Big News. This from the S&P Stock of the Week....
4/14/98 10:00 am. SUNRISE TECHNOLOGIES (SNRS 6.60 - OTC- BULLETIN BOARD). This company has the potential to revolutionize the world of ophthalmology and eye care. SNRS develops Holmium laser-based systems which utilize a patented process for shrinking collagen developed by Dr. Bruce Sand (the "Sand Process") in correcting ophthalmic conditions. The CorneaSparing laser thermal keratoplasty (LTKT) System is a non-contact simultaneous application for correction of hyperopia (farsightedness), presbyopia (loss of focus due to natural aging), and overcorrection resulting from PRK and LASIK treatments for myopia. The system is in Phase III clinical trials in the U.S. and is currently in use in Europe and the Americas.
SNRS started clinical trials for hyperopia way back in late '93, but, because of poor management, made little progress. However, things changed in mid '96 when C. Russell Trenary III joined the co. Trenary is now President and CEO. He had more than 15 years of experience in the ophthalmic industry, coming over from Allergan, where he was Senior VP/GM of the $180 million ophthalmic surgical devices group. Since mid '96, the co. has divested its dental operations to focus exclusively on laser surgery, and has built an experienced management team with over 100 years of ophthalmic and laser experience.
The market for SNRS's procedure is enormous. the co. is initially focusing on the market for simple hyperopia, or individuals between +0.75 and +2.50 diopters. Statistically, 31% of the initial targeted market over 40 years old in the Americas and Western Europe, or about 200 million people, are candidates for the SNRS procedure. According to CEO Trenary, the co. intends to sell these lasers for $200,000. the ophthamolgists will charge about $1000 per eye with SNRS getting $100 of that. Projected net margins are 90% for the procedure and 60% for the machine. just a 5% market penetration rate would yield per-procedure fees of $2 billion per year, and that does not include sales of the laser machines.
Trenary believes the Phase III study will be wrapped up by June '98. According to V.P. of Clinical and Regulatory affairs, Jeannie Gifford Cecka, the co. has treated over 450 eyes and the results have shown a very high safety profile. Dr. Alan Aker, Aker-Kasten Cataract and Laser Institute, tells MarketScope that he has personally performed over 100 of these procedures and says the results have been incredible, has had no problems with the procedure, and marvels about how happy his patients are after the procedure. CEO Trenary tells MarketScope that the co. anticipates FDA approval as early as mid '99 and as late as mid 2000.
The procedure itself is quite simple, takes about 2 seconds, is non-invasive, offers quick visual recovery, and there is little to no pain involved. The Sunrise Corneal Shaping System directs small amounts of heat to eye tissue, outside of the central vision zone, thereby shrinking collagen in a few small spots, and reshaping the cornea to correct refractive errors of the eye. there is simultaneous delivery, in a variable pattern, of up to 8 energy balanced and homogeneous infrared laser beams at a wavelength of 2.1 micrometers. the energy in the laser beams is adjusted to achieve an appropriate temperature and depth profile when directed onto a patient cornea. the depth of penetration varies from 50% to 70% of the corneal thickness. the reason this system works is that collagen undergoes thermal modification of its fibers (contracts) when the fibers reach a critical temperature of 58 to 75 degrees Celsius. it is the unique property of collagen that can be used to change the curvature of the cornea.
The laser system is very attractive to not only patients but to ophthalmologists. according to Dr. Aker, ophthalmologists have been hit hard by reductions in cataract fees and will seize upon this technology to offset their losses. they can perform many procedures each day, training is fairly simple, and maintenance for the laser system is minimal. current laser systems for nearsightedness cost up to $500,000 with maintenance running up to $100,000/year. plus the procedures are invasive and the safety risks are much higher than SNRS's. As a vote of confidence, many ophthalmologists have taken big equity stakes in the co.
To demonstrate some of the progress that SNRS has made over the last year, we start with an announcement made on 7/30/97 that the co. received conditional approval from the FDA to include the second eye in clinical trials 6 months after the first eye is done. on 8/12/97, the co. got conditional FDA approval to expand the trials to an additional 100 patients in their hyperopia study. 11/19/97 received FDA approval to move into Phase III studies for treating hyperopia. on 12/11/97, SNRS formed a Scientific Advisory Board comprised of leading ophthalmic surgeons from around the world. 1/27/98 completed $9.35 million private financing of which 80% of the money came from ophthalmologists who have seen the clinical data or have experience using the system for treating hyperopia. on 2/24/98, SNRS got conditional FDA approval to treat the second eye on the same day. and on 3/24/98, the co. got FDA approval to begin a study to treat patients who are overcorrected after having a myopic excimer laser procedure resulting in induced hyperopia.
On a technical basis, the stock is also quite appealing. SNRS recently broke out to all-time highs on extremely heavy volume. the stock is currently consolidating recent gains on lighter volume and looks poised to take out the intra-day high of $7.5 on its way to $8 to $10.
We believe the stock is extremely attractive for speculative accounts on a short term basis and has the potential to be a blockbuster over the next couple of years.
With respect to the Bulletin Board listing, the co. expects to be listed on the NASDAQ, NASDAQ small-cap, or AMEX within the next month. /Mark Arbeter |
