August 19, 2002

OpusDent, Lumenis’ dental subsidiary, wants to educated U.S. dentists on the advantages of lasers in dental surgery.Lumenis, based in Yokneam, Israel, has received clearance from the U.S. Food and Drug Administration for use of its OpusDent Erbium dental lasers in soft tissue and root canal work involving treatment of gums. Previously, Erbium lasers only had approval for use on hard tissue, which includes bones and teeth.

OpusDent, a subsidiary of Lumenis, produces OpusDent Erbium lasers as well as several other CO2- and Erbium-based dental lasers and those that combine both technologies. Depending on the model, the lasers cost between $35,000 and $50,000.

Dental lasers have three main uses: for tooth whitening, cavity removal and preparation, and gum surgery. The lasers can replace the use of high-speed drills in many instances, which usually means that the patient won’t need anesthesia. Thus, more fillings can be done in less time without the numbness and swelling that comes from the use of Novocain. Lasers also reduce pain and bleeding during dental surgery and shorten recovery times after surgery.

CO2-based lasers use a burning technique that prevents bleeding, while Erbium lasers act more like a scalpel in cutting tissue. Each laser can be used for different applications, but the best dental practice is to use a combination of both, said OpusDent chief executive Raanan Yehiely.

CO2-based lasers have been used in dentistry for about 15 years and Erbium-based lasers began to be introduced to the dental market more recently, Yehiely said.

Lumenis produces lasers for ophthalmic and plastic surgery, in addition to its dental lasers. The company was created in 2001 with the merger of Israel-based ESC Medical Systems and Coherent Medical Group, formerly headquartered in Santa Clara, Calif. The combined company is the world leader in the medical laser industry and controls more than 30 percent of the world market, well ahead of its nearest competitor. ESC paid a reported $203 million in cash, stock and notes for Coherent’s medical unit.

Dental lasers have achieved their highest market penetration in Japan where 12 percent of dentists use them. However, only 2 to 4 percent of dentists in Europe and the United States are taking advantage of laser technology so far, but Lumenis is planning an increased sales push in the U.S. market that will better explain the advantages of lasers to dentists, Yehiely said.

“There are figures indicating that 70 percent of U.S. (dental) patients have various gum problems,” Yehiely said. “Dentists will be able to use lasers to treat most of them more easily and painlessly.”

The total U.S. market for dental equipment and supplies is valued at more than $6 billion dollars a year and market analysts estimate that several thousand dental lasers are in use, putting the dental laser market at about $100 million.

Lumenis is the second-largest supplier of dental lasers in the United States following Biolase Technologies of San Clemente, Calif., the first company to receive FDA clearance for use of its Erbium laser with soft tissue.

Lumenis has had several well-publicized problems, including a series of profit warnings, an SEC investigation, reports that the ESC-Coherent Medical Group merger was poorly managed and frequent changes in chief financial officers.

These setbacks have caused company shares to fall 90 percent from their peak. In spite of the problems, analysts at UBS Warburg say that Lumenis is a viable company and is getting back on track. The company is expecting sales of $372 million in 2002. It earned a $2.2 million profit on revenue of $92.2 million during the second quarter.

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