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Medicis (MRX) 4Q Profit Falls, May Sell LipoSonix Unit
2/28/2011 8:20:05 AM
Phoenix Business Journal - by Angela Gonzales -- Just when I was getting excited about the prospect of trying Medicis Pharmaceutical Corp.’s LipoSonix fat-busting device, Chairman and CEO Jonah Shacknai said in a conference call with investors today that the Scottsdale company will begin looking to sell it off.
Medicis’ investors have not been warm to the idea of the dermatological company expanding into the fat-busting technology, which is undergoing clinical trials and is years away from FDA approval.
Next week, plans call for reaching out to companies interested in buying LipoSonix.
“We believe and always believed LipoSonix is a great technology that delivers highly predictable, consistent results,” Shacknai told investors. “We also believe this technology is better suited to a company that specializes in capital equipment and might have more latitude from a regulatory perspective than we do on a worldwide basis.”
The product originally was meant to be a platform for growth in the capital equipment market, but regulatory delays make this less attractive for a pharmaceutical company than it was a few years ago, he said.
“There is also a significant burn rate with LipoSonix products as they wait to gain FDA approval,” he said.
Still, Shacknai said Medicis (NYSE:MRX) will continue to seek FDA approval for the LipoSonix system in the U.S.
Shacknai said the company is considering various forms of divestiture that could even leave Medicis with a minority, noncontrolling interest.
Meanwhile, the company will continue to build its diversified research and development pipeline in its core dermatology and facial aesthetics franchise.
Medicis has signed four R&D transactions within the past six months and is in active negotiations for several more, Shacknai said. The company has $750 million in cash, putting it in a good position as a buyer.
“We have 15 projects under significant development, including two discovery programs, seven preclinical programs and six Phase II and Phase III programs,” he said, adding that none of those projects are related to LipSonix.
“Significantly, we believe at least seven of 15 development projects have peak revenue potential of greater than $75 million,” Shacknai said.
For the year ended Dec. 31, Medicis reported about $123 million in net income on $700 million in revenue. That is up considerably from about $76 million in net income on total revenue of $572 million in 2009.
The company’s stock closed at $25.82 today, about midway between its 52-week high of $30.94 and its low of $21.02.