IRVINE — The future for medical laser maker Trimedyne Inc. and its investors became decidedly brighter Tuesday as the company received long-awaited federal approval of its bloodless laser procedure for treating prostate enlargement.
The Irvine medical equipment company's stock nearly tripled in a frenetic day of trading as investors rushing to get in on the ground floor drove the price to $10.125 a share from Monday's close of $3.44.
"It's about time," said an elated Peter Hyde, Trimedyne's president. He holds options to acquire 200,000 shares of the company's stock at $5.50 a share--so Tuesday's surge gave him a profit on paper of nearly $1 million.
Hyde was hired in late 1992 to help the company complete a switch from making lasers for cardiac care to developing laser treatments for orthopedic and urological conditions. He characterized the Food and Drug Administration's ruling Tuesday as "a breakthrough" that will push Trimedyne out of the research-and-development stage and into full-fledged production and sales of a product with wide market demand.
In all, more than 5.5 million shares, or almost 59% of Trimedyne's total stock, changed hands on the Nasdaq market Tuesday. Market spokesman Marc Beauchamp in Washington said that such huge trading volumes and price run-ups are "rare, but they do happen. And they are more likely to happen with a company like this, where the government approval has been expected and anticipation has grown."
Trimedyne has soared higher--its shares traded at more than $23 in the late 1980s when, unlike the past six years, the company was profitable. But the market for the cardiac care products that drove Trimedyne to those heights has dried up. The company's fortunes have flagged in recent years as it concentrated on developing the urological laser, which permits the surgical reduction of an enlarged prostate to be performed as an outpatient procedure.
The head of the American Urological Assn.'s health policy council cautioned that Trimedyne's process is not the only alternative to traditional prostate surgery. Increasingly, physicians are treating the condition through nonsurgical methods, including prescription medications that help shrink swollen prostate tissue, said Dr. H. Logan Holtgrewe, a Baltimore urologist. Other procedures that do not require hospitalization, including ultrasound and microwave treatments, also are available, he said.
Trimedyne, though, says that its laser treatment can cut 20% to 30% from the cost of prostate reduction by eliminating hospitalization in most cases.
The treatment is not new--Trimedyne received federal approval for general urological use of its so-called side-firing laser several years ago. What touched off Tuesday's market madness--and a lot of partying at Trimedyne headquarters--was FDA approval to market the laser specifically for treatment of benign prostatic hyperplasia--or noncancerous enlargement of the prostate. The condition affects about half of all men over age 50.
While several competitors have received approval to use their lasers for general urology treatments, including prostate reduction, Trimedyne says it is the only company in the country with a product approved specifically for that condition.
The distinction is potentially worth millions to a medical products company. The agency's approval to market the laser specifically for treatment of noncancerous prostate enlargement reduces medical liability issues for urologists who use the process and greatly increases the chances that medical insurers will pay for the procedure.
In 1994, Medicare alone paid for 144,000 benign prostate reduction procedures, said Holtgrewe.
Hyde said it would be at least four months and possibly 18 months before competitors could obtain similar FDA approvals for their laser products.
That gives the company a big edge over the competition, one analyst said.
"This has the potential of being a home-run product if Trimedyne approaches the market intelligently," said David Anast, publisher of the Biomedical Market Newsletter. "The pent-up demand for this type of product, given the push to managed care and medical cost reduction, may reach the level of unquenchable for the next three to five years," he said. "Any time there is a major piece of medical equipment like this that can dramatically lower cost of treatment, it could be a major-league product in the cost-conscious HMO market."
In a 1994 test for Trimedyne, Stanford University Medical Center urologists John Kabalin and Edmond Butler found that the total cost of a prostate reduction using the laser treatment was an average of $2,000 less than the cost of the traditional surgical procedure.
The major saving, Kabalin said Tuesday, is achieved because the laser procedure causes little, if any, bleeding and permits most patients to return home the same day, wearing a small-diameter urinary catheter that can be removed by the urologist several days after the procedure.