Report of Cancer Hurts Maker of Chip Implants

Shares of Applied Digital Solutions and of its publicly traded subsidiary VeriChip, which makes an implanted microchip for identifying people, fell sharply yesterday as investors reacted to a report this weekend linking the tiny radio device to cancer.

The report, by The Associated Press, suggested that VeriChip and federal regulators had ignored or overlooked animal studies raising questions about whether the chip or the process of injecting it might cause cancer in dogs and laboratory rodents.

VeriChip said that it had not been aware of the studies cited in the report, according to the article, but both the company and federal regulators said yesterday that animal data had been considered in the review of the application to implant the chips in humans. They said that there were no controlled scientific studies linking the chips to cancer in dogs or cats and that lab rodents were more prone than humans or other animals to developing tumors from all types of injections.

“At this time there appears to be no credible cause for concern,” said Karen Riley, a spokeswoman for the Food and Drug Administration.

But VeriChip shares fell more than 11 percent, to close at $5. Applied Digital, which has other businesses but has called VeriChip its main engine for future growth, fell nearly 10 percent, to $1.09.

In addition to driving down the two companies’ shares, the report created concern among veterinarians and operators of animal shelters that pet owners would resist the practice, now widespread, of putting similar chips in pets to make it easier to return lost animals to their owners. Most animals who are not reclaimed by owners are euthanized.

“If there are any cancers from the chips, they are so rare that losing pets is far more serious,” said Dr. Lawrence D. McGill, a veterinary pathologist at Animal Reference Pathology, a veterinary laboratory in Salt Lake City.

The radio identification device for which VeriChip is named is a glass-encased chip the size of a grain of rice. The device, which carries an encrypted number, is injected in the upper arm. In medical applications, the chip is linked to medical records stored at hospitals or with a primary-care physician. A low-powered transmitter in the chip emits the identification number when queried at close range by a VeriChip scanner.

VeriChip has demonstrated that the same chip could also be linked to other databases. For example, nightclubs have used it to recognize regular visitors and Mexican police have used it to control access to a high-security office.

All of the potential applications have stirred strong opposition from privacy advocates, who have called implanting chips in humans an extreme abuse of radio-frequency identification (or RFID) technology. Katherine Albrecht, a longtime critic of RFID and VeriChip who contacted The Associated Press several months ago with some of the studies on which the article released this weekend was based, said in an e-mail message to supporters yesterday, “This kind of negative publicity spells the beginning of the end for VeriChip and their plans to chip us all like bar-coded packages of meat.”

In its news release disputing suggestions that the implant could be linked to cancer, VeriChip said yesterday, “We will retain independent scientists and researchers to review the content, veracity and credibility of the studies alluded to in the article.”