According to the World Health Organization, in 2005 there were approximately 24.6 million people worldwide living with cancer and an estimated 7.6 million cancer deaths, accounting for 13% of all deaths worldwide. The World Health Organization estimates that approximately 10.9 million new cases of cancer are diagnosed globally each year. The instances of diagnosed cancer are expected to continue to rise as a result of increased life expectancy, aging populations and technological improvements, which are leading to more sophisticated screening techniques and earlier detection of cancer.

The three primary methods of treating cancer are radiation therapy, chemotherapy and surgery, each of which can be used alone or in combination, depending on the type of cancer being treated. Radiation therapy is a proven, effective and widely accepted form of treatment for many types of cancer. The National Cancer Institute estimates that nearly 50% of cancer patients in the United States are treated using radiation therapy.

Currently, the most common type of radiation therapy is external beam radiation therapy, in which patients are treated with high-energy radiation generated by medical equipment external to the patient. Approximately 90% of patients treated with radiation therapy in the United States receive external beam radiation generated by a device called a linear accelerator.

Linear accelerators have been widely used for radiation therapy for over 30 years. According to industry sources, there are over 7,500 linear accelerator-based radiation therapy systems in use for medical purposes worldwide. Linear accelerators represent the largest product segment by expenditure within the global radiation therapy equipment market, which totaled approximately $2.0 billion in 2006.

Each Hi-Art treatment program begins by collecting a quantitative CT image of the patient. The clinician then evaluates the image to identify regions of interest, such as tumors or sensitive structures to be avoided. Once these structures are identified, the clinician determines the desired maximum and minimum radiation dose and defines the other parameters of the treatment plan, including the number of fractions.

The Hi-Art system automatically optimizes the treatment plan by calculating the best dose pattern to maximize the dose to the tumor and minimize the dose to healthy tissue.

During each treatment session, the patient is positioned on a treatment table, or patient couch and an image of the patient is taken with the CTrue system. This 3D quantitative CT image is then used to automatically align the patient’s internal anatomy to assure the accurate delivery of radiation.

The Hi-Art system’s rigid ring gantry houses a linear accelerator that circles the patient and enables both CT imaging and radiation therapy to be provided from the same integrated source. The ring architecture enables more precise and more efficient treatments by eliminating the need for the repeated adjustment and re-calibration steps necessitated by imaging and treating the patient on different systems and mechanically adjusting the C-arm to treat from different angles.

The Hi-Art system uses a low-intensity, fan beam CT to collect quantitative images prior to each treatment. These images allow lung tissue, fat, muscle and bone to be clearly distinguished. In addition, because of the low dose involved, clinicians can safely take daily images, which aid in treatment planning.

The Hi-Art system’s MLC is attached in front of the linear accelerator and consists of 64 individual tungsten leaves that move across the beam in less than 20 milliseconds to either block or allow the passage of radiation, effectively shaping the beam as it is emitted. Each leaf’s transition from open to closed defines a beamlet of radiation, and the intensity of the beamlet is modulated based on the length of time the leaf is open.

Cost of revenue increased from $35.5 million for the nine months ended September 30, 2005 to $65.9 million for the nine months ended September 30, 2006, an increase of $30.4 million or 85.5%.

Research and development expenses increased from $8.8 million for the nine months ended September 30, 2005 to $14.0 million for the nine months ended September 30, 2006, an increase of $5.3 million or 60.2%.

Selling, general and administrative expenses increased from $9.4 million for the nine months ended September 30, 2005 to $14.9 million for the nine months ended September 30, 2006, an increase of $5.5 million or 58.9%.