Zapping Hair May Give Palomar Zip

Starting in mid-August, Palomar Medical Technologies (PMTI) stock took a leap: from 21/8 to more than 4 by the end of the month. And it may be headed higher still.

The reason: Palomar will soon announce a licensing pact to market Massachusetts General Hospital's technology for laser-based hair removal. Palomar would thus compete head-on with Thermolase, whose stock has soared from 4 to 24 this year because of its laser technology that removes unwanted hair follicles. Some of those buying Palomar in mid-August were Thermolase investors who learned of Palomar's entry into the $1 billion hair-removal market.

The agreement gives Palomar access to Mass General's clinical data, which show the safety and efficacy of its system and will let Palomar file for FDA approval of the system, whose patent is still pending. Palomar Chairman and CEO Steven Georgiev expects FDA clearance by early 1996.

Each year, about 1 million women remove unwanted hair through electrolysis, a painful process. Lasers are less painful, quicker, and less expensive, according to Thermolase and Palomar. Palomar already has the manufacturing capacity and distribution system to market its product, says Georgiev. Palomar's Spectrum Medical Technologies division markets a laser system to remove tattoos, birthmarks, and other skin lesions.

Palomar, which expects to post a 60 cents-a-share loss this year, should make 39 cents in 1996, on estimated sales of $25 million, vs. a 1994 loss of $1.31 a share on sales of $14.6 million, estimates Amy Bell, an analyst at H.J. Myers. Based on this outlook, the stock should hit 10 this year, figures one big investor.

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