**q-vis**.more news**am buying, page-12

q-vis background Here is some info about QVL, hard to find much and this is dated, but parts are relevent. Love the 50c bit, LOL! In ya dreams....if only....

Q-Vis Limited
Eye-Q Refractive Eye Surgery Technology
Q-Vis Limited has developed a solid-state refractive laser (the Eye-Q) specifically for refractive eye surgery. All existing lasers used in the process use gas discharge systems, which have any number of drawbacks. For example:

· The gas lasers produce a hydrochloric acid byproduct, which is probably an unforeseen but nevertheless a fine example of built-in obsolescence.


· The wait for the gases to warm up to operating temperatures can be up to four hours.


· There can be toxicity problems.


· Existing lasers need a controlled humidity, which in the case of a specific example given to us in a hot climate duplicated the purchase cost of the laser.


· The existing product is bulky and not easily transportable.


· Finally the gas lasers are absorbed by saline solution, which is used as part of the eye surgery and this can lead to dry eye syndrome.


In mid January the company announced that the three month follow up data after tests conducted in the US showed that with 49 eyes being treated the Eye-Q exceeded all of the US FDA's clinical safety and efficacy criteria established for refractive lasers.


This is merely the first phase of a US clinical trial program in which data for approximately 500 eyes will be submitted to the FDA as part of the approval process before Eye-Q lasers can be sold in the US.


Huge Market Potential

Lasers used for eye surgery have been a real growth market with ongoing compound growth of around 40% per annum being registered. Despite this only about 2% of the potential patient pool have yet to be treated. To put that in context much of the 50% of the population wearing glasses can benefit from this laser corrective treatment.


Currently about 25% of the existing laser base is replaced annually or around 600 of the 2500 installed based worldwide. The potential for a significant increase in the installed base is obvious with only 1200 lasers in the US for example despite 14,000 opthalmologists.


QVL started production early this year, selling into the Australian, New Zealand and Asian markets from March. Initially the factory will produce two machines per month rising to a budgeted 10 per month next year and ultimately at least 20 per month from the existing plant.


The existing gas machines sell for $500,000 each and these machines will probably start out at similar prices but should ultimately fall back to between $350,000 and $400,000 per unit. Profit margins at that level are high.


Existing machines have a very high service component averaging around $80,000 to $90,000 per annum. These solid state or crystal lasers will also have a service arrangement, but probably along the lines of a base level of $20,000 or $25,000 per annum plus a usage fee on the basis of the number of times the laser is used between services.


Given the benefits of QVL's patented (4 patents granted, 8 pending) product (size, cost, service, non-toxicity etc advantages) we are expecting a rapid uptake by opthalmologists. European approval should be forthcoming sometime late 2001. Opportunities are seen in the Asian market ahead of this.


Originally it was thought they’d be ready to submit their product for FDA approval around August 2002, but now it appears this will take place in early 2002.


It is apparent that there is no obvious competitor in the solid laser market as there is nothing on the FDA horizons at this stage. That should give a minimum of one year's advantage to QVL.


Nestle's Perch Shaky?

Last year Nestle purchased the largest player in the gas laser market for US$967m and signaled its intention to spend US$1bn over the next five years on R&D to stay at the head of the industry. Once the Eye-Q is officially launched (and it will be demonstrated at the biggest opthalmological trade show in the world in San Diego on April 26) Nestle's leading perch is vulnerable. Therein lies the solid corporate appeal in this stock, which is controlled, approximately 23% by Perth opthalmologist Ian Constable, 19% by Cons Press Holdings, 13% by the Lions Eye Institute of Perth and 5% by NAB's NAFM division.


The company has around $14m in cash and a cash burn of around $1m per month in the run up to production, which includes an element of stock build up. The potential is difficult to fully comprehend, so consider the basis of the 240 units per annum scheduled to be produced in the current plant.


Sales turnover would be between $84m and $120m per annum to give a pre-tax margin of between $40m and $60m. A further $10m should come from maintenance contract turnover with a high profit element. Minimum earnings three years out should come in around 70 cents per share and potentially substantially higher. This is a unique product, which has the potential to take over the whole of the eye laser market.


One particular US group, which buys 50 machines per annum has already asked for a quote on multiple lasers as an indication of the early interest for a product which has yet to be launched officially.


Some revenue is expected to emerge in this current financial year, but the real story will emerge over the next two years as production gears up at the local facility. The company has stated that it hopes to be producing, or able to produce, 20 machines per month by the time FDA approval is forthcoming.


Demand should exceed that level considerably, because of the advantages solid state lasers have over the gas based lasers including potential cost advantages. There are over 3000 vision correction lasers already installed all of which have a gas base and all with an average life of less than five years. That replacement market alone looks attractive, but the overall market is also still growing strongly.


Clearly speculative until the lasers are accepted in the general market place, but Q-Vis has sufficiently solid potential over the next two years that we rate it a good chance of being acquired by one of the majors.


Preliminary results of recent treatments using the Company's latest Q-Vis Quantum at the Lions Eye Institute in Perth are outstanding and provide the Company with the opportunity now to seek a synergistic strategic alliance partner.

Through a suitable alliance arrangement the Company expects to be able to positively impact international LVC markets more quickly and with greater effect. Alliance partners will bring with them considerable advantages in the areas of distribution and marketing so as to fully leverage the advantages of the Company's unique solid-state technology.

Mr Ogle, who previously worked for Johnson & Johnson for 24 years holding senior executive and board positions in a number of its medical device companie, will be based in the USA for the roll out there. The Company's previous CEO, Mr. John Roper, has stepped aside and is expected to continue with the Company in a technical consulting capacity.

Mr Ogle said, "the LVC industry continues to rationalize with increasing pressure on margins throughout the whole industry. The cost and reliability benefits of our solid state technology provide the Company with an excellent opportunity to position our product as the future industry standard."

The Company's immediate focus continues to be completing its US FDA clinical trials. The US market is the LVC industry's single most important market contributing over 50% of total LVC procedures. Submission of the Company's Pre-Market Approval to the FDA is still expected for the second half of calendar 2002.

The Company's research and development activities will continue as will its Global Performance Program (GPP). The GPP will provide the Company with important clinical and functional data from the use of the Q-Vis Quantum by internationally recognized opthalmic surgeons.

Initial orders from early GPP participants have been received and the timing of the GPP roll out will be based around the performance of the FDA trials and the progress of initial alliance discussions.


Q-Vis has a very bright future and this is yet another stock with huge potential and upside over the next several years. Although we have a very big wrap on Q-Vis we suspect that there might be more downside in its share price as short-term investor’s sell positions due to impatience. Look to take positions below A$0.50. Any share price up to A$0.50 is excellent value. ????

http://www.worldsbest-intl-investing-stocks.com/qvl.html