Philadelphia Business Journal—
MAY 19-25, 2000
PhotoMedex to Attack Psoriasis with Lasers
With $15 Million in venture capital, the company will unveil its new treatment.
RADNOR – Armed with more than $15 million in venture capital money, PhotoMedex Inc. is getting ready to launch a new laser system that will be used to treat psoriasis.
“Psoriasis is the second-most common skin disorder in the U.S.,” said Jeff O’Donnell, the Delaware County company’s president and CEO. “Seven million people have it; $2 billion is spent domestically each year” on treatments.
Psoriasis – a chronic skin condition characterized by red patches covered with white scales – is most often treated either with drugs, which have potential side effects, or ultraviolet light therapy, which required dozens of treatment sessions. O’Donnell said his cool, laser system involves four to six, 10-minute office treatments that put a patient’s psoriasis in remission for four to six months. He expects PhotoMedex’s device to hit the market July 1. It will be marketed under the name XTRAC, a contraction of sorts for excimer laser technology for the reduction of affected cells.
The Food and Drug Administration approved PhotoMedex’s laser system in January. No other laser system has been cleared by the FDA treating psoriasis.
In March the company raised $15.5 million in a private stock sale to a syndicate of institutional investors that in included Pequot Capital Management Inc., DCF Capital, Narragansett Capital Partners, Anvers LP, and Special Situation Fund.
O’Donnell said the proceeds from that financing are being used to accelerate the commercialization of the company’s excimer laser system. The company, which has 51 employees, is now assembling a sales and marketing team and a of staff clinical specialists who will train physicians on the use of the laser.
Jessica Wise, a spokeswoman for the National Psoriasis Foundation, said the organization is always encouraged when a new treatment becomes available. The group’s only concern is the accessibility of laser treatments, since now only a limited number of devices, which were used in test sites, are out in the marketplace.
“People with severe psoriasis need more therapy options,” she said. “There aren’t that many out there, and there isn’t any that work universally for everyone.”
PhotoMedex, formerly operated as Laser Photonics Inc., moved its head quarters from Carlsbad, California, to Radnor in April. PhotoMedex still maintains a manufacturing in California, where the company has about 40 employees.
The change in address for the corporate office was the result of O’Donnell — who grew up in Plymouth Meeting and graduated from LaSalle University — taking over as chief executive of the company in December. O’Donnell said that he and his wife, who is from Wayne, wanted to return to the area.
Before joining PhotoMedex, O’Donnell was president and COO of Radiance Medical Systems Inc. of Irvine, California. Prior to that, he was president and CEO of Kensey Nash Corp. in Exton.
O’Donnell has worked toward narrowing the company’s focus to making lasers strictly for medical applications. Earlier this year, PhotoMedex sold the assets of its business operations in Orlando, Florida and Wilmington, Massachusetts, because those divisions were involved in making lasers for industrial applications.
“Medical device manufacturers have to focus like a bullet in flight,” he said. “Otherwise they get good at a lot of things, instead of being very good at a few specific things.”
On May 10, the company’s common stock began trading on the NASDAQ SmallCap market under the symbol “PHMD.” It previously traded over the counter as “LSPT.”
O’Donnell expects the launch of the new excimer laser system for psoriasis will enable the company to reach profitability during the second quarter of 2001.
PhotoMedex’s main revenue source is making excimer lasers, usually on a private label basis, for other manufacturers. It has sold more than 1,000 lasers since 1986.
The company posted an $8 million loss last year, along with revenues of $1.2 million. During the first quarter of this year, the company had no product sales and recorded a $3.1 million loss.
As of December 31, the company had an accumulated deficit of more than $25.6 million.