Yet another new breast implant!

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http://money.cnn.com/2005/08/25/news/midcaps/implants/index.htm?section=money_la\

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A better breast implant

Next generation of silicone implants could grow sales

August 25, 2005: 3:14 PM EDT

By , CNN/Money staff writer

NEW YORK (CNN/Money) - The market dynamic for breast

implants could swing dramatically over the next year,

and it has a lot to do with a new implant with a

consistency that's been compared to Gummy Bears.

California-based Mentor Corp. (down $0.25 to $52.42,

Research) and Inamed Corp. (down $0.05 to $73.53,

Research) both sell saline-filled implants in the U.S.

market and silicone implants overseas. Both companies

are waiting for the Food and Drug Administration's

decision on whether they can sell cohesive silicone

implants in the United States.

Mentor received an approval letter from the FDA on

July 28, and these are generally seen as precursors to

product approval. Inamed is hoping to receive a

similar letter soon.

Mentor and Inamed are both working on third and

fourth-generation implants, which are considered safer

than the silicone implants that were banned in the

U.S. in 1991. The third-generation implants are made

of cohesive gel that maintains its form and doesn't

leak. The fourth-generation, or 'Gummy Bear' implant,

is made of gel pieces that are clustered together like

the rubbery German candies, with even greater

cohesiveness.

In the United States, women can buy silicone implants

only for reconstructive surgery following

mastectomies, so saline implants make up

three-quarters of the U.S. implant market. The $350

million U.S. market could increase dramatically with

FDA approval of silicone, because those implants are

about twice the cost of saline, said Calcagnini,

analyst for CIBC World Markets.

" You'd almost double the sales of the U.S.,

potentially, " said Calcagnini, who projects a $300

million jump in annual U.S. sales if the FDA approves

silicone implants.

Mentor's in the driver's seat, but will Inamed take

the wheel?

Mentor is typically seen as the market leader because

an FDA advisory panel in April voted in favor of their

product, but advised against Inamed's implant, putting

Mentor's implant on a faster track to approval.

Investors have watched this race closely: Mentor's

stock price has jumped about 60 percent over the last

six months, while Inamed's stock has been flat.

" Mentor is in the driver's seat, " said Jayson Bedford,

analyst for Harkness, Inc. " Inamed is

well-positioned in number two. Those are the two

players that have come to the forefront. "

However, this dynamic could change next year if the

third-generation implants, which are still awaiting

FDA decision, are supplanted by a fourth generation.

Inamed could emerge as the market leader if the FDA

approves its fourth-generation product, Style 410,

known in industry slang as the Gummy Bear implant.

Inamed filed Style 410 with the FDA in December, 2004.

If this product is approved, that should come as

welcome news to Medicis Pharmaceutical Corp. (up $0.16

to $34.31, Research), a facial cosmetics company that

is set to merge with Inamed later this year. Mentor is

also testing a fourth-generation implant, but it has

yet to file with the FDA.

MediCor (Research) and the privately held Texas

company Silimed are also working on fourth-generation

implants, analysts say, but they are further behind in

testing.

" I think Inamed would be quite successful in switching

most patients over to that style, " said Eli Kammerman,

analyst for Cathay Financial. Kammerman said that 90

percent of Inamed's implant sales in Europe are from

silicone, and 80 percent of the silicone sales are

from fourth-generation.

Inamed and Mentor's 50-50 market share split could

shift to 55-45 in favor of Inamed if Style 410 enters

the market ahead of Mentor's product, said Amit Hazan,

analyst for Suntrust Humphrey. But Inamed's

lead would be softened by the high quality of Mentor's

third-generation implant, Hazan said. Also, analysts

are quick to point out that Mentor's fourth-generation

implant is not far behind Inamed's, so the market

shares could shift again.

American market means more sales, bigger implants

The fourth-generation implants are made of cohesive

gel, which is designed not to leak even when an

implant is sliced open.

" It virtually eliminates the risk of rupture and

leakage and it's a truly shape-stable implant, " said

Dr. Kress, a land doctor who installed

fourth-generation implants in clinical trials for

Silimed. " I've done 144 pairs of implants [in clinical

trials] and the satisfaction rate has been

phenomenal. "

The companies have been selling the third and

fourth-generation silicone implants overseas for

years, where the biggest markets are in Europe,

especially in France and Germany, and in South

America, particularly in Brazil and Argentina.

A green light from the FDA would increase not only the

sales of the implants, but also their size, according

to the doctor who helped with Silimed's trials.

" Only the Americans like the big implants, " said Dr.

Kress. " Even the Germans don't like big implants. "

The analysts do not own stock in the companies

mentioned here.

For more on breast implants, click here.