Focus Surgery opens Europe unit as part of international thrust

September 28, 1994

Ultrasound ablation offers outpatient potentialFocus Surgery plans to concentrate on international sales of itsSonablate ultrasound ablation prostate therapy system for thenext year or so, given the time required to obtain premarket

Ultrasound ablation offers outpatient potential

Focus Surgery plans to concentrate on international sales of itsSonablate ultrasound ablation prostate therapy system for thenext year or so, given the time required to obtain premarket approval(PMA) certification from the Food and Drug Administration. TheMilpitas, CA, firm has about 20 Sonablate installations in operationaround the world, according to Kenneth W. Marich, vice presidentof marketing.

The former Diasonics subsidiary established a European manufacturingand sales office outside Paris earlier this year. Initial nationalregulatory approval has been received in some European markets,most importantly Germany. German approval will fuel the startof system sales in other markets, such as Spain and Italy, Marichsaid. Sonablate lists internationally for $495,000. Its primaryusers are urologists.

Orders are coming in from Australia and other markets in theAsia-Pacific region, he said. Takai Hospital Supply will serveas the primary dealer of Sonablate in Japan. Clinical trials forthe Japanese Ministry of Health and Welfare have been completed.Four Sonablate systems are installed in Japan. Focus Surgery anticipatesthat a market application will be filed in Japan this month. Roundingout the firm's international strategy, Sonablate orders from SouthAmerican dealers should start before the end of the year.

European orders will be gathered through a combination of directand dealership sales, Marich said. Focus Surgery now has abouthalf a dozen employees in its Paris office. This is still smallrelative to the 50-member staff at U.S. headquarters, but theEuropean organization is expected to grow.

Focus Surgery's need for a direct European staff is tempered,however, by the continuation of a marketing relationship withSonotron, a Diasonics subsidiary and major European distributorof ultrasound and other medical equipment. While there is no longera legal link between the companies, connections have been forgedover the years. Sonotron provides an instantaneous start-up capabilityin Europe for Focus Surgery, he said.

The purchase of Diasonics Ultrasound by Elbit (SCAN 7/27/94)should not change existing technical and marketing cooperationwith Focus Surgery. The company was formerly known as Focal Surgery,but had to change its name this year due to a competing name registration.It continues to share headquarters space with the Diasonics organization.Both firms are expected to relocate at the end of this year becauseof lease problems. Focus Surgery expects to remain in the sameSilicon Valley area of California, Marich said.

Diasonics was split into three separate public companies lastyear. While the move provided enhanced product focus for FocusSurgery, it also removed financial support from cash cow OEC MedicalSystems. Propping up cash flow is a prime reason why Focus Surgeryneeds to bring international sales on line quickly.

"We have to start a revenue stream," Marich said."That is why we chose Europe as our first target area, settingup the manufacturing facility and initiating sales."

Diasonics technology is used in Sonablate, both for ultrasoundguidance and ablation. This technical cooperation will continuefollowing Elbit's takeover of Diasonics Ultrasound, he said.

"While we are separate financially (from Diasonics Ultrasound),we cooperate technically," Marich said. "We have anagreement with the ultrasound organization. That technologicalexchange will continue."

Dual-use technology. Focus Surgery is engaged in phase-threeclinical trials in the U.S. The firm anticipates filing a PMAfor Sonablate in mid-1995, Marich said. The initial applicationof the ultrasound ablation technology is for treatment of benignprostatic hyperplasia (BPH), an enlarging of the prostate. Sonablateuses high-intensity focused ultrasound transrectally to ablateprostate tissue constricting the urethra.

"We are able to take a single piezoelectric crystal anduse it in a low-power mode to do imaging and a high-power modeto do therapy," he said. "When you use techniques thatdon't offer this direct guidance, you don't know where you aredepositing energy."

Animal research is under way in the use of Sonablate for totalprostate ablation as a cancer treatment, he said. By year-end,the company hopes to apply for an investigational device exemption(IDE) with the FDA in order to initiate human trials of Sonablatein prostate cancer therapeutic applications. While special probesare needed for cancer work, Sonablate will be upgradable fromBPH to cancer applications.

The BPH market potential for Sonablate is significant, althoughthere are numerous competing technologies battling for the bulkof BPH work that is now performed surgically using transurethralresection of the prostate (TURP). Competing BPH treatments includeTURP, drugs, balloon dilation and stents, and other tissue ablationtechniques, such as lasers and thermal therapy.

"If it (Sonablate) proves to be as good as we think itis in comparison to other competitive techniques, we would havethe potential to do 200,000 procedures a year in the U.S.,"Marich said. "Fifty percent of all the TURPs now being performedwill eventually be done using an alternative method. Sonablatehas a high probability of being that method."

Advantages that Sonablate offers over other BPH therapies includeits ultrasound guidance, a transrectal rather than transurethralapproach, and its ability to perform therapy in an outpatientsetting without the need for general anesthesia.

The ability to bring BPH procedures into an outpatient settingcould bode well for Sonablate in an increasingly cost-conscioushealth-care environment.

"We have seen medicine go from open surgical proceduresto minimally invasive ones in which laparoscopes are used. Thenext step will be to noninvasive outpatient procedures,"Marich said. "Once we show that this (BPH therapy) can bedone without general anesthesia, we have essentially eliminatedthe need for hospitalization and the anesthesiologist. It thenbecomes something that could easily go into a day surgical centeror outpatient clinic."

One of Focus Surgery's clinical sites in the U.S. is at anoutpatient clinic of the University of Texas Southwestern, hesaid.