shipped some regular tubes to a United States (non-medical) customer. 

It all sounded plausible, until I saw what they put in their press release (translated by google):

The company believes that the cold cathode is the X-ray equivalent of the LED lamp, both in terms of its technical performance and the market's potential. An important technical advantage of the reduced heat generation is that it enables simpler cooling devices than those used for conventional [tubes.] Therefore, X-ray systems can be made smaller and more portable, which can create new opportunities for the X-ray industry.

Those two bold[ed] phrases are unmistakable telltales (indications) of a scam.  Why?  Because a cold cathode does not improve technical performance or market potential of a tube, just the opposite, and does not result in reduced heat generation (as 99% of the heat is actually generated at the anode). 

So, if you are waiting for that full-color MARS CT, even if it were invented by CERN, don't hold your breath.

Thanks to Risky business @yahoo for bringing it to my attention.

Update October 6, 2021:  Somehow MARS put together a device and placed it at Lausanne University Hospital (CHUV) in Switzerland for "a trial."  Not clear whether it is using a fancy Luxbright tube, or a regular cheap dental tube.

Planned spontaneity

There are two reasons why the scan of the CEO's hand at RSNA 2020 was not spontaneous as he pretended.

Reason 1:  About 9:20 into video the DICOM tag displayed on top of the radiograph says "Ran_3" - meaning, this was the third time they tried this (the CEO's name is Ran, of course).

Reason 2:  The video overlay with the CEO's name comparing his hand with the hand of Roentgen's wife was prepared well in advance.  It appears briefly in a frame before his radiograph actually shows on the display at about 8:06 into the video.

The weight of a human, CE Marking, and the rest

The fake battery-powered Nanox.Arc 1.0 body scanner can withstand a human, according to a photo shown in June 2020 Haaretz article.

 

Nanox CEO and founder Ran Poliakine, January 15, 2020.source: Haaretz/LUZ Corporate Photography

So, what did the CEO tell the Israeli publication:

"The Nanox.ARC was distantly inspired by the sickbay of the 1960s television series Star Trek, where “Bones” McCoy would swipe a device over a patient to get a complete instant medical picture."  OK, so Nanox.Arc is fiction?

"On a practical level, the research and development was born of a failed project at the Japanese company Sony to develop LED screens."  Not OK - it was a failed project, but nothing to do with LED (light-emitting diodes)

"compared to just $10,000 and 70 kilos for the Nanox"  Not OK.  Nanox is now saying tens of thousands of dollars, and weight is no longer discussed.

"The company has applied for permits to the U.S. Food and Drug Administration, Europe’s CE and Israeli regulators."  Really, really not OK!!! There are no such "permits."  Nanox is now saying it has not submitted for FDA 510(k) clearance of the magic device, and that it has not submitted for CE Marking, and that means that it cannot register with the Israeli Ministry of Health.  

"Nanox is readying to install a device at Jerusalem’s Hadassah Medical Center to be used for developing novel early-detection and screening protocols to promote global preventive healthcare practices. Research is scheduled to begin the first quarter of 2021."  Not OK.  It is not happening.

"A [Sony] team worked on the idea [for a novel LED screen] for seven years at a cost of more than $1 billion. The project never yielded the screen because Sony canned it after Panasonic got to the market with a similar, lower-cost device. But along the way the team designed tiny silicon chips capable of creating consistent and exacting screenshot images, Poliakine said."  Not OK at all.  The story is quite a bit different, there was no $1 billion, and there are no such chips "creating consistent and exacting screenshot images."

"X-ray technology was developed at the end of the 19th century and to this day uses the same basic technology, based on heating a metal filament to 2000 degrees Centigrade."  Not OK.  The metal filament thing was invented in 1913 by General Electric (the former employer of Nanox Advisory Board chair).  Until then, X-ray technology used Nanox, that is cold-cathode, technology.

"The filament emits electrons that collide with an anode to create x-rays. The process uses a lot of electricity to keep the device cool."  Not OK.  Nanox process needs just as much electricity to keep the device cool.

"Nanox uses a proprietary silicon chip embedded with 100 million microcones that generate x-rays There are no moving parts, no need for cooling and no need for lots of electric power."  Not OK.  Nanox proposed tube performs exactly the same and uses the same power as a cheap Chinese tube unsuitable for medical imaging.  And, nope, Nanox does not have a novel tube that can be used in a commercial device. 

"Nanox ... employs 60 people, 38 in its Israel R&D center ad the rest at production facilities in Japan, the U.S. and South Korea."  Not OK.  Nanox has no production facilities anywhere.

Update March 25, 2021:  The original $1 billion thing seems to come from the June 2019 press release by Nanox predecessor (the current Nanox was incorporated in December 2018 but did not start "operations" until September 2019, per prospectus)

Update September 28, 2021: The April 2020 Hadassah press release says:

Over $1 billion and 15 years of development have been invested in revolutionizing the X-Ray source...

So, 7 years at Sony and 8 years at Nanox and Nanox predecessor?  Nope.  First, all Sony did was to send 6 "engineers" to the offices of Candescent to "learn" about the tech after it signed an agreement with it in November 1998 - there is no evidence that any independent devlopment.  Second, NanoX Imaging (Nanox predecessor) was "a multinational start-up established in 2012," but it was developing x-ray detectors not sources!

Fooling one or the other, or both

Someone liked this comment I made:

The draft registration statement filed by Nanox in early February states that the company is planning to file for clearance, meaning it did not file in January. Same draft registration statement says the company has "not produced a working prototype of the Nanox.Arc" (a later draft registration statement says it was produced in February). 

A single-source unit may have been available for a century, but the FDA and the EU say it must pass certain safety and effectiveness thingies, including HVL and S-Values and non-fake images. And the company should not lie to the FDA or the Third Party or the investors about what x-ray source is used in the unit.  Yes, the FDA has approved devices that also use a dental tube (including a 2 mA one for limited intended use such as extremities, which is worse than Nanox' 11 mA from the hand drawing), but at least that dental tube is not crappy.  

Nanox tried to fool the FDA, or tried to fool the investors, or both.

Update April 5, 2021:  Nanox got clearance for a Nanox.Cart (the ugly single-source device).  So, both the FDA and investors were fooled?  More hints will come around May 1st, when the decision summary is expected to be published by the FDA.