“It isn’t good enough that we continue to lose half of cancer victims. The standard therapies, radiation and chemotherapy, must become more effective. That is the mission of our business.” -Hyrum A. Mead, President BSD Medical

BSD Medical Corporation (OTC: BSDM) is the world's foremost developer of microwave systems used in the treatment of cancer. Microwave hyperthermia therapy has been shown to substantially improve local control of cancer, tumor response and survival rates when added to radiation treatments. In phase III clinical trials where hyperthermia was combined with radiation therapy, hyperthermia improved 2-year local control of melanoma from 28% to 46%, complete response for recurrent breast cancer from 38% to 60%, 2-year survival for glioblastoma (brain cancer) from 15% to 31% and complete response for advanced cervical cancer from 57% to 83%, as compared to the use of radiation therapy alone. (See Hyperthermia as a Cancer Therapy.)

We have developed microwave systems for treatment of cancer and conditions of enlarged prostate.

BSD is also the developer of the microwave thermal therapy systems used by TherMatrx, Inc., a company dedicated to the treatment of symptoms associated with enlarged prostate, a health condition affecting half of men over age 50. BSD Medical is currently engaged in an earn-out that is projected to provide a cash return of approximately $30-40 million for the sales of its shares in TherMatrx, Inc.

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Our strategy is to provide approved and commercially accepted hyperthermia systems for treating cancer anywhere in the body.

BSD Medical’s strategy in cancer therapy is to deliver FDA approved hyperthermia systems capable of treating cancer anywhere in the body. BSD has already obtained FDA approval to treat cancers near the body surface and through interstitial techniques, and is in the application process for FDA approval to treat deep cancers. The primary objective for BSD’s holdings in TherMatrx has been to further fund its cancer business and advance new business under development.

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Our applications and products are protected by 9 U.S. patents, 3 foreign patents and 5 patent licenses.

BSD Medical has 9 U.S. patents, 3 foreign patents and 5 patent licenses covering its current applications and products. New technologies are also under development that may qualify for patent protection.

Four additional BSD patents that apply to the treatment of enlarged prostate (BPH), a urological disease, have been assigned to TherMatrx, Inc. BSD Medical’s prior licensee, Urologix, Inc. (NAS :ULGX), which has marketed under license to these patents, subsequently became a licensee to TherMatrx.

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We offer a therapy with substantial clinical support for claim of potent efficacy in the war against the second leading cause of death.

Despite the massive attention given to cancer prevention and treatment,  the American Cancer Society estimates that 1,368,030 new cancer cases will be diagnosed and 563,700 Americans will die from cancer during 2004.  Exceeded only by heart disease, cancer remains the second leading cause of death.  The current primary cancer therapies (ionizing radiation, chemotherapy and surgery) are still grossly inadequate, and an enormous need for better treatment is obvious.  Hyperthermia is an emerging cancer therapy that both kills cancer cells directly and has been shown to be a potent additive treatment used in making the major existing cancer therapies substantially more effective.  Research is also demonstrating that hyperthermia has the potential to become a powerful compliment for some of the most promising new cancer therapies under development. 

Radiation therapy relies on tumor oxygenation so that oxygen radicals can be formed during radiation treatments that attack cancer cell DNA.
 

Hyperthermia therapy is also being used in combination with the newest developments in cancer research.

Cancerous tumors are uncontrolled growths of mutated cells that require more energy to survive than do cells of normal tissue. As cancer cells grow rapidly, they tend to outstrip their blood supply, leaving them blood and oxygen starved. Oxygen starved cancer cells are resistant to ionizing radiation treatments, which create oxygen radicals to attack tumor cell DNA. Blood depletion also makes cancer resistant to chemotherapy, where blood transport is required to deliver the drug. Hyperthermia applied to a tumor draws blood to the cancer as the body’s natural response to the stimulus of heat. Many clinical trials have shown strong improvements in the results from both ionizing radiation and chemotherapy when hyperthermia is added to the treatment. While sensitizing tumors for more effective treatment from radiation and/or chemotherapy, hyperthermia also destroys cancer cells directly through damage to the plasma membrane, the cytoskeleton and the cell nucleus, and by disrupting the stability of cellular proteins. Tumors with poor blood supply systems lack the natural cooling capacity provided by efficient blood flow in normal tissues, making them selectively susceptible to the cancer-destructive effects of hyperthermia therapy.

Hyperthermia has other therapeutic uses. It can be used to shrink tumors prior to surgery, potentially making resection easier or even possible. Research has shown hyperthermia to be an activator for gene therapies, speeding gene production (heat mediated gene therapy). Hyperthermia may play a key role in the development of new anti-tumor vaccines that are based on the production of heat shock proteins. Research has shown hyperthermia to be an angiogenesis inhibitor, preventing cancer from inducing growth of new blood vessels to expand its blood supply. Hyperthermia could also be a companion therapy for drug angiogenesis inhibitors, used in the final destruction of depleted cancer cells. Hyperthermia has been shown to improve patient quality of life. Even in situations where there is no hope for survival, hyperthermia may provide benefits through alleviation of such effects as bleeding, pain and infection.

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Global involvement of over 1,000 physicians and physicists in development of the therapy, funded by the National Institutes of Health (NIH) and substantial foreign equivalents.

Over 1,000 researchers, consisting substantially of physicians and physicists, are members of world organizations dedicated exclusively to research in hyperthermic oncology. Three hyperthermia research organizations service North America, Europe and Asia.

In the opening address of the 2001 annual conference of the North American Hyperthermic Society (sponsored by the Radiological Society of North America), P. K. Sneed, M. D. (Univ. of California San Francisco) offered the following summary of completed Phase III randomized clinical trials involving combination ionizing radiation (RT) plus hyperthermia therapy (HT) vs. ionizing radiation treatments alone: “for melanoma (2-year local control 28% for RT vs. 46% for RT + HT), recurrent breast cancer (complete response rate 38% for RT vs. 60% for RT + HT), glioblastoma (2-year survival 15% for RT vs. 31% for RT + HT), and advanced cervical cancer (complete response rate 57% for RT vs. 83% for RT + HT).”

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BSD-500
Used for superficial and interstitial hyperthermia therapy, and sold by Nucletron, B.V., world leader in HDR brachytherapy delivery systems.

BSD-2000/3D/MR
Used to both provide deep hyperthermia therapy and image the treatment in progress, allowing precise delivery of therapy.

BSD Medical Corporation has developed the technology required to approach hyperthermia therapy through three techniques: superficial, interstitial and deep hyperthermia. These methods allow cancer to be treated virtually anywhere in the body.
Superficial hyperthermia systems are used to non-invasively treat tumors within a few centimeters of the surface of the body, typical in conditions of melanoma and recurrent breast cancer. Interstitial hyperthermia is primarily used to treat tumors in combination with popular interstitial and endocavitary ionizing radiation therapy (brachytherapy), using tiny microwave antennae inserted through the same catheters required to deliver radioactive seeds. This technique can be employed in treating prostate cancer, breast cancer, head and neck cancer and a variety of other cancer sites. Deep hyperthermia is used to non-invasively treat tumors deep within the body, including many problematic cancer sites located in the pelvis, abdomen and chest areas.

Development of the BSD-2000 has been a substantial effort involving the cooperative work of such American research institutions as Duke University, Northwestern University, University of Southern California, Stanford University, University of Utah and University of Washington St. Louis. Contributing

European research institutions included Daniel den Hoed Cancer Center of the Academisch Ziekenhuis (Rotterdam, Netherlands), Haukeland University Hospital (Bergen, Norway), Düsseldorf University Medical School, Tübingen University Medical School, Essen University Hospital, Charité Medical School of Humboldt University (Berlin), Luebeck University Medical School, Munich University Medical School Grosshadern, Interne Klinik Argirov of the Munich Comprehensive Cancer Center (all of Germany), University of Verona Medical Center (Italy), Graz University Medical School (Austria) and Kantonsspital Aarau (Switzerland).

Through research funded by the National Cancer Institute and supportive efforts by other research institutions, BSD Medical has been able to further enhance the BSD-2000. The BSD-2000/3D adds three-dimensional steering of deep focused energy, delivering even more precise heating to the tumor. As part of the international collaborative research efforts, sophisticated treatment planning software for the BSD-2000/3D has also been developed.

Both the BSD-2000 and BSD-2000/3D administer non-invasive treatment to deep tumors. As a further objective, MRI treatment monitoring has also been added. The BSD-2000/3D/MR provides magnetic resonance imaging (MRI) as an interface with the BSD-2000/3D. The development of MRI treatment monitoring has been a long-awaited breakthrough in hyperthermic oncology. Among many benefits, MRI treatment monitoring opens the way for the application of MRI monitored hyperthermia for better treatment of new cancer sites, using non-invasive imaging (including temperature monitoring) of tumors during therapy.

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The market for BPH therapy is huge. Half of men have symptoms by age 50, and the percentage of men with symptoms increase rapidly as they age.

As compared to surgery or hormone therapy, microwave thermotherapy is easier on the patient and less costly.

BPH is a benign condition resulting when the prostate enlarges as men age. Approximately 50% of men in their 50s and more than 75% for men over 80 suffer from symptoms of BPH. Worldwide, an estimated $10 billion is spent annually for the treatment of BPH.

The prostate is a walnut-size gland surrounding the male urethra (the channel that carries urine). As the prostate grows, it can create a variety of troubling symptoms that impact quality of life, including frequent urination, urgency and painful urination. Serious consequences can result from failure to treat BPH, including complete obstruction (acute retention of urine), urinary infections, loss of bladder functions and kidney failure.

To avoid dilution of its efforts in cancer therapy, BSD Medical elected to enter the BPH market through the founding of a new company, TherMatrx. On November 24, 1997, BSD entered into an agreement with Oracle Strategic Partners and Charles Manker to form TherMatrx, Inc., a jointly-owned company focused on minimally invasive treatment of benign prostatic hyperplasia, a urological disease. TherMatrx (with heavy participation by BSD employees) has since conducted Phase III randomized, multi-center clinical trials involving approximately 200 patients, and obtained FDA approval to begin marketing its products in July of 2001. The trials demonstrated highly significant improvements in patient symptoms with minimal side effects and excellent patient tolerance. TherMatrx has aggressively entered into marketing. TherMatrx offers a non-surgical therapy that has been shown to provide safe, effective relief from BPH symptoms. The treatment can be performed in a clinic or physician’s office. The company believes the results are clinically superior to medication. The therapy also avoids the side effects and complications of surgery.

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CMS billing codes have been established for both hyperthermia cancer therapy and treatment of BPH by transurethral microwave thermotherapy.

In the United States, BSD Medical's products are purchased primarily by medical institutions, which then bill various third-party payers, such as Medicare, Medicaid, other government programs, and private insurance plans, for the health care services provided to their patients, or by managed care organizations, which directly pay for services provided to their patients. The Center for Medicare and Medicaid Services (CMS) has established 23 billing codes that can be used as applicable for or in combination with hyperthermia therapy, depending on the circumstances of the treatment. Appropriate codes apply to billing for superficial, interstitial or deep hyperthermia, when used in combination with ionizing radiation therapy or chemotherapy. Billing codes are available for both the hospital and the oncologist.

In November 1995, HCFA (now CMS) authorized Medicare reimbursement for all investigational therapies and devices for which underlying questions of safety and effectiveness of that device type have been resolved, based on categorization by FDA. All of BSD's investigational (IDE) equipment and protocols have been placed in this category by the FDA, and thus may be reimbursed by Medicare.

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We pioneered RF hyperthermia therapy for cancer treatment and microwave thermotherapy for the treatment of BPH.

Generous contributions by NIH and equivalents in other governments have supported our development efforts.

BSD Medical Corporation was the first company to obtain PreMarket Approval (PMA) from the Food and Drug Administration (FDA) for a hyperthermia cancer therapy system and the first company to obtain Investigational Device Exemption (IDE) approval from the FDA for thermotherapy systems for the treatment of Benign Prostatic Hyperplasia (BPH). BSD has sold and manufactured over 200 hyperthermia systems installed throughout the world. Since its founding, BSD Medical has invested over $20 million in development of technology for hyperthermia treatment, and substantially greater funding has been provided for the clinical trials by the U.S. National Institutes of Health (NIH) and European governments.

BSD Medical Corporation was incorporated under the laws of the State of Utah on March 17, 1978. On July 31, 1986, pursuant to a Plan and Agreement of Merger dated July 11, 1986, BSD Medical Corporation was merged into a Delaware corporation, changing BSD Medical Corporation's state of incorporation from Utah to Delaware.

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Paul F. Turner, MSEE (Chairman/Senior VP/Chief Technology Officer) joined BSD Medical Corporation in 1978 after seven years as a respected developer of microwave communications systems for Sperry Univac (now L3 Communications). His experience with advanced military defense communication systems prepared him to lead the development of sophisticated phased array microwave technology at BSD Medical. Mr. Turner has led the design of microwave treatment systems for tumors, including the development of external phased array antenna technology to focus radiated microwave energy deep into the central area of the body to treat deep tumors. He has also integrated this novel technology with Magnetic Resonance Imaging (MRI) to non-invasively monitor treatments within the patient's body.

Hyrum A. Mead, MBA (President/CEO) joined BSD and elected to the Board of Directors in 1999. Previously he served five years as Vice President Business Development for ZERO Enclosures, a leading manufacturer in the telecommunications, computer and aerospace enclosures industry and seven years as President of Electro Controls, a manufacturer of computer controlled power systems. Mr. Mead began his career in marketing with IBM where he worked with the introduction of many new products. Mr. Mead’s career has focused on growing businesses and making them successful, including turnarounds.

Dr. Gerhard Sennewald (Director) was appointed to BSD's Board of Directors in 1994. He has been a key BSD European representative and distributor. Dr. Sennewald is President and Chief Executive Officer of Medizin-Technik GmbH of Munich, Germany.

Dr. J. Gordon Short (Director) an MD, was appointed to BSD's Board of Directors in 1994 after extensive participation in the initial development of the Company's products as Medical Director for BSD, as well as previous service on the Company's Medical Advisory Board. Dr. Short is Chairman of Brevis Corporation, a medical products company that specializes in consumable specialty supplies.

Dr. Michael Nobel (Director) was appointed to the Board of Directors in 1998. Dr. Nobel is Chairman of the Board of the Nobel Family Society that provides Nobel Prizes, including the Nobel Peace Prize. He is Chairman of the American Non-Violence Project Inc., and has served as a consultant to Unesco in Paris and the United Nations Social Affairs Division in Geneva. Dr. Nobel participated in the introduction of magnetic resonance imaging as European Vice President for Fonar Corp. He is the CEO of the MRAB Group which provides diagnostic imaging services.

Ray Lauritzen (VP Field Service Operations) has a high technical competence in managing the repair and maintenance of field systems. He served as Field Service Manager from 1982 to January 1988 and as Vice President of Field Service Operations since January 1988.

J. Richard Faux (Production/Materials Manager) joined the company in 1981 and leads BSD’s FDA compliant and ISO-9000 certified manufacturing facility.

Dennis Bradley (Accountant) joined BSD in 1985 and has managed the company’s financial records and SEC relations and filings since 1987.

Harley N. Griffith, MBA (Director of Sales) joined BSD in 1999 after a successful 18-year track record in medical sales and sales management for major companies. He was previously Director of Oncology Sales for Ciba-Geigy.

Dr. Mark Hagmann (Senior Engineer) joined BSD in 2000. He holds an undergraduate degree in physics and a PhD in electrical engineering. He has occupied important posts in universities and as a Senior Staff Fellow for the National Institutes of Health. Having published well over 100 articles in peer-reviewed journals, his expertise includes hyperthermia, lasers, microwave sciences and biotechnology.