Controversy Dogs Tustin Firm’s Lasers
Enamored of the magic of lasers, Wall Street a year ago believed that Trimedyne Inc., a small Orange County biotech company, would burn a sure path to success. It grew rapidly after winning the race to market the first laser designed to open plaque-clogged arteries.
But today, the company that set out to revolutionize the treatment of cardiovascular disease has fallen on hard times, proving that it takes more to win the following of the medical profession than a sales seal of approval from the U.S. Food and Drug Administration.
The stock in the Tustin firm, after soaring to $24 a share last August, has plunged to $6.75 in the wake of the decline in business. Sales and earnings have been sliding for nine months, and after eight consecutive profitable quarters, the company reported a loss: $546,000 for the fiscal third quarter ended June 30.
Trimedyne officials say that profits are depressed in part because the company has substantially stepped up its spending for marketing and new product research and development to prepare for the future. Wall Street was “spoiled” by the company’s extraordinary earnings growth last year, they say. But far more troubling for the company’s prospects is a dispute that has emerged over the effectiveness of the technology on which Trimedyne has built its business.
“There have been mixed results. There is no lack of controversy” over the value of the technology, said David L. Duclos, medical technology analyst with Wessels, Arnold & Henderson, a securities brokerage in Minneapolis.
It did not begin that way. In March, 1987, Trimedyne obtained permission from the FDA to begin marketing the first laser device that could sear through clogged leg arteries.
Trimedyne promoted the device as a breakthrough in the fight against cardiovascular disease. Cardiovascular problems, through strokes and heart attacks, are the leading cause of death in this country, and they account for $85 billion of the nation’s annual health-care budget.
Trimedyne’s laser-heated metal probe held the promise of being able to bore through otherwise impassable arteries, thus making bypass surgery unnecessary. With the laser, it was hoped, patients could be treated at far less cost and with much less pain. Laser-assisted treatment of blocked arteries costs $6,000 to $8,000, Trimedyne says; the cost of bypass surgery, by contrast, is $20,000 to $35,000.
Although the FDA approved the Trimedyne probe only as a treatment for arteriosclerosis in the legs, the company was expected to soon penetrate the much larger and lucrative market for treatment of blocked heart arteries. Trimedyne has estimated potential laser-system sales of $1 billion a year for leg and heart applications together.
As soon as the FDA determined that the Trimedyne laser was safe and effective enough, sales of the device exploded. In little more than two years, the company has sold 550 lasers to medical centers worldwide and more than 25,000 patients have been treated with them, the company says.
The initial welcome that the medical profession offered the laser technology was enough to take the company’s sales from $12 million for its fiscal 1987 to $31 million for its fiscal 1988, and also to prompt the company to move to larger quarters.
Sales Fell Off
But laser sales began tapering off last winter amid reports that many of the doctors who had plunked down $96,000 apiece for the lasers were using them little, if at all.
In addition, reports of studies conducted at UCI Medical Center and at Mount Sinai Medical Center in New York concluded that the Trimedyne laser probe causes complications that include perforations of artery walls and that it may not be any more effective than older mechanical and much less expensive treatments such as angioplasty.
Trimedyne also began facing competition. Another company recently obtained FDA approval to market a raw laser energy system for treating leg arteries, and many other competitors are developing devices that they predict will cut into Trimedyne’s market share.
Before the Trimedyne laser, physicians were treating blocked arteries without surgery using a technique called “balloon angioplasty,” in which a tiny balloon is threaded through an artery on a catheter, then expanded to crush the plaque and open a path for blood to flow.
The Trimedyne laser has not replaced balloon angioplasty; rather, it works in tandem. The Trimedyne device is a catheter tipped with metal that is heated by laser energy, and it is intended to open a passageway through the most densely clogged arteries; after the passageway is opened, a balloon catheter can be inserted.
It was hoped that the laser could open arteries that balloon angioplasty alone could not and that it would significantly reduce the high incidence of recurring blockages.
Results of UCI Study
Dr. Jonathan Tobis, a cardiologist at UC Irvine, said the hypothesis was that the laser-heated probe would bore through the middle of an artery by vaporizing the calcified plaque in its path. Instead, he said, a study at UCI, published in the June issue of the Journal of the American College of Cardiology, shows that the laser probe vaporizes very little plaque and that it takes a path of least resistance through arteries in much the same way a purely mechanical device such as a wire would.
Tobis said he found that although the laser does not penetrate plaque, it will sometimes burn holes in the artery itself.
Even more detrimental to Trimedyne’s stature on Wall Street was a report on a clinical study of the Trimedyne laser presented by Dr. Martin Harrington of Mount Sinai Medical Center. Harrington made his remarks at a meeting of the International Society for Cardiovascular Surgery in June in New York.
The study tracked the results of Trimedyne laser treatments on 64 patients. In some, according to a summary, the treatment resulted in puncture wounds and bleeding that in one case led to death.
‘Should Be Studied’
Harrington said in an interview that in 20% of the cases, the laser probe was not able to cut through the plaque. “And in about half of the cases in which the laser opened the artery,” he said, “the passage blocked up again within eight months.”
“The bottom line is that they probably have to do more work on the laser,” Harrington said. “We think it is something that should be studied in a few centers. I wouldn’t say every hospital in town or even every city should have one.”
Howard Cooper, Trimedyne president and chief executive, bristles at the mention of the Mount Sinai report, which precipitated an immediate drop in Trimedyne’s stock price. He said the study involved exceptionally severe cases of artery disease. He also contends that the results “are more positive than portrayed,” because, he said, in most instances the laser therapy prevented the need for amputation. He argued that the results of most other clinical studies of the Trimedyne laser have been favorable.
Cooper defends the importance of the Trimedyne laser, but he also acknowledges that current laser technology is such that it cannot be seen as the cure for artery blockages.
“Initially, when we got FDA approval, we were optimistic that every leg” with an artery blockage “could be treated with the laser,” he said. “Now it looks as if we could treat 30% of the cases.”
He says he also would like to see a lower recurrence rate for blockages in legs treated with laser-assisted balloon angioplasty. It ranges from 7% to 45%, he said, depending on the severity of the original blockage.
Doctors said they were not surprised by the shortcomings of the Trimedyne laser, which they consider a first-generation technology. They point out, though, that they often have difficulty convincing their patients that lasers are not perfect.
“We have patients who read articles in the newspapers who think lasers are the miracle cure for vascular disease, and there is no question they are not,” said Dr. Barry T. Katzen, director of the Miami Vascular Institute.
Dr. Richard Doering, a vascular surgeon at Hoag Hospital in Newport Beach, said the hospital owns a Trimedyne laser system but that it has used it in fewer than “a dozen cases” in the last year and a half. “I’m convinced it has a very limited place in the treatment of patients with obstructed arteries,” he said.
By contrast, Dr. Ted Diethrich, cardiovascular surgeon and medical director of the Arizona Heart Institute in Phoenix, has used the Trimedyne laser in more patients--1,800--than any other physician. Diethrich says that it has helped to clear 75% of leg arteries that otherwise would be impenetrable. He adds that the recurrence of artery blockage with the laser-assisted treatment is only 10% less than occurs after using balloon angioplasty alone.
Whether the Trimedyne laser system is effective for the heart is even more uncertain, vascular surgeons and cardiologists say. The uncertainty is partly because fewer procedures have been performed in the heart. Application of a hot laser probe in the heart is more difficult, they say, because heart arteries are narrower, they twist more, and any mishap would pose considerably more danger.
Diethrich said that he has participated in surgical trials using the Trimedyne laser-heated probe in the heart for two years and that he is “not too enthusiastic” about the results. “We can’t get across the lesions” with the Laserprobe “in a high percentage of cases” he said.
“I think the major disappointment with the Trimedyne system is that it probably is not going to be useful in the heart,” said Dr. Frank Litvack, co-director of the cardiac catheterization laboratory at Cedars Sinai Medical Center in Los Angeles. There is concern, he said, that a hot probe inserted in a tiny coronary artery can cause spasms or clotting.
Still, Trimedyne, which has been testing a coronary laser in human clinical trials since 1986, expects to file an application for FDA marketing approval before the end of the year, Cooper said.
Marvin Loeb, Trimedyne’s chairman and founder, predicted that if such approval is obtained, the company’s earnings would again increase dramatically.
Litvack, however, said he believes that the Trimedyne technology “will be supplanted by simpler and more effective technology both in the laser field and in non-laser mechanical devices.”
Litvack said he is a consultant to a company that is developing an excimer laser, a so-called “cold laser” that cuts through plaque with short bursts of ultraviolet light. This laser eliminates the heat that may damage an artery.
Trimedyne officials responded that most of such touted new technologies have not been proven. Moreover, they stress that Trimedyne is not standing still.
Since obtaining FDA approval for the first laser-heated probe, Trimedyne has obtained clearance to market 10 more leg artery probes of different sizes. It also has begun marketing a newer device that combines laser heat with the emission of a bare laser light that they believe shows more promise in cutting through calcified plaque. And further down the Trimedyne research and development pipeline is a cold laser system of its own.
“Everybody thinks once you’ve got an FDA approval, you don’t need to do any more research and development,” Cooper said. “High technology doesn’t work that way, particularly in the biomedical field.”
Cooper said that Trimedyne is still a developing-stage company that should not be expected to sustain the quarter-to-quarter growth that impresses Wall Street investors. He said that the company has a strong balance sheet and that it is paying for all of its research from revenue, without taking on debt.
Trimedyne’s decision to go public in 1982 was necessary to help it raise funds to develop its laser technology and enter commercial production, Cooper said. In all, the company has raised $11.8 million through a combination of private and public stock sales and warrants.
He agrees that Trimedyne must sell more lasers and persuade doctors to use the lasers they have. Trimedyne’s long-term business strategy relies heavily on repeat business from the sale of probes, which cost $460 to $625 apiece and are disposed of after each use.
The company refuses to say how many probes it has sold by quarter, which would show just how often the lasers are being used.
Cooper acknowledges, however, that “short-term expectations were too high. We had a lot to learn about the market. It is a matter of educating the doctors.”
TRIMEDYNE: FALLING ON HARD TIMES
A year ago Trimedyne, an Orange County bio-tech company, was headed for success. The excitement was centered on its approval to begin marketing the first laser-assisted device to open clogged arteries.
THE LASERPROBE: HOW IT WORKS
1. The physician creates a needlelike puncture and threads a thin catheter into the artery.
2. The Laserprobe is inserted through the catheter. The laser’s heat burns a tiny path through the artery.
3. The laser is withdrawn and a tiny balloon is threaded through the artery to widen the channel that the Laserprobe has created.
Source: Trimedyne
THE LASERPROBE: COMPLICATIONS
Studies conducted at UC Irvine Medical Center and Mount Sinai Medical Center in New York show that the Laserprobe can deflect off the hardest plaque, in some cases perforating the artery.
Source: UC Irvine Medical Center
