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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: HeyRainier who wrote (493)	3/23/1998 2:22:00 PM
From: majormember	Read Replies (2) \| Respond to of 1720

Rainer, As requested, here is rationale for SNRS hitting $35 in 12-18 mo. Sunrise Technologies is now in Phase III clinical trails to gain FDA clearance for Laser Thermal Keratoplasty (LTK), a non-invasive, laser based system for vision correction of hyperopia (farsightedness). Unlike excimer laser systems manufactured by VISX and Summet Technologies for treatment of myopia (nearsightedness) known as PRK, the SNRS approach employs a solid state holmium-YAG laser, signicantly less costly than an excimer. The holmium-YAG should be maintenance free, while it costs as much as $100,000 a year to maintain an excimer. The economics of PRK is high capital acquisition and maintenance cost of excimers which require large patient flow and a high per procedure fee to generate adequate return on investment. As this procedure is non-reimbursable it limits consumer acceptance. Post-operative pain is a common complaint. The laser ablation phase takes 30-45 seconds. In contrast, LTK projects dots of laser energy in a circular pattern toward toward the periphery of the hyperopic cornea (one that is too flat, focusing light behind the retina causing farsightedness), a process that causes the collagen fibrils of the cornea to shrink, "cinching up" the cornea and increasing the steepness. Laser energy is projected for approx. 1.4 seconds, the technique is easily mastered, post operative discomfit is minimal. Unlike PRK, which is performed on the central vision axis, LTK is generally 6-7mm off axis, which makes the procedure safer. With LASIK a blade is used to cut and lift a flap of the cornea before the laser ablates tissue and reshapes the cornea. The eye heals faster but it is a more extensive surgical procedure. LTK will be more affordable for patients: Because of lower equipment and ongoing costs to ophthalmologists, as well as the potential for ophthalmologists to treat a much larger volume of patients at a cost of $500-$1000 per eye vs. $2000 per eye for PRK/LASKIK. Hyperopics comprise approx. 31% of the worlds population. This is an over age 40 group and more affluent then myopics who generally have to become accustomed to wearing glasses at a young age. Over 200 Million people are candidates for the SNRS procedure. This represents a $40 billion market potentail, assuming a $100 per procedure fee, which does not include revenues from laser sales. A 5% market penetration rate would yield per-procedure fees of $2 billion per year. The growing population of baby boomers should expand the initial target market to 250 million people by 2010. In addition, add in surgical overcorrection resulting from PRK and LASIK treatments for myopia, where patients become hyperopic. The new management team at SNRS includes Russ Trenary who was Sr. VP of the $180 million ophthalmic surgical devices group at Allergan. The new management team has over 100 years experience in ophthalmic and laser correction. The only comparable companies to look at are VISX and BEAM. Near the time of FDA approval, the market values for BEAM and VISX reached $1 billion and $600 million. Both BEAM and VISX also went over $35 in expectation of them to reach their market potential. BEAM's valuation has dropped to $200 million and VISX to $400 million. Both companies had poor strategies. BEAM competed with it's own customer's by establishing it's own correction centers. Market penetration has fallen behind because of the high cost to ophthalmologists and patients. SNRS has better management and a more influential target market. If you look at SNRS recent news, you will see the $9.85 million that SNRS got is financed by the OPHTHALMOLOGISTS in the clinicals. If you look at who those ophthalmologists are you will see MANY of them were involved in getting VISX/BEAM to market, again where BOTH went over $35 (look at your charts). Finally, in the most recent news release, SNRS can now do BOTH EYES, SAME DAY treatment, cutting at least 6 months off the PMA date. In letting SNRS do both eyes, they are signalling, IMHO the safety of the LTK procedure. How much do you think a procedure where someone can walk into a Dr's office and inexpensively and painlessly leave without having the need for glasses. I beleive, givin VISX and BEAM's history, that $35 is not much once word is out. As SNRS is doing 1-3 conventions per month worldwide, the news is quickly getting out. Once SNRS is no longer BB listed, many more people will begin following company and stock will soar. This, of course, is just my opinion and all should do appropiate DD before making any investment. Best regards, Skane