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Four analysts and top management from twenty sector firms examine the Medical Technology sector in this special 98-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info375.htm

TWST: Let’s start with a review of the performance of the small cap medical technology stocks in the second half of 2000 and the first half of 2001. What has been most striking about the performance of this group?

Mr. Wise:The small cap med-tech stocks have not done very well in the last nine months as they remained out of favor. Only recently, for the last month or so, have they seemed to turn the corner. We believe the turnaround is more a reflection of what appears to be a growing interest in small caps by the market in general. The universe of smaller cap companies that we follow includes companies that basically have a market cap of less than 1 billion. However, these days it is common practice to include companies with a 1-2 billion market cap in the mid- and small cap category. In our small cap coverage universe of companies with market caps under 1 billion, the average stock is down 11% over the last year and up 25% in the last six months. In the last three months, these stocks are up 13% on a rolling basis.

TWST: Are there any others on your list that you’re similarly enthusiastic about?

Mr. Wise: We believe that Align (Nasdaq:ALGN) has the largest market opportunity, and there are other companies that we’re equally excited about, such as Thoratec Corporation (Nasdaq:THOR). Thoratec is in the process of completing a major acquisition and merging the two largest companies in their industry. This is an excellent time to take a look at this company. Thoratec just acquired Thermo Cardiosystems from Thermo Electron (NYSE:TMO). The combination is going to provide cardiac surgeons with the broadest range of cardiac devices that are used to treat end-stage congestive heart failure. And you should appreciate that patients with end-stage congestive heart failure (CHF) are patients not suitable for the kind of resynchronization devices that Guidant (NYSE:GDT) and Medtronic are developing. These are people who are very much at the end of their clinical rope, so to speak. Essentially, you’re putting together two companies, two market leaders, and we believe the combination will give them the broadest product line with an ability to leverage the expense base. As a result, you’re going to have a very, very attractive story over the next couple of years. We had them oozing money this year, but as the company turns more profitable we will see them move into the black in 2002 and beyond.

TWST: For these patients who you describe as being very sick indeed, does this enable them to live a somewhat normal life or just prolong life?

Mr. Wise: I don’t want to say a normal life, because these are very, very ill patients. These are patients who are potential candidates for heart replacement, and in situations where hearts aren’t available or the patient is perhaps already too ill to undergo a transplant, patients would benefit from this kind of therapy.

TWST: Is this reimbursed by most insurers?

Mr. Wise: Yes.

TWST: What are the risks to investors?

Mr. Wise: Obviously anytime that a company does an acquisition merging two companies, there are issues related to integrating the companies — sales force integration, corporate culture issues. But I think this looks like a very happy marriage, and with a similar customer base, related product lines, and a very excellent, motivated management team, Thoratec should be able to manage these issues.

This special issue includes:

1) Small-Cap Med-Tech Stocks - In an in-depth (5,000 words) Analyst Interview, Frederick Wise, Managing Director at Bear, Stearns & Co., examines the outlook for the sector and shares specific stock recommendations.

2) Medical Technology: Small Cap Stocks - In an in-depth (3,400 words) Analyst Interview, Hans von der Luft, Senior Vice President at McDonald Investments, Inc., examines the outlook for the sector and shares specific stock recommendations.

3) Small Cap Medical Supply & Devices - In an in-depth (4,100 words) Analyst Interview, Dr. David Gruber, Senior Vice President and Rosanne Ott, Research Analyst, both at Lehman Brothers, examine the outlook for the sector and share specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of twenty sector firms examine the outlook for their firm and the sector.