S A ADVISORY September - October 1999


S.A. Advisory
2274 Arbor Lane #3
Salt Lake City, Utah 84117

(Recommended via E-mail July 25, 1999 @ $2.03)

The Company: A leading manufacturer of surgical lasers. TMED manufactures a family of Holmium and Nd.. YAG lasers for use in urology, orthopedics, ENT surgery, gynecology and general surgery to treat a variety of diseases and medical conditions.

We became really excited about this situation on July 22, 1999 when the company received FDA clearance to market its new Side-firing Holmium Laser Needle!

According to the press release: TMED received clearance from the FDA to commence marketing its Omnitip Side-Firing Needle, commonly referred to as the “Knight Needle”

The principal use of the Knight Needle will be to vaporize a portion of a herniated lumbar spinal disk in a minimally invasive procedure, reducing the volume of the disk. When a spinal disk develops a herniation, the resulting bulge presses against the nerves in the spinal column. This causes lower back and leg pain, a condition affecting millions of people within the US.

The Knight Needle was developed jointly by TMED and M. Knight, one of the world’s most renowned orthopedic surgeons. In addition to decompression of herniated lumbar spinal disks, the Knight Needle has been cleared for sale for a wide variety of surgical applications, including the incision, excision, vaporization, ablation and coagulation of tissues in arthroscopy urology, ear-nose-throat (ENT) surgery, gynecology and general surgery.

The Knight Needle contains a suction/irrigation channel which can be connected to an external pump, providing surgeons with the ability to withdraw fluid or administer drugs or fluids of their choice before, during or after the laser procedure.


Press Release, July 16, 1999, Trimedyne Inc. (NASDAQ/NMW:TMED) announced the U.S. Patent and Trade Office has issued U.S. Patent No. 5,913,853 to Trimedyne’s 90% owned subsidiary, Cardiodyne Inc.

The patent covers Cardiodyne’s new Laser Transmyocardial Revascularization (“ TMR”) System, which is designed to create channels in the heart wall, using Timedyne’s powerful Holmium “ cold’ laser in less than 1/2 second, during diastole, when the heart is momentarily at rest. The channels enable blood from the chamber to perfuse the heart muscle and the growth of new blood vessels (angiogenesis), which is seen around the laser created channels, increases the distribution of blood in the heart muscle.

Cardiodyne’s Laser TMR System is fully automated and synchronizes the channel making procedure with the patient’s ECG. When the surgeon positions the device and presses a button, the optical fiber, which is encased within a short length of syringe needle, pierces the outer portion of the heart wall without activating the laser. The laser is then activated and the fiber/needle advances through the remainder of the heart wall into the chamber, creating the channel. The AutoFire System is designed to also inject genes or a growth factor to increase the angiogenic effect, if desired, as the fiber/needle is withdrawn. When the fiber/needle exits the heart wall, bleeding from the needle puncture is minimal, enabling the procedure to be performed with a scope through a puncture between the ribs in a minimally invasive, endoscopic procedure at lower cost.

Cardiodyne’s patent also covers Laser TMR catheters which can be inserted into the femoral artery in the groin and advanced through the arterial system into the heart chamber, enabling the channels to be made less invasively from the inside of the heart. Cardiodyne’s extensive patent portfolio includes three other issued U.S. Patents and four pending U.S. patent applications.

Press release August 10, 199 - TMED announces Web presence - www.trimedyne. com. According to the company, spokesman Shane H. Traveller stated, “ Trimedyne caters to a broad customer, supplier and investor base. Our goal in developing our Web site is to provide our customers and investors with current information on the company’s activities in a format accessible by both English and non-English speaking visitors.

“We have worked hard to develop a Web presence that meets the needs of potential users, while conforming to FDA regulations regarding format and content. Our Web site is a significant step in that direction.”

Customers visiting Trimedyne’s Web site will have access to a variety of product information including new product releases, special offers and promotions. Though the Web site is not presently set up for on-line sales, the company anticipates adding this feature to a future site. The current Web site also incorporates links to recent press releases, SEC filings, stock performance and company profile.

Traveller continued, “ We are continuing to develop new medical devices, while filling out our existing product line. Our technology is widely considered to be the best in the industry and our quality is superb. Management is focusing on its vision of the future for the medical laser industry.”

  1. Cash as of June 30th - $6.7 milliion
  2. Total assets - $12.5 million
  3. Total liabilities - $1.3 million
  4. Shareholders Equity - $11,300,000
  5. Book value - $1.03
  6. NOL - $30 million (company shielded from taxes for a loooong time).
  7. Management controls 1 million shares.
  8. “Free” trading - 9.9 million.
  9. LTD=0
  10. 52 week range - .625 - 3.75.
  11. During January 1994, TMED reached all time high of $18.00.

In our opinion, TMED offers investors a very interesting speculation! They obviously have cutting-edge technology using laser for surgical procedures. This, of course, is “HOT” stuff, figuratively as well as literally! The company has a great balance sheet with plenty of cash on hand. The market cap is tiny when one considers the possibilities of laser surgery. The company has also a few brokerage firms that follow it and have recently commented onTMED with speculative recommendations. Since we recommended, it has been a real trading stock. It ran from $1.93 to $3.75 back to $1.875 back to $3.00, and is now hovering around the $2.375. We would not chase, but would establish a position at the $2.00 area. This stock is not tightly held, so with almost 10 million shares in the float, it will be very difficult for a large substained advance unless a corporate alliance is forged with a major drug or medical company or earnings start to appear.

The largest problem that this company has is that medical insurance reimbursements only pay a limited amount of money for the listed procedures that use TMED lasers. That means much more out of pocket for the patient and less fees for the surgeon. This is a problem. Many surgeons will opt for older techniques in order to make the “GREEN”!

From what we have read, TMED’s laser for herniated disks is by far the answer for such a terrible condition.

The company is also actively working on the introduction of other products using this laser technique. We see little downside risk near term and possible huge upside potential over the long term!

Overall: Interesting core holding in the medical industry for speculative accounts that understand the inherent risk of investing. Note: if the insurance companies eventually see the overall benefit for these and other laser procedures, then TMED will most likely fly and most probably be acquired by a large company.

We intend to monitor TMED in our portfolio for percentage gain performance.

Broker contact: Mike Chesler @ 1-800-890-1629; Corporate # 949-559-5300.

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