Entrepreneur aims new laser device at cancer

I t can't be said that Dr. Rama Rao remembers his introduction to Chicago with pleasure. One day in 1979 he arrived at O'Hare from his native India, struggled through customs and boarded a taxi, asking the driver to take him to a YMCA in the city. He had been told be could get a room at a reasonable price at a Y and he hoped to get a night's rest before reporting to the University of Illinois at Chicago.

"The driver drove me around and around and charged me $60," says Rao, who had $100 to take care of necessities during his first days in a strange land. Rao reports the incident like anyone who has been taken for a rube. He's a bit shamefaced. But then he grins. Today, 12 years later, he has $3,645,000 in his pocket. That's not quite accurate. The $3.645 million is the sum raised in May by an initial public offering of stock in Excel Technology Inc., a company that holds promise in the treatment of cancer.

Rao is company president, with an annual salary of $100,000, and he owns 558,000 shares of the stock. Rao's wife, Dr. Triveni Srinivasan-Rao, owns another 600,000 shares, so the family should have control of Excel Technology Inc., in that total shares outstanding number slightly more than 3 million.

That is as it should be. The Raos built the company from scratch. The day after Rama Rao escaped the clutches of that taxi driver back in 1979 he found his way to circle campus and his way to circle campus and his promised position as a teaching assistant at the Laser Laboratory.

The son of a bookkeeper at a steel company in India, Rao had earned a bachelor's degree and a master's degree in physics from a leading Indian university. At Illinois, he added another master's degree and a doctorate. Illinois also contributed his wife, who has a similar string of degrees in physics from Illinois and from India.

In 1986, Rao was a member of the faculty at the City College of New York while his wife worked at the Brookhaven National Laboratory on Long Island where she became a senior scientist exploring laser technology. "I told my wife," Rao says, "that I wanted to start a company to develop an advanced generation of medical laser systems that would have the potential down the road to detect and treat cancer.

"My wife agreed that she could support the family while I tried. My business plan set a three-year goal to prove the feasibility of my ideas and to fund a company to manufacture the system.

"I put a 220-volt line and a water supply in the garage of our home and went to work. I also set out to get funding and I knocked on the door of every venture-capital firm in New York."

But only the federal government responded with funding, primarily from agencies under the auspices of the Small Business Innovation Research program. Early this year, eight private investors did put up a total of $400,000 to finance Rao's work.

Two years ago, the company- based in Holbrook, N.Y.-introduced what it calls the "world's first and, currently, only all solid state KHz repetition rate (1,000 pulses per second) tunable Ti:Sapphire laser."

That may throw you. Rao says Excel's laser can be attuned to zap malformations of the eye, the teeth and the skin. More important is the potential for cancer treatment. The over-simplified idea: a tumor is injected with a harmless but light-sensitive drug, a laser blast turns on the toxic property of the drug, and, Rao says, the cancer is "disintegrated."

A number of companies, large and small, are experimenting with the same technology, Rao says, and "it has been proven in animal tests on breast, bladder, stomach, brain and lung tumors." Excel now has systems on test at MIT, Hughes Medical and the Ames National lab, plus one system in Japan another in Italy, Rao says.

He claims the Excel technology represents an advance over existing laser systems. "Our one system at $100,000 lends itself to any number of applications while specific machines are needed for each kind of application" under other systems, Rao says.

Financial columnist Edwin Darby writes Thursday and Sunday.