Just about six months ago, when an FDA panel decided to hold off on recommending laser ophthalmology systems developer Sunrise Technologies International's(Nasdaq: SNRS) Hyperion LTK correction system for low and moderate farsightedness, we pointed at that and a potential cash crunch and suggested that the company's light was in danger of dimming for good.
But today it appears there may still be brighter days ahead, perhaps making the new question for investors "How bright?"
Today, news that the panel yesterday recommended approval of Sunrise's laser thermal keratoplasty -- that's what the LTK stands for -- system for U.S. use sent the shares up about 30% and back to about the level the stock enjoyed before the June carnage.
"It was a fun day yesterday," CEO Russ Trenary III said today in a conference call, the company's website celebrating the news with virtual fireworks. The next step is getting the final FDA marketing approval, which isn't guaranteed but is generally granted following a panel OK.
Sunrise is counting on the go-ahead, having already fired up production, and the company hopes to be selling within six months. Though the company's direct sales staff isn't fully in place, Trenary said that they are on the way as he's been plying his experience in the industry with a view toward sniping top people from the competition.
The Sunrise laser is in many ways an alternative to lasers made by competitors VISX (Nasdaq: VISX) and Summit Technologies (Nasdaq: BEAM). While the latter two also treat nearsightedness, the treatments are generally considered more complicated and labor-intensive -- and could, potentially, be more expensive for patients -- than Sunrise's.
That, anyhow, is how Sunrise plans to market itself to the thousands of surgeons and, according to one doctor who spoke for Sunrise, tens of thousands of patients who might be sick of glasses but wary of the other companies' procedures. The LTK process, the company says, takes less than three seconds to complete and uses heat to melt the eye rather than cut it.
On the flip side, there was a good bit of parsing of words in yesterday's panel discussion as it appears Sunrise will need to market LTK as a means of farsightedness "reduction" rather than "correction," with close detail to labeling paramount as questions arose about the treatment's usefulness and staying power.
How Sunrise positions its product given that perception could be a telling sign of the company's marketing savvy, which Trenary believes is top-notch. He also believes the FDA panel's concerns were more a reflection of their limited knowledge about the needs of farsightedness patients than their assessment of the treatment. "If the contention is that [with LTK] you have an initial effect and its goes away," he said, "we don't have data to support that."
Meanwhile, Sunrise is already working on more trials to establish broader market opportunities for the LTK system in the future.
But the priority now is getting momentum together for a full-scale launch. With the company's cash position boosted earlier this week by a nearly $12 million private investment in convertible debentures from a group that includes a Lehman Bros. (NYSE: LEH) affiliate, Sunrise's balance sheet is right about where it was six months ago -- with the key difference being that now it may be about to begin recouping its cash outflow with sales.
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