PUTTING TEETH INTO PROFITS; WESTLAKE VILLAGE DENTAL FIRM POISED FOR SUCCESS.

Byline: Ben Sullivan Daily News Staff Writer

Smiles have been getting noticeably brighter lately at Dental Medical Diagnostic Systems Inc.

Driven by the launch of a new tooth-whitening system last fall, the maker of high-technology dental equipment is expected in the coming weeks to report record sales for the quarter and year. And while to date little-followed by Wall Street, the company recently attracted coverage by a second brokerage firm, which like the first has rated its shares a ``buy.''

But perhaps most promising, Dental Medical in early January applied for U.S. Food and Drug Administration approval of a low-cost digital X-ray system that analysts say could greatly expand the existing market for such devices. If approved, the system could within a year double the firm's sales and, according to one analyst, give it annual revenues of up to $150 million by 2001.

``We've had some really substantial growth,'' said Dental Medical Chief Executive Robert Gurevitch. ``But there's a long way to go before we saturate the market.''

Those who follow Dental Medical give Gurevitch the lion's share of credit for putting the firm on the map and nurturing it over three and a half years into an organization that may soon dominate its market.

And his success is not without precedent.

As chief executive of New Image Industries, a company he founded in the mid-1980s, Gurevitch grew the firm into the nation's top supplier of intraoral cameras - devices that dentists, orthodontists and oral surgeons use to project close-up images of teeth and gums onto a video monitor.

Under Gurevitch's direction, New Image's revenues went from zero to approximately $30 million per year - on a product whose technology he acquired for less than $1 million - and the company's share price zoomed from 60 cents to $22 before the firm was bought by industry giant Dentsply International in 1995.

``I knew Bob Gurevitch at New Image Industries, saw what he did at that firm, knew he was very competent and thought he'd repeat the same process at this one,'' said Sutro & Co. analyst Eugene Melnitchenko, who initiated coverage of Dental Medical in December.

So far so good. Though sales have tapered off sharply in the past year due to market saturation, Dental Medical's own intraoral camera had by 1997 become the segment's best seller, easing his former company from the top spot. Now focusing on marketing the firm's tooth-whitening device, a system called the Apollo 95 E, Gurevitch is beginning to strike pay dirt in that realm as well.

Like most in-office tooth-whitening systems, the Apollo uses a hydrogen peroxide-based compound to bleach teeth. While similar systems use a laser to activate the bleach, Apollo does so with plasma, a high-energy state of matter that to the naked eye looks like intense light. Because of its intensity, the plasma-based system can accomplish in around 40 minutes what laser systems do in two hours.

Also, because Dental Medical's system does not affect surrounding tissue the way a misguided laser can, a dental technician or assistant can perform the procedure, making it cheaper for a dental office to operate. The device's $4,500 price tag is about 50 percent less than most laser-based systems.

``I think it's a $50-100 million market or more for them, and they could see revenues of that magnitude within a three-year horizon,'' said analyst Jeffrey Berg at M.H. Meyerson & Co.

Since winning FDA approval last October, Dental Medical has sold about 1,800 units in the United States. In Europe, where it won approval several months earlier, about 2,700 units have been sold, the company said. Melnitchenko estimates a worldwide market for the Apollo of 60,000 units.

Both Gurevitch and Melnitchenko hold out equally high hopes for Dental Medical's digital X-ray system, now under consideration by government regulators. Like typical X-ray systems, the machine ta`kes still images of patients' teeth and jaw bones.

But because of more acute - and smaller - sensors that a patient bites on while being scanned, the machine requires a far weaker X-ray dose to achieve resolution images superior to standard systems.

The machines have an anticipated price tag of around $7,000, more than typical film-based X-ray systems, but less than lower-resolution digital machines made by Dental Medical's competitors. Because most dentists are expected to shift to digital systems in the coming decade as their film-based systems wear out, Melnitchenko and Berg believe Dental Medical could generate up to $30 million within three years from sales of the system.

Because of the high sales potential of Dental Medical's products, both analysts also say the company's stock is underpriced, with Melnitchenko projecting a 12-month target of $14.40 a share, and Berg expecting a price in the $12 to $13 range. It closed Friday at $6.50.

Gurevitch says he's confident investors will eventually wake up to this. ``We've been so aggressive trying to build our market we haven't spent a lot of time communicating with the public,'' he said. ``But we also believe that following our (quarterly earnings report) in February the market is going to be very pleased.''

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11 Photos

PHOTO (1--Color) Robert Gurevitch of Dental Medical Diagnostic Systems displays the Westlake Village firm's Apollo 95 E teeth-whitening system.

Tina Gerson/Daily News

(2-11--Color) no caption (Smiles)