Corporate raider Carl Icahn, who gained fame in the 1970s and 1980s by acquiring large stakes in what he considered to be undervalued companies, is at it again. In late July, an Icahn-controlled company filed under the Hart-Scott-Rodino Act that it intended to acquire up to 15% of the outstanding shares of VISX, a leading maker of lasers used in refractive surgery.

VISX , based in Santa Clara, Calif., reacted quickly in an effort to head off any possible takeover attempt. The VISX board of directors adopted a stockholder rights plan, or "poison pill," which creates large amounts of new VISX stock if anyone acquires 10% of the company's shares. The poison pill strategy is designed to make a hostile takeover prohibitively expensive.

In the past 52 weeks, VISX shares have traded for as high as $100 and as low as $14. The stock was changing hands at approximately $22 when the Icahn news was announced on July 28. Word of Icahn's intentions touched off a rally in VISX shares.

VISX, which now trades on the New York Stock Exchange under the symbol "EYE," has approximately 60 million shares outstanding. The company earned $1.35 a share in the year ended December 31, but reduced licensing revenue is expected to keep this year's earnings to under 90 cents. VISX boasts a debt-free balance sheet and about $200 million in cash. The scope and breadth of VISX's so-called "388 patent" for laser vision correction has been the subject of ongoing government review.

The 64-year-old Icahn, who is estimated to be worth more than $4 billion, grabbed headlines with his much-publicized earlier forays against such giant corporations as Texaco and Phillips Petroleum. Like other raiders, Icahn gained a reputation for targeting companies whose share price was below the true value of the business. His usual strategy is to put pressure on company managements to unlock more value for stockholders. In 1985, Icahn actually gained control of Trans World Airlines and operated it for approximately 8 years without much success.

Icahn has never really left the fray. Earlier this summer, he wrapped up a successful long-running battle against Nabisco Group Holdings management when that company sold its highly profitable food business to Philip Morris, rewarding Nabisco shareholders (Icahn himself made approximately $600 million on that deal). Recently, Icahn announced his intention to acquire up to 15% of the stock of CSX, a major U.S. railroad.

STOCK WATCH: A LOOK AT THE PERFORMANCE OF OPHTHALMIC COMPANIES

COMPANY	8/16 CLOSE	52-WEEK LOW	52-WEEK HIGH
Akorn Inc.	8 1/4	31/2	13 5/8
Allergan	69 7/8	40 9/16	811/2
Atlantic Pharmaceuticals	2 3/4	11/4	10 5/8
Bausch & Lomb	56 3/8	48	80 7/8
Coherent Inc.	71	17 1/4	107 3/8
The Cooper Companies Inc.	34 15/16	22 1/16	38 13/16
Escalon Medical Corporation	1 23/32	11/2	7 3/8
Iridex	7 7/8	3 5/8	18 1/2
KeraVision	2 5/8	2 3/16	17 3/4
LaserSight Inc.	3 3/4	31/8	18 5/16
Laser Vision Centers, Inc.	4 13/16	3 7/8	32 1/4
Merck & Co.	73 11/16	52	811/8
Ocular Sciences Inc.	11 25/64	10 3/4	23 7/16
Paradigm Medical Industries	4 3/16	2 7/8	14 1/2
Pharmacia & Upjohn	57 7/8	32 3/4	59 3/4
Premier Laser Systems	NA	1/2	5 3/16
Signature Eyewear	13/4	9/32	4 1/8
Sola Optical USA	7 3/8	4	17 7/16
Staar Surgical Inc.	13 1/2	9 1/8	15 3/4
Summit Technology Inc.	18 7/8	7	21 5/8
Sunrise Technologies	6 13/16	3 1/4	16
TLC Laser Eye Centers	5 5/8	5 5/8	34
VISX, Inc.	24 1/8	14	100 1/4
Vision Twenty-One	0.218750	3/16	7 9/16
Vista Eyecare	0.190000	1/8	17/32
Wesley Jessen VisionCare Inc.	37 11/16	22	40 15/16

Fda Approves Glaucoma Drug
Rescula Is A Docosanoid.

CIBA Vision has received FDA approval to market unoprostone isopropyl ophthalmic solution 0.15% (Rescula), a synthetic docosanoid compound for the treatment of open-angle glaucoma or ocular hypertension.

Approval was based on clinical studies involving 1,100 patients at 50 sites.

"Unlike non-cardioselective beta blockers, Rescula safely lowers intraocular pressure without affecting cardiovascular or pulmonary function," says Dan Myers, president of CIBA Vision's North American Ophthalmics group.

CIBA Vision notes that Rescula is the only available ocular therapy containing a docosanoid. Docosanoids are lipids that are naturally derived from docosahexacnoic acid. Studies have shown that docosahexacnoic acid is essential in the development and normal functioning of the retina.

Patients use Rescula in eye drop form b.i.d. The drug rapidly penetrates the cornea, providing maximum effect in as soon as 24 hours. CIBA Vision says that, with Rescula, IOP reduction is maintained at a constant level throughout the day, and that clinical studies show no loss of efficacy over 12 months.

In The News

European approval.

The European Union (EU) Commission has approved Visudyne for the treatment of wet AMD in EU countries. It's estimated that 200,000 patients in EU countries lose their vision from wet AMD each year.

Labeling settlement

. Bausch & Lomb has announced a proposed settlement of a lawsuit brought in 1995, which charged the company with not revealing to consumers that four of its contact lens solutions were chemically identical to other solutions sold by B&L under different names. If the settlement is approved at a hearing this month, B&L will change some labels and packaging, include $12 million in $1 discount coupons in contact lens solutions packages, and formally advise eyecare professionals of any chemical similarities among its contact lens solutions.

Surgeon honored

. Arturo Chayet, M. D., recently received the prestigious LANS award from the the International Society of Refractive Surgery (ISRS). Dr. Chayet, who practices at the Codet Aris Laser Vision Institute in Baja California, Mexico, has been recognized as one of North America's leading refractive surgeons.

Contact lens alliance.

The Vistakon Division of Johnson & Johnson Vision Care, which makes Acuvue brand contact lenses, and Allergan, a leader in contact lens care, have formed a global alliance encompassing research, education and marketing.

Lacrimal plugs.

Lacrimedics has received FDA approval for its Opaque Herrick Lacrimal Plugs. The opaque feature permits simple transillumination of the eyelid for confirming the presence and location of plugs after insertion.

Anika supplies B&L

. Anika Therapeutics, Inc. has entered into a new supply agreement with Bausch & Lomb making Anika B&L's exclusive worldwide provider of Amvisc and Amvisc Plus ophthalmic viscoelastic products until 2007.

STAAR application.

STAAR Surgical has submitted a Pre-Market Approval (PMA) application with the FDA for its Aqua-Flow glaucoma device. The all-collagen Aqua-Flow is used in a non-penetrating surgical procedure designed to reduce intraocular pressure on a long-term basis.

OptiCare names Harrold

. OptiCare Health systems has appointed Jason Harrold as president of its Managed Care Services business unit.

For sale.

Premier Laser Systems, which filed for bankruptcy protection earlier this year, has retained The Magnum Group to sell its assets and/or seek merger opportunities. Premier's ophthalmology products include EyeSys corneal topographers.

Refractive Surgery Update

TLC milestone.

TLC Laser Eye Centers Inc. performed its 300,000th paid laser vision correction procedure in late July. The company reached the 100,000 procedure milestone only 18 months ago.

Marketing Intacs

. KeraVision Inc. and NovaMed Eyecare, Inc. will co-market KeraVision's Intacs prescription micro-inserts for correcting nearsightedness in six U.S. cities. The marketing effort kicks off in Kansas City, Mo., in September. It will later be expanded to Chicago, Louisville, St. Louis, Richmond and Atlanta.

Lawsuit settled

. Bausch & Lomb has settled a patent infringement lawsuit that it brought against two microkeratome blade suppliers. The two companies, Visionair and Med Logics, have agreed not to manufacture or sell microkeratome blades that infringe on a recently issued patent that protects B&L's blades, blade designs and blade holders intended for use with pivoting microkeratomes.

O'Hare to TLC.

Thomas G. O'Hare has been named president and chief operating officer of TLC Laser Eye Centers. O'Hare was previously executive vice president of Host Marriott Services.

Refractive lenses

. CIBA Vision has expanded its participation in the emerging refractive lens market by acquiring patents on three types of anterior chamber implants that can be implanted through small corneal incisions. The implants, which have yet to undergo clinical trials, are designed to correct high degrees of myopia, hyperopia and presbyopia. CIBA Vision has also acquired a 10% equity stake in Medennium, Inc., for exclusive rights to market and distribute Medennium's Phakic Refractive Lens (PRL). PRL, which is currently in clinical trials in the United States, corrects a wide range of myopia or hyperopia after being implanted in the posterior chamber.

First for Eyesite.com

. Eyesite.com recently opened its first Eyesite Laser Center in Dallas, Texas. The company plans to place similar centers in selected metropolitan areas of the United States.

Presbyopia treatment.

SurgiLight recently demonstrated its infared laser treatment for presbyopia at the World Refractive Surgery Symposium and reported positive clinical results in a study involving 35 patients. More clinical trials are planned.

Discounts offered

. Lasik Vision is offering laser vision correction at special discount pricing to members of Health Net in California. In another marketing initiative, ICON Laser Eye Centers is offering LASIK at a significant discount to MemberWorks members.

Proposed Fee Schedule A "Mixed Bag".
Additional Increases Are Expected.

The American Academy of Ophthalmology (AAO) says one of the best things about the recently released proposed 2001 Medicare Fee Schedule is that it's not the final schedule.

"We're hopeful that our recent 'wins' will be reflected in the final schedule released in November," says Sandra Remey, communications manager for the Governmental Affairs Division of the AAO. "The Academy provided a great deal of documentation to make our case that increased fees for specific procedures were both necessary and fair. We're optimistic that the higher payments will be approved."

The Practice Expense Advisory Committee (PEAC) has recommended higher payments for corneal transplants and a number of office-based lid procedures. The Relative Value Scale Update Committee (RUC) supports increased fees for complex cataract surgery. These recommendations are not reflected in the proposed 2001 schedule.

"We're particularly concerned about the declining fees for cataract surgery," says Pam Johnson, manager for Regulatory Affairs of the American Society of Cataract and Refractive Surgery (ASCRS). "We're watching to see what happens in November."

The proposed 2001 schedule indicates that ophthalmology will receive an overall increase of approximately 5% --or about $200 million -- as a result of the adoption of new resource-based practice expense relative value units.

The basis for the increases is updated data on practice expenses presented to PEAC and RUC over the past 2 years, says Remey.

Bausch & Lomb Increasing European Presence.
B&L Buys Groupe Chauvin, A French Eyecare Company.

In a move designed to enlarge its markets outside of the United States, Bausch & Lomb recently acquired Groupe Chauvin, a French company that produces a range of prescription and over-the-counter eye medicines, as well as a number of surgical products for treating glaucoma and cataracts.

Bausch & Lomb said that in addition to giving the company a much wider presence in Europe, the $221 million acquisition will speed revenue growth and enhance Bausch & Lomb's attractiveness as a research partner.

Groupe Chauvin, which employs nearly 800 people, recorded sales of approximately $100 million in 1999. It currently markets its products in France, Germany, the UK, Switzerland, Portugal and the Benelux countries. Top-selling brands include Carteol for glaucoma and Indocollyre, an anti-inflammatory.

The all-cash deal is expected to be dilutive to Bausch & Lomb's earnings until the middle of next year, when it should begin to make a contribution to the bottom line.

"Laser" Is A "Fightin' " Word.
A Duel Over A Definition.

Two Salt Lake City, Utah, companies involved in developing technologies for cataract removal have become embroiled in a war of words.

When Laser Corp. issued a press release on July 3 announcing FDA clearance to market the first laser device for cataract removal, it didn't sit well with Paradigm Medical Industries.

Paradigm has been in clinical trials in the United States for several years in an effort to bring what it calls "true laser cataract removal" to the public.

Paradigm charged that Laser Corp. has only a laser-based transducer that converts electrical energy to ultrasound "shock waves," which are used to fragment the lens. Paradigm said the Laser Corp. device exposes neither the eye nor the cataract to actual laser light.

This brought a response from Laser Corp. President and CEO B. Joyce Wickham, who said that "unlike ultrasound phacoemulisfication, [Laser Corp.'s] technology creates no clinically significant heat and eliminates the possibility of burns to the cornea or sclera of the eye. Additionally, cataracts are removed with far less energy imputed into the eye."

Wickham contended that it was a "distinct advantage" that the Laser Corp. device does not expose the eye to "the effects of direct laser light."

So what is "true laser cataract removal" and what's not?

As Wickham concludes, "In the final analysis, physicians will choose the best unit to render care to their patients."

Injectable Gel As Lens Replacement?
Company Licenses MIT Technology.

Atlantic Technology Ventures, Inc., is not only hoping to revolutionize the way cataract surgery is performed, it also wants to replace rigid, intraocular lens implants with an injectable gel-like substance it hopes to develop.

That's a tall order for a smallish venture capital firm, which invests in early-stage technologies, but Atlantic Technology does have a game plan. The company recently signed a year option to exclusively license a patented ophthalmic polymer gel technology from the Massachusetts Institute of Technology. The company hopes to use the MIT technology to develop an injectable lens substitute, which would then be used with Atlantic's patented Catarex device in both cataract and refractive surgery.

As you know, current methods of cataract surgery aren't compatible with the use of injectable gel lens substitutes because they functionally destroy the integrity of the lens capsule, rendering it impossible to refill the capsule. Atlantic Technology says its Catarex device leaves the entire capsule essentially intact, except for a tiny peripheral hole. The company says a soft and pliable lens would more closely mimic the eye's natural function, expanding and contracting to accommodate the different focal lengths required for near and far vision.

Joseph Rudick, M.D., the CEO of Atlantic Technology Ventures and an ophthalmologist himself, is hopeful that Catarex, which has been licensed to Bausch & Lomb, will be launched in late 2001 or early 2002. He believes widespread use of the injectable lens is 4 to 5 years away.