Addition of Edap's Prostatron transurethral microwave thermotherapy (TUMT) system for treatment of benign prostatic hyperplasia (BPH) doubles Urologix' market presence in the BPH treatment area, the firm says. Urologix also expects the total number of cooled microwave thermotherapy procedures performed "to double in the next year" due to expanded market acceptance of the treatment.

Urologix, which offers the competing Targis system for cooled microwave thermotherapy treatment of BPH, acquired the Prostatron business Oct. 2 for about $20 mil. The valuation includes approximately $8 mil. in cash, about 1.4 mil. shares of Urologix stock, and 327,466 warrants to purchase common stock. The acquired shares represent about 10.5% of Urologix, making Edap Urologix' largest shareholder.

Urologix "can now offer urologists one source for the highest quality cooled thermotherapy products with varying feature options," Urologix President/CEO Mike Selzer said in a release. "By combining the product lines, we gain the ability to effectively execute a broader range of market awareness programs." In addition, the buy "creates significant synergies in sales, distribution, marketing and technology development, all of which will drive overall financial performance."

Both Prostatron and Targis list for about $150,000. Disposables used with the Prostatron cost about $900 while disposables used with the Targis list for about $1,200. In addition to outright purchase of the product, rental, lease and "per procedure" plans are available.

The procedure is reimbursed at $1,875 under the hospital outpatient prospective payment system developed by the Health Care Financing Administration. Announced in April, the rate was effective Aug. 1 (¹ Also see "BPH Treatment Devices To Be Reimbursed By HCFA At Approximately $1,875" - Medtech Insight, 24 April, 2000.). Reimbursement remains key to the adoption of alternative BPH treatments such as TUMT. The lower cost of the Prostatron disposables appeared to give the system a price advantage under the new reimbursement scheme, possibly contributing to the motivation for the buy. Final reimbursement rates for in-office procedures will be effective January 2001.

Besides price, the main difference between the two systems is that the Prostatron's pattern of energy delivery facilitates BPH treatment in the vicinity of the bladder neck, while the Targis system does not, Urologix explains. The Targis system, however, incorporates an additional "cool-down" period in device treatment that lessens patient discomfort. Choosing the ideal system is purely a matter of physician choice, Urologix says.

Targis and Prostatron, approved by FDA in August 1997 and May 1996 respectively, each hold about half of the cooled microwave thermotherapy BPH treatment market, each with about 80 systems placed in the U.S. and with 500-600 treatments per month.

Combined, Urologix will have about 160 units in the field in the U.S. with approximately 1,000-1,200 procedures performed each month. Urologix' procedure growth alone increased about 80% for the year ended June 30, the firm says.

Urologix recently expanded its sales force from 12 to 18-20 U.S. reps. Urologix uses distributors overseas. No employees were included in the Edap deal.

Of the approximately 6 mil. men in the U.S. with BPH, about 4 mil. are placed in a "watchful waiting" category, 1.8-2.2 mil. are treated with drugs, and 130,000 have surgery to remove the prostate. Another 30,000 are candidates each year for minimally invasive or alternative treatments such as TUMT. About 23 mil. men suffer from BPH worldwide.

While transurethral resection of the prostate (TURP) is the most prevalent surgical procedure for BPH, alternatives besides TUMT include radiofrequency-based transurethral needle ablation (TUNA), high-intensity focused ultrasound (HIFU), water-induced thermotherapy (WIT), and laser treatment.

Minneapolis-based Urologix, which has about 80 employees, reported fourth quarter (ended June 30) sales of $2 mil., up 5%. A net loss of $1.6 mil. was 36% smaller than in the comparable quarter last year. For the year, sales were up 34% to $8.2 mil. A net loss of $7.1 mil. was 49% lower than last year.

Divestiture of the Prostatron business will enable France-based Edap to focus on its HIFU treatment for prostate cancer and lithotripsy for urinary tract stones. A 120-patient U.S. trial of Edap's Ablatherm HIFU system is underway. A 510(k) for the Sonolith Praktis lithotripsy device is expected soon. Edap has a manufacturing agreement with Urologix for production of the Prostatron unit, as well as an international distribution agreement for sales in Japan.

Urologix Doubles Presence In BPH Treatment Via $20 Mil. Prostatron Buy

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