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Biotech / Medical : SNRS- Sunrise Technologies -- Ignore unavailable to you. Want to Upgrade?

To: BostonView who wrote (3982)	8/8/2000 11:32:56 AM
From: Joe	Respond to of 4140

Full text of Lehman report this morning. Cut and pasted from a post by gtfay on RagingBull. BTW, anyone that has not listed to Lehman's David Gruber VCall on the Medical Technology Sector from August 1st, might want to take a listen. Mentioned Sunrise at about minute 18:40 through 23:00. If you listen to the whole thing, you will get a feel where Sunrise fits into Lehman's view of Medical Technology. radiowallstreet.com Joe _____________________________ Lehman's FULL report follows, Sunrise Technologies 1-Buy Earnings Preview Reiterate BUY; Anticipating positive launch data! David A. Gruber, M.D. and Kenneth N. Goldman, M.D. Investment Conclusion We reiterate our 1-buy rating and price target of $19 based upon early indications that the launch of the Hyperion laser for the correction of hyperopia may exceed our earlier estimates. We expect a rapid ramp 2HOOE, break even 4QOOE, with over 300% top line growth in 2001E to $80.7m and EPS $0.18. Investor sentiment will turn positive as units are shipped to doctors and demand for the "no touch" correction of hyperopia is demonstrated by procedure growth. Summary 1. Interest among ophthalmologists remains high. 2. Hyperion manufacturing capacity far exceeds our estimates. 3. The hyperopic market is large and virtually untapped. 4. Hyperion laser is adjunct to excimer as another option and as a market-differentiating factor. 5. Short sellers may have a myopic view. INTEREST AMONG OPHTHALMOLOGISTS REMAINS HIGH. Sunrise has had to add extra didactic courses to their schedule to accommodate the interest among ophthalmologists in gaining familiarity with the Hyperion LTK procedure. The most recent such program required the doctors to give up a summer weekend and pay a nominal fee, indicating to us more than casual interest. Dr. Sandra Belmont, Director of the Laser Vision Correction Center and Corneal Service at New York Weill Cornell Medical Center believes 'that the SUNRISE LTK procedure will become the procedure of choice for farsightedness because of its excellent safety profile, effectiveness, low learning curve for physicians, and ease of treatment for the patient.' We note that less than 25% of U.S. ophthalmologist routinely perform excimer LASIK, which requires significant surgical skill and a steep learning curve. Hyperion LTK is a no touch, non-surgical, procedure which only requires the MD to 'aim and shoot" with a system that is quite similar to other ophthalmological lasers. HYPERION MANUFACTURING CAPACITY FAR EXCEEDS OUR ESTIMATES. Lehman has estimated the manufacture and sale of 105 Hyperion units at approximately $200k per unit for CY00 based on a June launch. Our present financial projections are based on each machine treating 5 patients (10 eyes) per week initially, growing to 7.5 patients per week by end of December 00. We have visited the factory assembly line and found that the new COO, John Hendrick, has revamped the facility and has significantly more machines coming off the line and being shipped than our earlier expectations. There could be significant upside to revenues from capital placements as well as procedure royalty fees. THE HYPEROPIC MARKET IS LARGE AND VIRTUALLY UNTAPPED. Hyperion LTK is approved for the reduction of up to 2.5 diopters of hyperopia in patients older than 40 years. Hyperopia, unlike myopia usually first manifests in adulthood with nearly two-thirds of farsighted patients over 40 years old. Approximately 38 million Americans are eligible candidates for this procedure. The 'unconvinced' observe that only 5-15% of patients undergoing LASIK are hyperopic, thus concluding that the hyperopia market will not be as robust as that for myopia. They should understand two important facts: 1. Laser vision correction marketing has never been aimed at the over 40 demographic, but more towards a much younger, nearsighted population, and 2. Excimer laser LASIK for hyperopia has not yet been approved by the FDA. Hyperopic LASIK is presently being performed 'off-label,' without sanction by the FDA. Furthermore, hyperopic LASIK involves increased procedural complexity relative to myopia, and more importantly, relative to the Hyperion LTK. We believe holmium laser LTK offers a 'better" solution for mild-moderate grade hyperopia (+.75 to +2.5 diopters) than does LASIK. MD enthusiasm for LTK will expand the hyperopia opportunity. HYPERION LASER IS ADJUNCT TO EXCIMER AS ANOTHER SURGICAL OPTION AND AS A MARKET DIFFERENTIATING FACTOR. Besides being a primary modality for the correction of hyperopia, the Hyperion can help the LASIK surgeon in other ways. Approximately 8% of excimer LASIK surgeries yield over and under-corrections. The Hyperion represents a fast and efficient way of correcting many of these "complications' of excimer LASIK surgery, offering a non-surgical approach to the re-operated patient. Further more, in many markets LASIK competitors are now trying to differentiate themselves by advertising the features of their lasers, such as 'narrow beam vs. broad beam.' We believe the ability to offer circumspect hyperopic patients a “3-second, non-cutting laser technique,” will be a powerful marketing tool. SHORT SELLERS MAY HAVE A MYOPIC VIEW Negative investor sentiment has been based on the assumption that the company would never obtain FDA approval, would not be able to sell units and would not appeal to the hyperopic market. On August 9 the company will report that units are being sold (to high volume surgeons who are opinion leaders in refractive surgery). The only issue that remains to be elucidated will be how the public will respond to established LASIK doctors who advertise the newly approved "No Touch Laser for Refractive Surgery.' Early response to this marketing approach has been extremely positive in one of the early markets we have sampled.