Visx Stock Dives 41% After ITC Patent Ruling
Shares of Visx Inc. fell 41% on Tuesday after a U.S. International Trade Commission judge ruled that the company’s patents weren’t infringed by vision correction lasers sold by rival Nidek Co.
Shares of Santa Clara, Calif.-based Visx, the biggest maker of eye lasers in the U.S., fell $36.13 to close at $52 on Nasdaq. It was the third-largest decline, wiping out more than $2 billion in market value.
Unlike Visx, Nidek doesn’t charge doctors a fee for each use of its lasers. If Nidek’s laser stays on the U.S. market, Visx’s laser sales could be hurt, analysts said. About 950,000 eye laser procedures are expected to be done this year, more than double the number in 1998.
“This is bad,” said Robert Faulkner, a Hambrecht & Quist analyst. “To the extent that Nidek continues to sell lasers without charging the $250-per-procedure fee, the pricing structure of the industry is increasingly at risk.”
Shares of Summit Technology Inc., Visx’s main competitor in the U.S., also fell, dropping $6.31 to close at $15 on Nasdaq. Summit also charges fees for use of its lasers. Waltham, Mass.-based Summit said in a statement, though, that the ruling won’t affect patent litigation Summit has brought against Japan-based Nidek.
A majority of U.S. adults have vision problems such as nearsightedness. Laser surgery offers some of them the chance to discard glasses and contact lenses. Before Tuesday, Visx shares had quadrupled this year on expectations the demand for vision correction surgery would keep expanding.
Laser makers are expected to receive about $350 million this year from device sales, fees and other services, while doctors and clinics that perform vision correction surgery are expected to receive about $2 billion in revenue, said Theodore Huber, an Advest Inc. analyst.
The International Trade Commission is a federal agency that looks into trade issues that affect U.S. industries. The news of the initial ruling by Debra Morriss, an administrative law judge for the commission, came after U.S. markets closed Monday.
The judge ruled that the evidence supported Nidek’s contentions that the technology in Nidek lasers didn’t violate Visx’s patents, and that one of Visx’s patents is invalid and unenforceable.
“We won all contested issues,” said Hiroshi Okada, a vice president of a Fremont, Calif.-based unit of closely held Nidek. “We are very happy.”
Visx said it will ask the full commission to review the initial determination. The company has 10 days to petition for a review, and the commission then has 45 days to respond. If the commission decides to review the ruling, a final determination would be expected by March 6, Visx said.
Visx, Nidek and Summit, among others, sell lasers used to reshape the surface of the eye to correct vision problems. Visx’s lasers require doctors to activate the devices for each use with a card costing about $250.
Visx has received U.S. approval to market its lasers for treating nearsightedness, farsightedness and astigmatism, a wider range of approvals than Nidek has received. Nidek’s lasers, though, don’t require a card to operate, meaning that the devices are, in the long run, a cheaper option for doctors.
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A Dim View
Before an unfavorable patent ruling Tuesday, Visx shares had quadrupled on expectations the demand for vision correction surgery would keep expanding. Weekly closes and latest:
Tuesday: $52
Source: Bloomberg News
