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Milestone for Accuray TomoTherapy

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Radiosurgery systems maker, Accuray Incorporated (ARAY - Free Report) announced that Germany-based Heidelberg University Hospital is the first to use its latest Tomotherapy technology for patient treatment. The new TomoEDGE Dynamic Jaws technology combined with VoLO Planning as part of its TomoTherapy System was introduced at the ASTRO meeting in Oct 2012.

Accuray had acquired Wis.-based radiation system maker TomoTherapy in Jun 2011. TomoTherapy markets advanced radiation therapies for treating multiple cancer types. The TomoTherapy Systems are advanced radiation therapy systems, which provide precise and safe radiation therapy by combining CT imaging and radiation treatment delivery in a single device, thereby lowering side-effects.

Accuray had achieved a major milestone with the launch of the new TomoTherapy H Series, featuring the TomoHDA System, at the ASTRO meeting. This unique series is considered to be the near-term growth driver for the company. Prior to the ASTRO meeting, the TomoTherapy System occupied a niche position in the market, as it was considered to be a specialty device used to deliver IMRT for complex cases. The launch of the TomoTherapy H Series for treatments that cover the entire spectrum of radiation therapy patients, positions the product line in the mainstream market.

The advanced TomoEDGE technology is capable of providing precise dosage of radiation in a lesser time frame. This allows for more treatments per day without compromising on clinical efficiency.  

The company had also launched a new CyberKnife M6 System at the ASTRO meeting in 2012. The unmatched FDA-approved series is capable of treating large, complicated tumors (which were rendered untreatable earlier), thereby expanding the number of patients that can benefit from this treatment. In Feb 2013, the European CyberKnife Center Munich-Grosshadern (ECZM), a global pioneer in radiosurgery, treated the world's first patient with the new CyberKnife M6 System.

Accuray is currently going through a rough phase with losses widening and product revenues declining at a rapid rate. Its legacy CyberKnife system sales are also declining. Management cited certain internal issues that led to delay to the launch of its latest technologies and widening of losses. In an effort to remediate the shortfall, the company announced a major restructuring program and issued convertible notes to strengthen its balance sheet, which appears to be encouraging.

The stock currently carries a Zacks Rank #3 (Hold). While we remain on the sidelines regarding Accuray, medical instrument companies such as Cepheid , Given Imaging and Abiomed (ABMD - Free Report) are worth considering. While Cepheid and Given Imaging carry a Zacks Rank #1 (Strong Buy), Abiomed carries a Zacks Rank #2 (Buy).

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