ferrets stock to watch: advanced ocular systems

Ferret's Stock to Watch: ADVANCED OCULAR SYSTEMS LTD
09:34, Tuesday, 7 November 2006

NEW PRODUCT TO HELP FOCUS EYES REPLACING GLASSES

Sydney - Tuesday - November 7: (RWE Aust Business News)
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OVERVIEW
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Advanced Ocular Systems (ASX:AOS) has been struggling for market
recognition for much of the year and has still to convince investors
that it has the goods to lead to success.

At the beginning of the year the Ferret thought Advanced Ocular
showed promise.

He still thinks the same way but traders want more proof of
progress to commercial viability.

But last week the company lifted confidence a little after it
reported to the Australian Stock Exchange that it had entered into a
letter of intent to purchase new intraocular lens (IOL) technology from
Dr Robert Kellan, who is a leading US ophthalmologist and the inventor of
the Tetraflex accommodating IOL technology owned by AOS and licensed to
Lenstec, Inc.

What all this comes down to is that Advanced Ocular Systems has
acquired the rights to this new lens technology, which fixes the
inability of eyes to focus on a change in depth (particularly for those
of us over 55).

The intellectual property to be acquired covers the design and
use of an IOL that may be implanted during cataract surgery and for the
treatment of presbyopia.

Presbyopia is the loss of the eye's ability to change focus from
distant to near objects.

It affects many people, leading to the need for reading glasses
or bifocals.

The new "third generation" technology, to be known as the
Omnifocal lens, will be aimed at the high-value presbyopia-correcting IOL
market segment - a relatively new segment that includes a small number of
technologically advanced IOLs that command significant price
premiums based on their ability to enable people to be free of glasses
for most day-to-day activities.

The new lens is likely to be an improvement on currently
available presbyopia-correcting IOLs.

Increasing demand for such products is being driven by
demographic factors such as an ageing population and increased
expenditure to achieve better vision correction outcomes.

A product development plan has been designed to rapidly evaluate
this technology through proof of concept studies to be followed by
clinical tests likely to commence in 12-18 months.

AOS and Dr Kellan have reached agreement on the principal terms
for the acquisition of the technology, which are subject to finalisation
December 31.

Dr Kellan has been a scientific adviser to AOS for over a year
and will continue in this capacity.

You might remember that Advanced Ocular Systems Ltd was
previously known as Regenera until it merged with Advanced Ocular Systems
Inc.

The name change was approved last December at a meeting of
shareholders.

At the time, executive chairman Tony Fitzgerald said he new name
reflects the merged company's coherent focus on ophthalmic technologies
and represented the nature of its business and breadth of product
offerings more accurately.

SHARE PRICE MOVEMENTS
*********************

Shares of Advanced Ocular Systems fell 1.5 to 14c yesterday.
Rolling high for the year has been 47c and low 5c. The last time Ferret
examined Advanced was at the beginning of the year when the shares were
28c. Investors appear to have been disappointed by the slow progress of
activity in generating cash flow.

The company has 197.3 million on shares with a market cap of
$27.6 million.

AOS has an extensive intellectual property portfolio and product
development activities in many of the following areas:

* Age-related macular degeneration (AMD) is the leading cause of
blindness in the developed world for people aged over 50, affecting as
many as 60 million people worldwide. AMD is a progressive eye condition
that attacks the macula the central part of the retina, where sharpest
central vision occurs.

In the US market, where AOS holds an issued patent relating to
the use of triamcinolone acetonide (TA) to treat AMD, there are between
13 and 15 million people that suffer from AMD of which about 1.5 million
people suffer the severe form called wet AMD.

The wet form of AMD, characterised by abnormal vessel growth in
the retina can result in visual impairment. There are 1.6 million people
considered to be visually impaired as a result of AMD and approximately
200,000 new cases of wet AMD diagnosed each year.

* The International Diabetes Federation estimates there are
currently 194 million people worldwide with diabetes, most in developing
countries. With age, over 20 per cent of diabetics develop back-of-eye
problems, such as Diabetic Retinopathy (DR) and Diabetic Macular Oedema
(DMO).

* It is estimated that there are more than 560,000 vitrectomy
procedures each year. This procedure involves the surgical removal of the
vitreous, a clear gel-like fluid within the centre of the eye, and
replacing it with a sterile salt solution.

AOS's recent licensing transaction with Alcon relates
specifically to the vitrectomy market, a market segment which Alcon
dominates.

The use of TA in the vitrectomy field is growing, and acceptance
among retinal surgeons is increasing, particularly in the US. In March
2005, the journal Archives of Ophthalmology contained a leading article
supporting the use of TA.

Subsequent to this, the journal Retina published an article
citing TA as "excellent in all patients for visualising the vitreous".

* Uveitis is an inflammation of the structures of the uveal
tract that can lead to an irreversible loss of vision, especially when
not diagnosed or treated properly.

It can be caused by several factors including virus or fungus,
certain parasites, autoimmune disease or ocular trauma.

* Cataract is an opacity of the natural lens of the eye,
resulting in visual impairment or blindness.

Worldwide, an estimated 14.3 million cataract procedures were
performed in 2004.

This number is estimated to increase by 3.6 per cent annually to
17 million by 2009.

Traditionally, cataract surgery is followed by post-operative
anti-inflammatory or anti-bacterial eye drops. Recent data suggests that
surgeons are increasingly administering TA during surgery to avoid the
need for post-operative anti-inflammatory eye drops.

* Conjunctivitis is a common form of ocular infection.

It is an inflammation of the conjunctiva, the delicate lining
that covers the eyelid and part of the outer surface of the eyeball.
When it becomes irritated or inflamed, usually caused by viruses,
bacteria, or an allergy, the condition is known as conjunctivitis.

There are many forms of conjunctivitis. Each type requires
different treatment, and except for allergic conjunctivitis, is highly
contagious.

Left untreated, it can have serious consequences for the
patient.

BACKGROUND
**********

Advanced Ocular Systems Ltd is an innovative Perth-based company
with a focus on high-growth segments of ophthalmology.

AOS develops refractive devices that address or correct vision
disorders and pharmaceutical treatments that address certain eye
diseases.

Primary focus areas include:

* Presbyopia - a disorder affecting most people over 45 where the
eye loses its natural ability to adjust its focus from distance to near
objects;

* Cataract - a disorder where the eyes natural lens becomes
cloudy and is replaced by the insertion of an intraocular lens;

* Retinal diseases - including age-related macular degeneration,
the leading cause of vision loss for people aged over 50 in developed
countries; and

* Inflammatory conditions of the eye.

AOS develops technologies and products through the acquisition
of intellectual property, conducting research and development and
clinical trials.

The company may also acquire other businesses that complement the
development of an integrated ophthalmology business.

ENDS

Copyright © 2006 RWE Australian Business News. All rights reserved.