Trimedyne Stock Soars, Triggered by ‘Cold’ Laser Gains

TUSTIN —  The stock of Trimedyne Inc. has leaped 72% in value in the past two days in an apparent response to a company’s report that it has received federal regulatory approval to begin testing a second “cold” laser for opening blocked arteries in the heart.

The company’s stock climbed $1.25 to $5.375 in trading Thursday on the over-the-counter market. That followed a $1 gain on Wednesday.

The stock spurt came after the Tustin-based maker of medical-laser products said that the U.S. Food and Drug Administration had approved its plan to begin human clinical trials of its Excimer laser for removing fatty deposits from coronary arteries as an alternative to bypass surgery and balloon angioplasty.

Richard Demmer, Trimedyne’s executive vice president, said the stock market activity confirms that the company has “met the challenge” of redirecting its research to the changing demands of the medical marketplace.

The company had inspired even more hope from investors in 1988 after it became the first firm in the nation to obtain FDA approval to market a laser-catheter product for opening blocked leg arteries. The company’s stock rose as high as $24 a share in August, 1988.

But the stock plunged when it became evident that Trimedyne’s original laser technology, a so-called “hot-tip” laser catheter that relied on heat to sear through arterial blockages, probably would not be considered safe and effective enough for use in the heart.

“Over the last year and a half, it seemed like the leading physicians in laser angioplasty were suggesting that the industry go toward cold lasers that emit high laser energy in pulses,” Demmer explained.

Trimedyne’s sales and earnings have also dropped sharply. It reported a net loss of $7.4 million for its fiscal year ended Sept. 30, which included writeoffs of $3.4 million. By contrast, its net income the previous year was $1.3 million..

Demmer said that, in response, Trimedyne has added two kinds of cold lasers to its product development: a solid-state Holmium laser that emits infrared light and a gas-fueled Excimer laser that emits ultraviolet light.

With both products, catheters are inserted through the skin into blood vessels, and the catheter tip emits the laser energy that removes the blockage.

In September, Trimedyne reported that it had received FDA approval to begin conducting human tests on its Holmium cold laser system to clear clogged heart arteries, and in November it reported that the FDA had approved sales of the same laser for opening blocked arteries of the legs. In addition, the company in early January announced that it has begun testing a new catheter with its Holmium laser that is anticipated to be far more effective than earlier models.

Despite all of this activity, Demmer acknowledged that if the clinical testing goes as expected, it will take at least another year to two years before the company can expect to receive FDA approval to sell either of its cold-laser catheters for use in the heart.

Jeff Kilpatrick, president of Newport Securities, a Costa Mesa brokerage, said the sudden gain in Trimedyne’s stock price indicates that many investors do not understand how difficult it is to obtain FDA approval of any new medical product.

“People, I think, underestimate the risk,” he said. “The future of Trimedyne is still unknown.