April 13, 2004.
By LEONARD ZEHR,
The Globe and Mail.
After being mired in the doldrums for three years, laser vision surgery is staging a dramatic comeback as new "custom" technology is reducing fears of complications and enticing people to fork over up to $4,500 for the promise of better than 20/20 eyesight.
According to ophthalmic industry research firm Market Scope, laser eye correction procedures in the United States are expected to increase by up to 12 per cent this year and jump 35 per cent next year, reaching 1.7 million surgeries in 2005 and matching the industry's record in 2000.
All of which should have industry leader TLC Vision Corp. of Mississauga seeing dollars signs.
But these days, the company has its fingers crossed about an experimental blood filtering treatment to prevent blindness in seniors caused by the "dry" type of age-related macular degeneration (AMD).
"Even if we get up to five million [laser procedures a year], I'd take rheo any day," declares TLC's chief executive officer Elias Vamvakas.
Rheo stands for rheopheresis, a German invention that uses a specially designed Japanese filter to remove excess levels of large proteins and fatty substances from blood. Too many of these substances have been shown to reduce blood viscosity and blood flow.
Nobody knows what causes dry AMD, where blood vessels at the back of the eye essentially harden and dry out, causing a loss of central vision.
But rheo proponents contend that many patients with the disease have unusually high levels of things like LDL (bad) cholesterol, fibrinogen and certain macroglobulins under the retina.
And clinical studies suggest that filtering out these substances allows blood to flow more freely through tiny capillaries in the eye, stabilizing vision and, in some cases, even reversing vision loss.
Analysts suggest that TLC and its Vascular Sciences affiliate are sitting on a potential bonanza if rheo, the only treatment for dry AMD, clears clinical trials and U.S. regulatory hurdles for a proposed launch as early as mid-2005.
Of about 15 million Americans suffering from AMD, 90 per cent have the dry version, with about more than one million new AMD cases each year. Dry AMD often progresses to "wet" AMD, where blood vessels leak at the back of the eye, resulting in a rapid progression to legal blindness.
Moreover, a recent study of AMD has found that there are some eight million dry AMD patients most at risk of developing wet AMD, which represents the likely target group for TLC's rheo treatments.
There are no approved treatments for dry AMD other than vitamin supplements sold by Bausch & Lomb, which can reduce the risk of progression to wet AMD.
"The aging of the baby boomer generation is likely to increase the number of dry AMD patients over time," Orion Securities analyst Aaron Bennett said in a recent report.
"It is estimated that 42 million Americans will be living with the disease by the year 2030."
At a projected cost of about $2,000 (U.S.) for each of eight recommended rheo procedures per patient, TLC figures each patient represents $8,000 in filter sales and $4,000 in profit, of which it would receive 63 per cent under its venture with Vascular Sciences.
Treating only 1 per cent of the AMD population, or 150,000 patients, represents $1.2-billion in sales and $600-million in profit, TLC estimates.
"Getting reimbursement is the real question," Mr. Vamvakas said. "There's no way the U.S. government will cover everybody's treatments. If it did, TLC would get a check for $200-billion and that's not going to happen."
Those kind of numbers are attracting analysts to resume coverage of TLC after a three-year hiatus that was sparked by a price war in laser eye surgery and resulting industry shakeout.
Many analysts are recommending investors take "overweight" positions in TLC, even though the stock price has nearly doubled this year, closing at $12.06 on the Nasdaq Stock Market yesterday.
While rheo is still being tested in the United States, TLC has treated 60 to 70 patients at a clinic in its Mississauga head office in the past year with encouraging results.
One of the early patients, for example, was able to read three additional lines of an eye chart, the company has disclosed, a dramatic outcome because no treatment for AMD has ever shown any improvement in vision and patients with the disease usually get worse.
The U.S. Food and Drug Administration was so impressed with the interim trial results of rheo testing that it shortened the time frame of the pivotal trial this year, reduced the number of patients needed for approval and demanded that all placebo patients receive rheo treatments after the study, a rare recommendation.
"It's great that we can make people get rid of their glasses and see better [with laser surgery] but rheo is really significant for what it can do to stop people going blind," Mr. Vamvakas said.
If rheo reaches its potential, it would represent another ophthalmic breakthrough by TLC, which pioneered laser eye surgery, or lasik, in the early 1990s and the new "custom" procedure three years ago.
CustomLasik, as it's called, measures the eye from back to front, using new "wave-front technology," which creates a specific 3-D computer map of the cornea for each patient. The technology, which received FDA approval last summer, is cutting the risk of complications and raising the odds for improved vision.
Mr. Vamvakas said studies are showing that CustomLasik is giving 90 per cent of patients 20/20 vision or better, nearly twice the rate with traditional laser surgery.
Moreover, 70 per cent of patients are obtaining 20/15 vision, which is better than average vision.
(20/15 vision means you can see something at a distance of 20 feet that the average person can see at 15 feet.)
"CustomLasik is changing the industry by expanding the pool of people that want to see better than with glasses," Mr. Vamvakas said.
But the new procedure comes with a price.
TLC, which has a 17-per-cent market share in North America, is charging a premium of $300-to-$500 per eye above traditional lasik surgery for CustomLasik, or a total of about $2,250 per eye, on average.
© Copyright 2004 Bell Globemedia Publishing Inc. All Rights Reserved.
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