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Editorials, Tuesday, 03/14/2000

Laserscope: Hair-Removal Just In Time For Summer
By Matt Paolucci

With summer only a few months away, going outside with just shorts and a T-shirt can sometimes leave a person feeling a bit uncomfortable. With the way society constantly pushes us to look our best, it can drive a person to drink. For those of you who have the distinct displeasure of having more body hair than most gorillas, a little company called Laserscope (LSCP) may be your saving grace.

Yesterday, the company received U.S. Food and Drug Administration (FDA) written clearance to market its Lyra(TM) Laser System for hair removal on patients with the full range of skin tones. The Lyra Laser System is the first system designed to remove hair from darker skin types as well as light, making it the most versatile product available.

Industry sources estimate the potential worldwide market for hair removal lasers to be $600 million to $700 million over the next three years. But LSCP makes more than just hair- removal lasers.

Based in California (Where else would you go for a cosmetic fixer-upper?), Laserscope designs, manufactures, sells and services, on a worldwide basis, an advanced line of medical laser systems and related energy devices for the medical office, outpatient surgical center, and hospital markets. The Company is a pioneer in the development and commercialization of lasers and advanced fiber-optic devices for a wide variety of applications, including photodynamic therapy to treat lung and esophageal cancer, and other diseases. Primary medical markets served by Laserscope include dermatology, aesthetic surgery, urology, gynecology, ear, nose and throat surgery and photodynamic therapy.

Photodynamic therapy (PDT) utilizes a light-activated drug that is administered intravenously to the patient. This is followed by an interval during which the drug circulates, accumulates and is retained in tumors, while largely clearing from other tissues. The drug has no apparent effect on tumors until it is activated by non-thermal light from Laserscope's Dye Module machine, which produces an active form of oxygen that destroys the cancer.

Laserscope, in an effort to rid itself of non-core businesses, recently divested its controlling interest in its German subsidiary, NWL Laser-Technologie, which it acquired in 1997. It was a great deal for LSCP. As part of the transaction, NWL will continue to distribute Laserscope's products in all countries covered by NWL's current distribution channels. The $4 million improves LSCP's balance sheet and provides cash for future operations.

In addition to the $4 million from the NWL divestiture, Laserscope recently completed a private placement of subordinate convertible notes worth $2.9 million, and a common stock private placement providing net proceeds of $1.8 million to help fund continued research, marketing of its existing products, and for other general corporate purposes.

The financial picture for Laserscope is also improving. Eric Reuter, Laserscope President and CEO stated, ``Our new programs for returning the company to profitability in 2000 are clearly on track. Our inventories are down by approximately $4 million from a year ago. I am very pleased with our progress and outlook for the future.''

Revenues for the fourth quarter ended December 31, 1999 were $9.6 million compared to $13.2 million in revenues in the prior year period. Revenues for the quarter were lower than the previous quarter due to lower sales from NWL. The company reported a narrower loss of 13 cents per share compared to a net loss of 55 cents per share in the fourth quarter of 1998. Revenues for the year ended December 31, 1999 were $41.0 million compared to $52.7 million a year ago, with a net loss of 60 cents per share compared to net losses of 79 cents per share.

Shares of LSCP have also been seeing some insider buying of late. It's always a positive sign to see management stepping up to buy shares. Since August of last year, a total of 180,000 shares were purchased by five different insiders.

With shares trading at just over $3, there really isn't much down side to LSCP. Laserscope has an improved balance sheet, new cash to fund future opportunities, profitability on the horizon, and a new FDA-approved hair-removal laser ready to conquer a $600-$700 million market. Laserscope certainly looks poised for future success.

 


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