The 10k came out today. This part about their R&D is interesting.....I think this might finally be the year they get things going with BSX....let's hope!
THE UROLOGY MARKET
While our Lasers and Fibers are presently used in urology to fragment stones in
the kidney, ureter and bladder, we have developed two, new, proprietary, Side
Firing Laser Fibers for use with our Holmium Lasers and others to vaporize a
portion of the prostate to treat benign prostatic hyperplasia or "BPH", commonly
called an enlarged prostate.
One of these new Fibers is for use with our 80 watt Holmium Lasers and the other
is designed for use with 80 and 100 watt Holmium Lasers manufactured by Lumenis,
Ltd. of Yokneam, Isreal ("Lumenis"). Lumenis is one of the world's largest
manufacturers of medical lasers, has revenues exceeding 250 million per year and
has a large worldwide sales force.
The Side Firing Fibers we will be manufacturing for Lumenis will be marketed in
the U.S. and Japan under Lumenis' DuraMAX trademark by Boston Scientific
Corporation (NYSE:BSX) and by Lumenis' sales organization elsewhere throughout
the world, when BSX has completed its quality review and testing of the new
Fiber.
We will market the other Side Firing Fiber under our VaporMAX registered
trademark through a limited number of commission sales representatives in the
United States and by distributors in certain foreign countries.
Both of these Side Firing Fibers are designed to be used with our and Lumenis'
Holmium Lasers to vaporize a portion of the prostate gland to treat BPH. This
condition, in which excessive growth of the prostate causes difficulty in
urination, affects about 50% of men over age 55, and a higher percentage of men
at advanced ages. While drugs are used to treat BPH, when they are no longer
able to adequately treat this condition, removal of a portion of the prostate is
needed to open a channel to permit proper urine flow.
3
<PAGE>
About 200,000 men in the United States and an estimated one million men in
foreign countries are treated with a procedure each year to remove a portion of
the prostate to open a channel for urine flow. While radio frequency ("RF")
energy is also used to do this, laser vaporization or resection of the prostate
is becoming increasingly popular, as the laser procedure typically reduces
procedural bleeding and can be performed on an outpatient basis, whereas the RF
procedure usually entails a hospital stay, potentially significant bleeding, a
variety of adverse effects and a recuperation period of days to weeks.
As a result, when Boston Scientific and Lumenis begin marketing the new Fiber
for use with Lumenis' Holmium Lasers, we believe the treatment of BPH will
become the largest segment of our business.
The development of our new Side Firing Fiber for use with our 80 watt Holmium
Lasers and Lumenis' 80 and 100 watt Holmium Lasers has been delayed due to
obstacles imposed by the high peak powers and other characteristics of Holmium
Lasers, which make them excellent at vaporizing tissue, but also make them very
hard on the glass components of the Fibers. The new Side Firing Fibers we are
developing have been shown in our bench testing on animal tissue to vaporize
tissue faster and to be significantly more durable than the side firing fibers
presently being manufactured by Lumenis and marketed by Boston Scientific and
Lumenis.
Our new Side Firing Fibers have been cleared for sale by the FDA.
In mid December 2008, we delivered a number of DuraMax Side Firing Fibers to
Lumenis for bench testing on animal tissue, and we plan to deliver a number of
these devices to an independent laboratory for bench testing on animal tissue in
early 2009 and expect to receive the results of this testing in February 2009.
If the results of this testing confirms our results, we anticipate Boston
Scientific may commence its quality audit of Trimedyne in the first calendar
quarter of February or March of 2009, which could take four or more months to
complete.
The problems we faced in developing our new Side Firing Fibers are detailed in
the following description of the lasers and impact of their laser energy on the
Fibers.
Holmium Lasers emit very short pulses of laser energy. At 80 watts, our Holmium
Lasers emit pulses of energy with a duration or pulse width of about 700
microseconds, with a peak pulse power level of up to 9,000 watts. The laser
energy is transmitted from the laser through optical fibers to a tip designed to
emit the energy to the side at an angle of about 80 to 90 degrees.
Holmium Laser energy is highly absorbed by water. When tissue is struck by the
laser beam, water in the cells is almost instantly turned to steam, vaporizing
the tissue. As a result, Holmium Lasers vaporize tissue more efficiently than
most other lasers whose energy can be transmitted through conventional optical
fibers, such as KTP Lasers, whose energy is highly absorbed by hemoglobin in
blood, and Diode lasers, whose energy is moderately absorbed in both hemoglobin
and water.
KTP and Diode lasers, at very high power, can vaporize tissue, but can also
cause significant charring and thermal damage to the remaining tissue. Charred
tissue is removed from the body by macrophages and other mechanisms. Macrophages
emit harsh chemicals to dissolve char and other foreign matter, which causes the
patient to experience irritation at the vaporization site in the prostate for a
week or two.
Holmium lasers are able to vaporize tissue better than the above mentioned
lasers, with little or no charring or damage to the remaining tissue. However,
the very high power energy pulses of Holmium Lasers cause a steam bubble to
almost instantly be formed in a sort of explosion. These explosions of steam
typically occur at a rate of about 25 times per second with our Holmium Lasers
and at a rate of about 50 times per second with Lumenis' Holmium Lasers.
Also, when the steam bubble collapses between pulses, it causes an acoustic
shock, which can damage the glass components in the tip of the Fibers. And, the
water and steam heated by the laser energy can act as a catalyst for erosion of
the glass surface at the tip of the optical fiber, which can cause damage to the
Fiber's tip. Further, when the laser energy strikes the tissue, some of the
laser energy is reflected back into the tip of the optical fiber, which can
cause thermal damage that can affect the integrity of the Fiber's tip.
The combination of the above described steam explosions and the shock waves from
the collapse of the steam bubbles can fracture the glass enclosure of the
Fiber's tip and, with the degradation of the fiber tip by laser energy reflected
from the target tissue, reduce the Side Firing Fiber's useful lifetime.
As a result of the above described problems, it took us much longer than
anticipated to develop a durable, fast vaporizing, Side Firing Fiber for use
with our 80 watt Holmium Lasers. We expect, barring any unforeseen problems in
manufacturing, to begin marketing our VaporMAX(R) Side Firing Fiber for use with
our Holmium Lasers by late March 2009.
4
<PAGE>
We encountered a more difficult problem in developing the Side Firing Fiber for
use with Lumenis' 100 watt Holmium Lasers. At 100 watts of power, Lumenis'
Holmium Laser produces 25% more laser energy than our 80 watt Holmium Laser, and
its pulse width or duration is about 250 microseconds at this power level, with
a peak pulse power of up to 11,000 watts.
In addition to the optical fiber's tip having to emit 25% more energy per pulse,
since the pulse width is about one-half that of our 80 watt Holmium Laser, 25%
more power must be transmitted through the tip of the optical fiber at about
twice the number of pulses per second as with our 80 watt Holmium Laser. The
steam explosions at the surface of the tip of the Fiber are more powerful, the
acoustic shocks caused by the collapse of the steam bubble are more intense and
the amount of laser energy reflected from the tissue, which can damage the tip
of the Fiber, is more powerful.
As a result, developing a fast vaporizing, durable, Side Firing Fiber for use
with Lumenis' Holmium Lasers proved to be a formidable challenge. A very
significant portion of our management and R & D efforts over the past year were
devoted to the development of the new Side Firing Laser Fiber for use with
Lumenis' Holmium Lasers and our Holmium Lasers.
Before Boston Scientific and Lumenis will commence marketing our new Side Firing
Fiber, Boston Scientific must conduct a quality review of the new Fiber and our
manufacturing and quality systems, as well as conducting limited physician
feedback testing in humans to assure that it functions within customer
expectations. No clinical studies of the new Fiber are expected to be required,
as we have already received FDA clearance to market the new Fiber.
While we plan to commence marketing our new VaporMAX(R) Side Firing Fiber to the
owners of our Holmium Lasers by late March 2009, the quality review and testing
of our DuraMax Side Firing Fiber for use with Lumenis' 80 and 100 watt Holmium
Lasers by Boston Scientific and Lumenis is expected to take four months or
longer from the time we provide supplies of the new fiber to Boston Scientific
and Lumenis, which is presently anticipated to commence, barring unforeseen
delays, in late March 2009. As a result, we expect to commence shipments of the
new Fibers to Boston Scientific and Lumenis early in the third calendar quarter
of 2009, assuming Boston Scientific begins its quality audit in February or
March of 2009 and physician feedback testing of the new fiber in April 2009.
We settled our patent litigation against Lumenis, Ltd., and in September 2005
entered into an OEM Agreement, under which Lumenis agreed to purchase 100% of
its side firing (75 to 90 degree emitting) laser fibers and 75% of its angled
firing (60 to 75 degree emitting) laser fibers from us. Lumenis presently
markets its laser fibers through Boston Scientific in the U.S. and Japan and
markets them elsewhere throughout the world through its own sales organization.
Our Side Firing Laser Fiber will replace Lumenis' side firing laser fibers in
these markets when Boston Scientific completes its quality audit and testing of
the new Fiber and validates us as a supplier (vendor).
Side firing laser fibers to treat an enlarged prostate typically sell for about
$750 or more and, due to their exposure to blood, are labeled "single use" and
should be discarded after one use, although some illicit re-use of these fibers
occurs in the United States and Europe and is common throughout the rest of the
world, where government reimbursement, insurance plans and self-pay patients
cannot afford such expensive devices.
Our Lasers and plain, straight-ahead firing Fibers are used in urology to
fragment stones in the kidney, ureter or bladder in "lithotripsy" procedures.
However, our plain, straight-ahead firing Fibers are reusable and are used an
average of about 20-30 times. As a result, revenues from the sale of $500 plain
Fibers to fragment stones do not result in as significant sales as those
expected from single use, disposable Side Firing Fibers to treat enlarged
prostates.
