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Biotech / Medical : AtheroGenics, Inc.{AGIX}-nasdaq

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To: Secret_Agent_Man who started this subject	11/5/2000 5:44:51 PM
From: sim1	of 332

Making America's 800,000 Angioplasties More Effective from the March, 2000 Technology Investor technologyinvestor.com Within a few years of an angioplasty, nearly 20% of these patients have a re-narrowing of the arteries called restenosis. This means another angioplasty. Vascular brachytherapy (VBT) is a new ten-minute procedure that may reduce the need for another angioplasty by 50%. VBT is done during the initial angioplasty. The cost of an angioplasty in America today is $18,000. Cutting the need for second and third angioplasties is a huge benefit. VBT emits low levels of radiation at the angioplasty site (the point of blockage). The radiation inhibits the growth of scar tissue and prevents new blockages. The VBT business is similar to the razor and blade model. VBT machines are sold for a small profit. The companies make huge profits selling a disposable catheter for $1,500-$2,000 per procedure. Each company has developed a catheter unique to their machine. Once the VBT unit is placed with a hospital, all procedures are performed with the company’s catheter. VBT is the first angioplasty advancement since the advent of stents in the late 1980s. Stents are metal mesh tubes that are inserted into an artery to prevent the blood vessel from collapsing after a blockage is removed. Stents have exploded from nothing ten years ago to $2 billion last year. VBT will not be as big. Analysts expect world-wide demand to be $750 million by 2006. Novoste Corporation (NOVT) is the leading developer of VBT technology. It’s their only business. The company’s Beta-Cath was the first vascular brachytherapy system to receive regulatory approval in Europe. Over 2,500 surgeries have been performed with Beta-Cath in Europe, Australia and Israel with no negative side effects (except on the patient’s hospital bill). Demand is ready to explode in the United States. Novoste expects to submit clinical data to the FDA during the second quarter and could receive regulatory approval by the end of the year. Analysts expect sales to rise from $10 million this year to $70 million in 2001. The company will report a loss of $2.30 a share in 2000 but should become profitable by the second half of next year. Novoste could be an acquisition target. If demand for VBT takes off, Novoste would be a logic partner for Medtronic (MDT) or any other stent maker without a VBT system. Guidant (GDT) is Novoste’s closest competitor. The ompany’s Galileo system uses a slightly different catheter and has a few other variations but is very similar to Beta-Cath. Galileo is expected to receive FDA approval in the second half of next year, six to 12 months after Novoste. Guidant is the largest stent maker with 35% of worldwide sales. The company should use its strong distribution relationships to gain significant market share. JP Morgan analyst Michael Weinstein expects Novoste and Guidant each to have 40-45% of the market with the remainder split among several companies. Johnson & Johnson’s (JNJ) Gamma I is the only VBT technology using gamma radiation. Gamma energy is more powerful than beta radiation. Early clinical trials showed a 37% reduction in restenosis. However, 5% of patients had a significant blockage within nine months — possibly related to the higher radiation. Doctors are still refining the dosage. Emitting radiation over a larger section of the artery would reduce scar tissue but may also damage healthy parts of the artery. As with all medications, doctors prefer to err on the side of caution. Beta-Cath currently releases radiation over 30 mm of the artery. Novoste is currently studying the benefits of increasing the area to 40 mm. The results will allow doctors to refine dosage recommendations and further reduce restenosis. VBT is just one of the many exciting innovations to treat heart disease. Researchers are studying the benefits of using stents coated with blood thinning medication such as heparin or anti-cancer therapies that inhibit cell growth.

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