laproscopic prostatectomies

TECHNOLOGY INC. | MEDICAL DEVICES
Surgery in 3-D

San Diego company adapts military technology to let surgeons be more
precise and less invasive during operations

By Terri Somers
STAFF WRITER
January 5, 2007


[ P H O T O ]

Technology originally developed by the military to help fighter pilots
immerse themselves in air combat is now helping surgeons performing
minimally invasive surgery be more precise when removing a diseased
prostate or completing a hysterectomy.

Like the pilots, surgeons using the system slip a pair of sophisticated
goggles over their head. But rather than seeing radar images, night
vision or other perspectives of the pilot's battlefield, the surgeon is
immersed in the patient.

Projected before the doctor in three-dimensional video is a view of the
operation from within the patient's body. The image is projected to the
headset in visual stereo by two tiny cameras inserted through tiny
incisions into the patient, just as their surgical tools are inserted
below the skin.

A simple voice command by the surgeon can prompt a second picture to be
shown simultaneously on the screen, giving the doctor additional
perspective by referring to an ultrasound, X-ray or CT scan, said Dr.
Julio Pow-Sang, a surgeon at the H. Lee Moffitt Cancer Center &
Research Institute in Tampa, Fla.

"Three-D makes a huge difference because you can be more precise and
see the difference between different tissues, which helps when I'm
trying to preserve the neurovascular bundles around the prostate so the
patient can retain function," said Pow-Sang, chief of genitourinary
oncology.

He performs about seven laproscopic prostatectomies a week using the
3-DI Digital Vision System developed by San Diego's Viking Systems.

In Moffitt and hospitals around the world, surgeons are increasingly
switching to minimally invasive surgical techniques, such as
laproscopy. Since the surgery is performed through small incisions,
recovery times are faster and hospital stays are shorter. That means
lowers costs for hospitals.

Moffitt bought one of the Viking systems in October 2005 after
considering a much more expensive robotic system made by Intuitive
Surgical, a Sunnyvale company with a $3.5 billion market
capitalization.

The robotic system, called the da Vinci Surgical System, was very
effective, Pow-Sang said. It requires the surgeon to sit in a small
room and operate joysticks that control a robot, which does the
surgery. The surgeon watches the operation through a device that looks
like a microscope, he said.
But the system costs about $1.6 million with a $130,000 yearly
maintenance fee and about $1,500 a surgery in disposable parts,
Pow-Sang said.

Major medical centers that have bought the da Vinci, sometimes after
having fundraisers to get the money, often market the technology
aggressively.

Meanwhile, Viking's 3-DI system has received little media attention.
And many Wall Street analysts who cover Intuitive Surgical have never
heard of the 35-employee Viking, whose shares trade over-the-counter.

Founded in April 2004, Viking lost $8.74 million in the first half of
2006, compared with a loss of $2.74 million in the first half of 2005.
Chief Executive Donald Tucker said the company spent the money last
year improving itself internally by pumping up a sales force and
strengthening management and development teams, and is now ready to
become profitable in 2007.

It's not necessarily shooting for the major medical centers for
customers.

"Smaller hospitals ready to upgrade and update is our major market
opportunity," Turner said. His company's technology is the only 3-D
high resolution alternative to the da Vinci robot, he said.

The Viking system costs $1,200 to $1,800, depending on the amount of
informatics attachments a hospital requests, said Greg Decker, the
company's chief financial officer.

Up to three headsets can be attached to each system, allowing the
surgeon's assistant and scrub nurse a 3-D view of the action rather
than having to look at a video screen near the operating table,
Pow-Sang said.

Because it is on a cart, it can be moved to operating rooms on
different floors, he said. After using one system for a year, Moffitt
recently ordered three more.

Closer to home, Viking announced last month that it sold several
systems to Hoag Hospital in Newport Beach, where they are being used in
gynecological surgeries. The company's 100 systems in operation around
the world are at hospitals in Sweden, Korea, Russia and Puerto Rico.

Moffitt figured that if the Viking equipment is used for about 200
prostatectomies a year, its cost is about $160 per patient, Pow-Sang
said. The da Vinci system would have to perform at least 600 operations
a year to break even, he said.

"It's very ergonomic," Pow-Sang said of Viking's system. "You're
using a headset so you don't have to be turning your head and looking
at a screen for a couple of hours. And it allows you to move around.
The robot requires you to sit down and look through a microscope-type
device for several hours like a pathologist - remember, like Quincy
on TV," he said.

Viking's name may not be familiar to San Diegans, even those who have
been inside the biotechnology industry for 20 years. However, its
technology has been around for quite some time.

It was originally purchased from the military by San Diego-based Vista
Medical Technologies, founded in 1993 as a spinoff from what is now
known as Rockwell Collins. Vista saw the technology's promise in the
medical field, and poured money into developing it, primarily for
cardiac cases.

But heart surgeons have been slow to adopt minimally invasive
techniques. So Vista began to develop it for bariatric procedures.

By 2000, the company's focus had shifted exclusively to providing
consulting services to hospitals that offer gastric bypass surgery, an
increasingly popular and lucrative procedure for helping morbidly obese
people lose weight.

At the same time, Tucker, a partner at the Accenture consulting firm,
was looking for investments in the biomedical field.

He learned of Vista and its desire to sell its vision systems. For 28
years, Tucker led Accenture's biomedical device unit. And Vista, he
thought, was offering up what he thought would be a worthwhile
investment.

"This technology should be at the value center of the hospital, which
is the surgery center for most providers," Tucker said.

With hospitals increasingly pushing outpatient care and minimally
invasive surgery, the technology had a clearly defined and growing
market, he said.

And the 3-D technology was so different, it was somewhat disruptive to
the way people were doing business, he said.

"Three-D is so important on the diagnostic front, why not when you
are doing surgery?" Tucker reasoned.

Meanwhile, it has the capacity to add medical informatics, allowing for
the screen-in-screen viewing, he said. In the future, Tucker thinks the
informatics will allow surgeons to call up a patient's medical records
and other data on command.

With a 78 percent personal stake in the newly acquired technology,
Tucker spun it out into a company by buying a shell corporation. Then
he slowly began to build a team.

In May, Chief Executive Tom Marsh retired, and Tucker moved into the
position. The company hired software expert and entrepreneur Mark C.
Surles to the newly created position of vice president, advanced
systems with the charge of expanding the informatics platform.

In late November, the company signed a distribution agreement with
Platinum Medical of Las Vegas, a company that sells devices to
hospitals. The deal essentially doubled the number of sales people
offering Viking's products.

In June, the company received $8 million in private equity financing,
which it is using to support the commercialization of the company's
core products, the three-dimensional and two-dimensional systems;
continue growing its original equipment manufacturing segment, which
designs and manufactures cameras and other components for large medical
device companies; and expand its informatics offerings.

It is informatics, now, where Tucker sees the future of his company.

"We have a tremendously powerful strategic opportunity in front of
us: Bring more clinical information into the surgical environment. That
is where we are going."