UPDATE 1-U.S. panel narrowly backs Mela skin cancer device

* FDA advisers vote 8-7 in favor of MelaFind device

* Mela: doctors need help diagnosing deadly cancer

* FDA staff cite worries about missed melanoma cases (Recasts with panel vote, adds panel and FDA comments)

By Susan Heavey

WASHINGTON, Nov 18 (Reuters) - U.S. medical advisers narrowly backed Mela Sciences Inc's (MELA.O) experimental skin cancer detection device on Thursday, with some advocating the new technology while others said the company's data was questionable.

In an 8-7 vote, a Food and Drug Administration advisory panel offered a mixed assessment. Some of the outside advisers said the company's MelaFind device could help save lives while others expressed doubts about its ability to reliably catch more cases of the deadly skin cancer.

The move is somewhat positive for the devicemaker, which is seeking FDA approval and has no other products on the market. It has seen its shares plummet this week amid FDA staff concerns about the device. The agency still must make the final decision.

"I was very conflicted," said panelist Scott Collins, an Oregon-based dermatologist who supported the device.

"At the end of the day, MelaFind is going to allow some people to die. Dermatologists are going to allow some people to die. I believe that MelaFind is going to help a few less people to die," he said.

Panel member Lynn Drake, a dermatologist at Harvard Medical School who voted against the device, said: "There is a need for a piece of equipment ... It would be absolutely wonderful. I think this falls short right now."

Representatives for the devicemaker told FDA's outside medical advisers that its computerized system helps dermatologists decide which unusual skin lesions warrant further biopsy for possible melanoma.

"The decision to biopsy is subjective, and it's variable. Having an objective device to give me input on making that decision would be very helpful," Laura Ferris, a dermatologist at the University of Pittsburgh who studied MelaFind for the company, told the panelists.

Shares of the Irvington, New York-based company have lost 60 percent of their value since FDA concerns were made public on Tuesday. Its shares were halted on Thursday. The stock closed at $2.53 on Nov. 17, down from its 52-week high of $12.24 in January.

FDA staff, in documents released before the panel meeting, said the device had not been studied adequately and was a public health risk because it could miss cases of melanoma.

They also urged the agency to seek a new clinical study.

Analysts have said it could be difficult for Mela Science to launch a brand new trial, citing a lack of resources. The company would either need to raise more cash or partner with a larger devicemaker, some said. [ID:nN15271931].

Agency staff at the meeting criticized the company's data and said its device could actually be harmful if used widely, especially by non-dermatologists, a worry echoed by some panelists.

Peter Rumm, deputy director of the FDA division that reviews such devices, said it "is a real concern" that the device missed a couple of melanoma cases in such a small study and failed to read several other skin samples.

"There's inadequate data to determine any true real value added," he said. "As a tool, it doesn't add much."

Mela Sciences has taken issue with the FDA staff's findings and on Thursday argued against agency reviewers stance.

It told panelists its device is more sensitive than physicians in picking up early melanoma. MelaFind uses a special dermoscope to view the skin through a thin layer of alcohol or oil. A digital camera in the probe captures the images, then software sorts out various patterns.

Mela Sciences Chief Executive Officer Joseph Gulfo told the panel MelaFind is only supposed to give doctors additional information. "It is not a screening device," he said, adding that dermatologists can also miss the cancer.

Doctors now catch just 70 to 80 percent of cases, said New York University dermatologist Darrell Rigel, who spoke on behalf of Mela Sciences, saying the device was a needed tool.

FDA's Rumm disputed that, saying most data shows overall dermatologists catch roughly 80 to 100 percent of melanomas and can get second opinions from other colleagues. He also expressed concern about reliance on the device in light of possible false results.

Melanoma is the fifth most common form of cancer diagnosed in the United States. More than 68,000 patients are expected to be diagnosed in 2010 while another 8,700 will die from the disease, the government's National Cancer Institute estimates.

Mela Sciences had already faced multiple delays in getting MelaFind to market since seeking approval in 2009, including an earlier FDA request for more data. It is also seeking approval in Europe.

The FDA will consider the panel's recommendation before later making its final approval decision. Mela Sciences said it does not know when the agency will act. (Reporting by Susan Heavey; Editing by Dave Zimmerman and Carol Bishopric)