No. of Recommendations: 3
Sunrise Technologies International (SNRS) makes a laser used in eye surgery to correct farsightedness that "heats the corneal collagen and steepens its shape.” In contrast, the widely used eximer lasers used in the LASIK procedure actually reshape the cornea such that it focuses properly. (I had LASIK done a little over a year ago and am delighted with the results. See my testimonial on at

Sunrise claims that its laser will appeal to people who are uncomfortable with competitors' lasers that "cut" the cornea. (For a story that echoes the company's arguments, see a recent New York Times article, In a Burst of Laser Heat, Farsightedness Is Zapped, at

Despite this apparent advantage, there are a number of reasons why I think this stock is quite likely to go to zero (it closed Friday at $2.63, giving the company a market cap of $133 million):

-- Last June, the FDA approved Sunrise's laser for the temporary reduction of low to moderate hyperopia (farsightedness). Note the word “temporary.” Would you let a laser go within 100 miles of your eyes for a temporary fix of your farsightedness? (The FDA recently approved a label change noting that "some of the effects of the Sunrise LTK(TM) Procedure can last for 10 years and beyond." This doesn't change my point that much of the improvement fades within a year or two for many patients.)

-- At least two competitors' lasers -- both of which, unlike Sunrise's, are in widespread use already -- have been approved for treating both myopia (nearsightedness) and hyperopia. Doctors will likely hesitate to buy or lease Sunrise's machine, which only treats hyperopia.

-- At least one competitor had Sunrise's LTK technology years ago and abandoned it. Sunrise's own 10-K states that “certain of the Company's competitors, including Summit (which has since been acquired by Alcon Labs), have developed LTK devices for the treatment of hyperopia.” One of my readers works for Summit and wrote to me: “Summit discontinued [development of the LTK laser] because we thought and still think that LASIK is a better procedure than LTK. LTK is not permanent. The collagen shrinkage does not hold.” My ophthalmologist agreed, saying: “From my experience the excimer lasers are more accurate than the thermal lasers. The healing response seems less controlled and therefore less predictable with the thermal lasers.”

-- Even if Sunrise's laser were a superior product, the company would have real problems gaining traction in a fiercely competitive marketplace. VISX and Summit have large installed bases, and ophthalmologists are reluctant to switch lasers due to their familiarity and experience with current ones, as well as the cost.

-- Herb Greenberg at has raised questions about Sunrise's checkered history of failed products, questionable associations, and financial conflicts of interest among the clinical investigators testing its laser. Go to this address for link's the Greenberg's columns:

-- Last quarter, Sunrise had $10.0 million in revenues, $4.1 million in losses, $4.1 million of debt, and only $2.3 million of cash. Time is running short.
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