South Florida Business Journal – by Stephen Van Drake
Date: Monday, November 11, 2002, 12:00am EST
In 1997, Peter Sayet strolled along a Fort Lauderdale area Publix aisle that displayed an array of adult diapers.
“Why is it that an adult has to wear diapers to combat incontinence?” he pondered. “This is incongruous.”
Sayet’s odyssey into the biotech world, where mind matters and designs conquer, had begun. And in the offing, the potential for profits in the billions.
Sayet, then 50, buried himself in a medical library for two months, reading all about urinary incontinence (UI). Then, he started sketching a device that could be surgically implanted to cure it.
Sayet said he knew he could create a better micromedical implant to help an estimated 50 million Americans and 125 million people worldwide with serious UI problems.
Since age 21, Sayet has worked in and owned medical laboratories. He knew physicians.
He turned to urologist Victor Politano, then 79, who had just retired as chairman of the University of Miami Medical School’s urology department and opened his own practice in Miami.
From Politano to prototype
The duo brought in mechanical engineer Lloyd Sutherland, former senior project engineer at Pfizer Hospital Products Group.
In 1998, Sayet formed the Florida company Precision Medical Devices and applied for a patent. Last November, the U.S. Patent Office granted his company the patent for the Politano-Sayet-Sutherland Flow Control Device (PSS).
The trio next called on Charlie Pfretzschner, a mechanical engineer specializing in control systems. He owns Custom Application Products of Delray Beach.
Pfretzschner constructed three generations of the PSS.
Precision recently completed 32 months of animal testing at a Jackson Memorial Hospital/UM research facility in Miami.
“Now we have proof that the product will work for humans,” Sayet said.
The device and its market
A survey of medical literature reveals at least 20 million Americans suffer from urinary incontinence. This cuts across all ages and genders, although it afflicts those 65 or older more.
In 1998, the Journal of the American Medical Association conservatively projected UI diagnostic and treatment costs to exceed $26 billion a year, using 1995 figures. Those costs applied only to individuals older than 65, who constitute less than half of UI sufferers.
Sayet said he is convinced the PSS will outperform competing UI devices from American Medical Systems (Nasdaq: AMMD) and Medtronic (NYSE: MDT).
The PSS is designed to mimic the function of the human urethra. In a 20-30 minute operation, a surgeon implants a small valve into the urethra connected to what Sayet called the “box.”
The box is the brain of the PSS, currently about the size of a pacemaker. It is surgically implanted just under the skin below the belt line. This is simple surgery done under local anesthesia. The box contains a computer chip and battery that lasts five years.
When the user wishes to empty the bladder, the person holds a magnet over the box. This triggers the valve to open, releasing urine. Remove the magnet and the valve closes.
Everything implanted is totally sealed, Sayet said.
“We will get it [the PSS] where we want it someday,” Politano said. Precision is working on its fourth prototype. And each gets smaller. Politano estimated by the time the PSS gets to market, the box will shrink by at least 40 percent.
Unlike any competitive UI device, the PSS can adjust pressure of the implanted bladder device from the box without surgery, Sayet said.
Meeting FDA muster
On Oct. 31 in Washington, D.C., Precision principals met with U.S. Food and Drug Administration officials to establish the protocol for animal testing.
Following the animal testing, at least a year of human clinical trials are expected before the FDA considers granting Precision a license to make and sell its PSS in the United States.
With a patent’s life 17 years, time is money.
The FDA process under President Clinton’s fast-track took three to five years, said Don Szaro, the global health science director at Ernst & Young in Miami.
“It’s dramatically slower under Bush � seven years; but we anticipate that will change since the Senate in October approved Mark B. McClellan as FDA commissioner,” he said.
Sayet said he might also approach the European Union’s comparable regulatory agency, which beats the FDA approvals by two years. Then he could probe the European market. Sayet said he might move into the Latin American market simultaneously.
Precision rides the tsunami of fast-paced change in how medicine is practiced.
The biotech industry is exciting for investors and scientists: “It is going to change the way health care is delivered,” Szaro said.
He added once the PSS gets FDA approval, which takes between three and five years on a “fast-track,” it must take full advantage of its remaining patent period to reap profits.
Sayet, who spends small, thinks big. He works out of a 10-by-20 office, pays himself $2,500 a month and describes himself as frugal, tenacious and competitive.
Although Sayet has raised $800,000 since 1998 through 70 “premium investors,” at least 20 of whom are physicians, he said he is looking for more to package $2.5 million for the FDA trials.
Sayet has armed his company with a board of advisers, including Herbert Karol, senior VP of Solomon Smith Barney in Fort Lauderdale, who said he has agreed to help prepare Precision for an IPO in 2003.
Once marketed, Sayet said he could make a profit by selling 300 devices a year: about $10,000 each at a 95 percent margin.
Sayet’s business plan attacking the world market, however, envisions selling 397,500 units: at least $3.4 billion annually.
Beyond profits, Sayet said he knows the PSS will help millions of people cure their urinary incontinence.
“Men and women suffering from UI become devastated because they are embarrassed; they become recluses,” Politano said. “Something like this [the PSS] will bring back their dignity.”