Device Makers Up After Hearing on Laser Eye Surgery

Orange County Business Journal, May 5-May 11, 2008 by Reed, Vita

Private Equity Invests in Prosthetics Maker; CHOC Opens Dhont Wing for Cancer Patients

HEALTHCARE

A recent Food and Drug Administration hearing on the safety of laser eye surgery hasn't affected the stock prices of related medical device makers as some on Wall Street had feared.

Days after the April 25 hearing, shares of Advanced Medical Optics Inc., a Santa Ana device company that produces lasers used in Lasik procedures, were trading up slightly with a market value of $1.25 billion. Atom Inc., a Fort Worth, Texas, division of Nestlé SA that employs about 600 people in Irvine, also saw a boost a few days after the hearing.

Stock analysts had predicted that information from the FDA's hearing, which involved patients who had suffered complications from the procedures, could hurt laser surgery-related companies such as Advanced Medical, Alcon and Bausch & Lomb Inc., as well as clinics such as TLC Vision Coip. and LCA-Vision Inc.

The FDA does not regulate Lasik or the doctors who perform it but does oversee devices used in the surgeries.

Analysts predict that Lasik procedures will decline 5% to 15% this year as the economy makes the surgery financially unfeasible for some people. Laser eye surgery can cost $1,500 to $5,000 and isn't covered by most health insurers.

Earlier mis year, Advanced Medical cut its earnings outlook for 2008 to $75 million to $87.5 million after saying it expects fewer vision correction surgeries.

Advanced Medical made a big push into vision correction surgery gear with 2007's $808 million buy of Irvine's IntraLase Corp., a maker of laser, software and other products used to create a flap in the cornea. The company gets a tee for each procedure done with its machines as well as sales from a disposable kit used in the surgery.

As for the meeting itself, a FDA advisory panel said the agency should take more steps to advise patients of laser eye surgery's potential risks. The advisory panel's recommendation followed hours of testimony from some patients who said that blurriness, double vision and other complications stemming from the surgery led to depression, and in some extreme cases, suicidal tendencies.

The panel agreed with the FDA that laser eye surgery is safe and effective, but said the regulatory body could offer clearer information about side effects.

Private Equity Targets Prosthetics

Freedom Innovation Inc., an Irvine medical device company, said late last month that a pair of private equity firms bought "a significant stake" in it with an eye toward funding future growth and deals. Financial specifics weren't disclosed.

Telegraph Hill Partners of San Francisco and New York-based Tailwind Capital Partners, part of Tailwind Management LP, bought the stake. Freedom said in a release mat Chief Executive Maynard Carkhuff, and Roland Christensen, its founder and chief technology officer, "retain meaningful equity interests" as well as their roles.

Freedom makes prosthetic devices for amputees. Its products include the Plié MPC Knee, a microprocessor-controlled product; Renegade, a shock-absorbing prosthetic foot; and the Sierra line of artificial feet.

CHOC Opens Infusion Center

Children's Hospital of Orange County opened the Dhont Family Foundation Outpatient Infusion Center. The center is on the second floor of the hospital's ambulatory care center in its Orange campus. The center will primarily serve pediatric cancer patients who receive chemotherapy and other services in an effort to avoid hospital stays.

The center received a $1 million gift from the Dhont Family Foundation. The O.L. Halsell Foundation and the McBeth Foundation also contributed.

Bits and Pieces:

Michael Mussallem, chief executive of Irvine's Edwards Lifesciences Corp., spoke at last week's Global Healthcare Unplugged conference in Miami put on by Morgan Stanley & Co. ... Richard Carmona, U.S. surgeon general from 2002 to 2006, spoke last week at the Institute for Health Advancement's annual heflhh literacy conference in Irvine ... Hoag Memorial Hospital Presbyterian in Newport Beach said its cancer center received an outstanding achievement award from the American College of Surgeons' Commission on Cancer... HairDX LLC, an Irvine company, introduced a genetic test to predict hair loss in women.

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