Varian Medical Systems, Inc. (VAR)

PauvrePapillon (99.58) Submitted: 1/03/08 11:50 PM

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Note Varian’s Wednesday press release concerning FDA approval for RapidArc. See anything out of the ordinary there? Like what happened to their SRS claims?

Ever since the Accuray IPO, Varian has been touting their machines as SRS capable. Now comes FDA clearance for RapicArc and suddenly Varian goes silent on SRS? Huh? Lots of hype about what a great breakthrough RapicArc represents in “radiotherapy” but no mention of SRS whatsoever. Hmmm. What prompts this 180-degree change in tactics at Varian?

Did you notice that even on a down day, ARAY took off Wednesday at about midday and continued up on Thursday despite the absence of any substantial news other than the Varian release? Add to that the fact that Varian lost about two dollars over the same time period and is now actually down from where it was at the day before the FDA action was announced. Are we seeing some information leakage here? Has anybody seen a copy of the actual 510(k) clearance document from the FDA? Wouldn’t it be a bombshell if the FDA has some language in there concerning SRS marketing claims?

And then there are the billing code issues. Medicare pays more per fraction for SRS but what exactly qualifies as SRS? From a medical standpoint we know that gantry-mounted linacs are not really in the SRS business but from a billing standpoint is it permissible to use SRS codes for gantry-mounted radiotherapy? Or is that a massive Medicare fraud case in the making?

Don’t believe for a minute that Varian management just suddenly forgot to include their bogus SRS capability claims in their most recent RapidArc press release. This is a very high profile event for Varian. FDA clearance for marketing is big news and a big opportunity for them to tout their technology. No, I don’t know for sure what it is but there has to be a very good reason why Varian chose to exclude their typical SRS misinformation from this particular press release.

Yes, Jefferies had an internal report out sometime Thursday that was bullish on Accuray but so what? Jefferies has been bullish on Accuray for months now and their report was not posted on the headlines, blogs or reports sections of any stock reporting web sites and, in any event, would not account for Wednesday’s price action. Something else is going on here and it’s having an impact on both Varian and Accuray share prices these past two days.

Are the chickens finally coming home to roost for Varian and Tomo?

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