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Medicis (MRX) Snags Graceway Pharmaceuticals, LLC in $455 Million Bankruptcy Sale



11/18/2011 11:20:27 AM

SCOTTSDALE, Ariz., Nov. 18, 2011 (GLOBE NEWSWIRE) -- Medicis (NYSE:MRX - News) today announced that it was the successful bidder at a bankruptcy auction conducted by Graceway Pharmaceuticals, LLC (Graceway) for substantially all of the outstanding U.S. and Canadian pharmaceutical assets of Graceway. Graceway filed for Chapter 11 bankruptcy protection on September 29, 2011.

Under the terms of its bid, Medicis will pay to Graceway a purchase price of $455 million. In turn, Medicis will receive Graceway's commercial pharmaceutical product portfolio, which includes prescription products in the dermatology, respiratory and women's health specialties, and certain other assets. Medicis will add to its research and development pipeline:

-- a formulation-stage dermatology project with an applied-for patent and projected annual peak sales in excess of $200 million;

-- a Phase 2 dermatology new chemical entity product currently patent-protected through 2016 with a potential patent term extension of up to five years and projected peak sales in excess of $200 million; and

-- a nearer-term women's health product which has completed Phase 2 and will soon enter Phase 3 with an applied-for patent and projected annual peak sales in excess of $100 million.

Additionally, Medicis will have the opportunity to launch two recently approved line extensions for the Zyclara(TM) franchise, which has several applied-for patents currently under accelerated examination in the U.S. and related patent protection in Canada already obtained.

The transaction is subject to approval by Graceway's board of directors and execution of a definitive asset purchase agreement, which will include customary closing conditions, including clearance under the Hart-Scott-Rodino Act and final approval by the bankruptcy court. While Medicis expects the transaction to be accretive in 2012, the Company anticipates updating financial guidance upon closing.

"We are pleased to announce this strategic acquisition of the Graceway product portfolio, and the ability to broaden our presence within dermatology," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "We anticipate near-term positive cash flow as we market certain newly acquired Graceway products which are currently approved for various dermatological and women's health conditions. Additionally, we are very pleased to be adding to our pipeline several mid- and late-stage products with a combined annual net sales peak potential of over $500 million in the dermatology and women's health categories."

Key Graceway Pharmaceutical Products (See Important Safety Information Below)

The following key Graceway pharmaceutical products to be acquired represent in excess of $125 million in annual revenues.1

Dermatology

Aldara(R) (imiquimod) Cream, 5% is indicated for: the topical treatment of clinically typical, nonhyperkeratotic, nonhypertrophic actinic keratoses (AK) on the face or scalp in immunocompetent adults; the topical treatment of biopsy-confirmed, primary superficial basal cell carcinoma (sBCC) in immunocompetent adults, with a maximum tumor diameter of 2.0 cm, located on the trunk (excluding anogenital skin), neck, or extremities (excluding hands and feet), when surgical methods are medically less appropriate and patient follow-up can be reasonably assured; and the treatment of external genital and perianal warts/condyloma acuminata in patients 12 years old or older.

Atopiclair(R) Nonsteroidal Cream is a nonsteroidal cream indicated to manage and relieve the itching, burning and pain experienced with various types of dermatoses, including atopic dermatitis and allergic contact dermatitis.

Zyclara(TM) (imiquimod) Cream, 3.75% and 2.5% are indicated for the treatment of external genital and perianal warts (EGW)/condyloma acuminata in patients 12 years or older. Additionally, Zyclara 3.75% is indicated for the topical treatment of clinically typical visible or palpable, AK of the full face or balding scalp in immunocompetent adults.

Respiratory

Maxair(R) Autohaler(R) (pirbuterol acetate inhalation aerosol) is indicated for the prevention of and reversal of bronchospasm in patients aged 12 years and older with reversible bronchospasm, including asthma.

Women's Health

Estrasorb(R) (estradiol topical emulsion) is indicated for the treatment of moderate to severe vasomotor symptoms (hot flashes) associated with menopause.

MetroGel-Vaginal(R) (metronidazole vaginal gel) 0.75% Vaginal Gel is indicated in the treatment of bacterial vaginosis.

About Medicis

Medicis is the leading independent specialty pharmaceutical company in the United States focusing primarily on the treatment of dermatological and aesthetic conditions. The Company is dedicated to helping patients attain a healthy and youthful appearance and self-image. Medicis has leading branded prescription products in a number of therapeutic and aesthetic categories. The Company's products have earned wide acceptance by both physicians and patients due to their clinical effectiveness, high quality and cosmetic elegance.

The Company's products include the brands DYSPORT(R) (abobotulinumtoxinA) 300 Units for Injection, PERLANE(R) Injectable Gel, PERLANE-L(R) Injectable Gel with 0.3% Lidocaine, RESTYLANE(R) Injectable Gel, RESTYLANE-L(R) Injectable Gel with 0.3% Lidocaine, LOPROX(R) (ciclopirox) Gel 0.77% and Shampoo 1%, SOLODYN(R) (minocycline HCl, USP) Extended Release Tablets, VANOS(R) (fluocinonide) Cream, 0.1%, ZIANA(R) (clindamycin phosphate 1.2% and tretinoin 0.025%) Gel, AMMONUL(R) (sodium phenylacetate and sodium benzoate) Injection 10%/10%, BUPHENYL(R) (sodium phenylbutyrate) Tablets and Powder and the over-the-counter brand ESOTERICA(R).

For more information about Medicis, please visit the Company's website at www.Medicis.com. Printed copies of the Company's complete audited financial statements are available free of charge upon request.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. All statements included in this press release that address activities, events or developments that Medicis expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements, including the ability of the parties to consummate the proposed acquisition and the timing, scope and financial terms or effect of the proposed acquisition, each as described above, current estimates with respect to projected peak sales for certain of Graceway's products, the anticipated cash flow contribution of the Graceway products and the expectation that the acquisition will be accretive in 2012, are based on certain assumptions made by Medicis based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. No assurances can be given, however, that these activities, events or developments will occur or that such results will be achieved. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Medicis. Several of these risks are outlined in the Company's most recent annual report on Form 10-K for the year ended December 31, 2010, and other documents we file with the Securities and Exchange Commission. Forward-looking statements represent the judgment of Medicis management as of the date of this release, and Medicis disclaims any intent or obligation to update any forward-looking statements contained herein, which speak as of the date hereof.

Important Safety Information about Graceway Products Mentioned in this Release

Aldara(R):

The histological diagnosis of superficial basal cell carcinoma (sBCC) should be established prior to treatment. Aldara Cream is not recommended for treatment of BCC subtypes other than the superficial variant (i.e., sBCC). Aldara Cream should be used with caution in patients with pre-existing autoimmune conditions. Flu-like signs and symptoms may accompany, or even precede, local inflammatory reactions and may include malaise, fever, nausea, myalgias and rigors. Patients may also experience application site reactions such as itching and/or burning. Most patients using Aldara Cream for the treatment of AK experience erythema, flaking/scaling/dryness and scabbing/crusting at the application site with normal dosing. Most patients using Aldara Cream for the treatment of sBCC experience erythema, edema, induration, erosion, scabbing/crusting and flaking/scaling at the application site with normal dosing. Other adverse reactions observed in clinical trials of Aldara Cream include respiratory infection, sinusitis, headache, carcinoma squamous, diahhrea, eczema, back pain, fatigue, atrial fibrillation, viral infection, dizziness, vomiting, urinary tract infection, and fever.

Atopiclair(R):

For external use only; avoid contact with eyes. For under the supervision of a health care professional only. Atopiclair nonsteroidal cream contains shea butter (butyrospermum parkii), a derivative of shea nut oil (not peanut oil). Frequently reported adverse events in Atopiclair-treated and vehicle-treated groups were burning (6.9% vs 7.1%) and stinging (8.3% vs 2.8%).

Zyclara(TM):

Intense local skin reactions including skin weeping or erosion can occur after a few applications of Zyclara Cream and may require an interruption of dosing. Zyclara Cream has the potential to exacerbate inflammatory conditions of the skin, including chronic graft versus host disease. Severe local inflammatory reactions of the female external genitalia can lead to severe vulvar swelling. Severe vulvar swelling can lead to urinary retention. A transient increase in lesion counts may be observed during treatment. Response to treatment cannot be adequately assessed until resolution of local skin reactions. Lymphadenopathy occurred in 2% of subjects with actinic keratosis treated with Zyclara Cream, 3.75% and in 3% of subjects treated with Zyclara Cream, 2.5%. Concomitant use of Zyclara and any other imiquimod products, in the same treatment area, should be avoided since they contain the same active ingredient (imiquimod) and may increase the risk for and severity of local skin reactions. Zyclara Cream should be used with caution in patients with pre-existing autoimmune conditions because imiquimod activates immune cells. Patients may experience local skin reactions during treatment with Zyclara Cream. Potential local skin reactions include erythema, edema, erosions/ulcerations, weeping/exudate, flaking/scaling/dryness, and scabbing/crusting.

Maxair(R) Autohaler(R):

Maxair Autohaler is contraindicated in patients with a history of hypersensitivity to pirbuterol or any of its ingredients. WARNINGS. Cardiovascular: Maxair Autohaler, like other inhaled beta adrenergic agonists, can produce a clinically significant cardiovascular effect in some patients, as measured by pulse rate, blood pressure and/or symptoms. Paradoxical Bronchospasm: Maxair Autohaler can produce paradoxical bronchospasm, which can be life threatening. If paradoxical bronchospasm occurs, Maxair Autohaler should be discontinued immediately and alternative therapy instituted. Use of Anti-Inflammatory Agents: The use of beta adrenergic agonist bronchodilators alone may not be adequate to control asthma in many patients. Deterioration of Asthma: Asthma may deteriorate acutely over a period of hours or chronically over several days or longer. Drug Interactions: Other short-acting beta adrenergic aerosol bronchodilators should not be used concomitantly with Maxair Autohaler because they may have additive effects. Monoamine Oxidase Inhibitors or Tricyclic Antidepressants: Pirbuterol should be administered with extreme caution to patients being treated with monoamine oxidase inhibitors or tricyclic antidepressants, or within 2 weeks of discontinuation of such agents, because the action of pirbuterol on the vascular system may be potentiated. Beta Blockers: Beta adrenergic receptor blocking agents not only block the pulmonary effect of beta-agonists, such as Maxair Autohaler, but may produce severe bronchospasm in asthmatic patients. Diuretics: The ECG changes and/or hypokalemia that may result from the administration of nonpotassium sparing diuretics (such as loop or thiazide diuretics) can be acutely worsened by betaagonists, especially when the recommended dose of the beta-agonist is exceeded. Labor and Delivery: Because of the potential for beta-agonist interference with uterine contractility, use of Maxair Autohaler for relief of bronchospasm during labor should be restricted to those patients in whom the benefits clearly outweigh the risk. Nursing Mothers: It is not known whether pirbuterol is excreted in human milk. Therefore, Maxair Autohaler should be used during nursing only if the potential benefit justifies the possible risk to the newborn. Pediatric Use: Maxair Autohaler is not recommended for patients under the age of 12 years because of insufficient clinical data to establish safety and effectiveness. The following were the adverse reactions reported more frequently than 1 in 100 patients: CNS: nervousness (6.9%), tremor (6.0%), headache (2.0%), dizziness (1.2%). Cardiovascular: palpitations (1.7%), tachycardia (1.2%). Respiratory: cough (1.2%). Gastrointestinal: nausea (1.7%). The following adverse reactions occurred less frequently than 1 in 100 patients and there may be a causal relationship with pirbuterol: CNS: depression, anxiety, confusion, insomnia, weakness, hyperkinesia, syncope. Cardiovascular: hypotension, skipped beats, chest pain. Gastrointestinal: dry mouth, glossitis, abdominal pain/cramps, anorexia, diarrhea, stomatitis, nausea and vomiting. Ear, Nose and Throat: smell/taste changes, sore throat. Dermatological: rash, pruritus. Other: numbness in extremities, alopecia, bruising, fatigue, edema, weight gain, flushing.

Estrasorb(R):

BOXED WARNINGS:

ESTROGENS INCREASE THE RISK OF ENDOMETRIAL CANCER

Close clinical surveillance of all women taking estrogen is important. Adequate diagnostic measures, including endometrial sampling when indicated, should be undertaken to rule out malignancy in all cases of undiagnosed persistent or recurring abnormal vaginal bleeding. There is no evidence that the use of "natural" estrogens results in a different endometrial risk profile than synthetic estrogens at equivalent estrogenic doses.

CARDIOVASCULAR AND OTHER RISKS

Estrogens with or without progestins should not be used for the prevention of cardiovascular disease. The Women's Health Initiative (WHI) study reported increased risks of myocardial infarction, stroke, invasive breast cancer, pulmonary emboli, and deep vein thrombosis in postmenopausal women during 5 years of treatment with conjugated equine estrogens (CE 0.625 mg) combined with medroxyprogesterone acetate (MPA 2.5 mg) relative to placebo. Other doses of conjugated estrogens and medroxyprogesterone acetate, and other combinations of estrogens and progestins were not studies in the WHI and, in the absence of comparable data, these risks should be assumed to be similar. Because of these risks, estrogens with or without progestins should be prescribed at the lowest effective doses and for the shortest duration consistent with treatment goals and risks for the individual woman.

CONTRAINDICATIONS

Estrogens should not be used in women with any of the following conditions: 1. Undiagnosed abnormal genital bleeding. 2. Known, suspected, or history of cancer of the breast except in appropriately selected patients being treated for metastatic disease. 3. Known or suspected estrogen-dependent neoplasia. 4. Active deep vein thrombosis, pulmonary embolism or history of these conditions. 5. Active or recent (e.g., within the past year) arterial thromboembolic disease (e.g., stroke, myocardial infarction). 6. Liver dysfunction or disease. 7. Estrasorb should not be used in patients with known hypersensitivity to its ingredients. 8. Known or suspected pregnancy. There is no indication for Estrasorb in pregnancy. There appears to be little or no increased risk of birth defects in women who have used estrogens and progestins from oral contraceptives inadvertently during early pregnancy.

WARNINGS

See BOXED WARNINGS.

The use of unopposed estrogens in women who have a uterus is associated with an increased risk of endometrial cancer. 1. Cardiovascular disorders. Estrogen and estrogen/progestin therapy have been associated with an increased risk of cardiovascular events such as myocardial infarction and stroke, as well as venous thrombosis and pulmonary embolism (venous thromboembolism or VTE). Should any of these occur or be suspected, estrogens should be discontinued immediately. Risk factors for arterial vascular disease (e.g., hypertension, diabetes mellitus, tobacco use, hypercholesterolemia, and obesity) and/or venous thromboembolism (e.g., personal history or family history of VTE, obesity, and systemic lupus erythematosus) should be managed appropriately. a. Coronary heart disease and stroke. In the Women's Health Initiative (WHI) study, an increase in the number of myocardial infarctions and strokes has been observed in women receiving CE compared to placebo. These observations are preliminary, and the study is continuing. In the CE/MPA substudy of WHI an increased risk of coronary heart disease (CHD) events (defined as non-fatal myocardial infarction and CHD death) was observed in women receiving CE/MPA compared to women receiving placebo (37 vs 30 per 10,000 person-years). The increase in risk was observed after the first year and persisted. In the same substudy of WHI, an increased risk of stroke was observed in women receiving CE/MPA compared to women receiving placebo (29 vs 21 per 10,000 person-years). The increase in risk was observed after the first year and persisted. In postmenopausal women with documented heart disease (n = 2,763, average age 66.7 years) a controlled clinical trial of secondary prevention of cardiovascular disease (Heart and Estrogen/Progestin Replacement Study; HERS) treatment with CE/MPA (0.625 mg/2.5 mg per day) demonstrated no cardiovascular benefit. During an average follow-up of 4.1 years, treatment with CE/MPA did not reduce the overall rate of CHD events in postmenopausal women with established coronary heart disease. There were more CHD events in the CE/MPA-treated group than in the placebo group in year 1, but not during the subsequent years. Two thousand three hundred and twenty one women from the original HERS trial agreed to participate in an open label extension of HERS. Average follow-up in HERS was an additional 2.7 years, for a total of 6.8 years overall. Rates of CHD events were comparable among women in the CE/MPA group and the placebo group in HERS, and overall. Large doses of estrogen (5 mg conjugated estrogens per day), comparable to those used to treat cancer of the prostate and breast, have been shown in a large prospective clinical trial in men to increase the risks of nonfatal myocardial infarction, pulmonary embolism, and thrombophlebitis. b. Venous thromboembolism (VTE). In the Women's Health Initiative (WHI) study, an increase in VTE has been observed in women receiving CE compared to placebo. These observations are preliminary, and the study is continuing. In the CE/MPA substudy of WHI, a 2-fold greater rate of VTE, including deep venous thrombosis and pulmonary embolism, was observed in women receiving CE/MPA compared to women receiving placebo. The rate of VTE was 34 per 10,000 person-years in the CE/MPA group compared to 16 per 10,000 person-years in the placebo group. The increase in VTE risk was observed during the first year and persisted. If feasible, estrogens should be discontinued at least 4 to 6 weeks before surgery of the type associated with an increased risk of thromboembolism, or during periods of prolonged immobilization. 2. Malignant neoplasms. a. Endometrial cancer. The use of unopposed estrogens in women with intact uteri has been associated with an increased risk of endometrial cancer. The reported endometrial cancer risk among unopposed estrogen users is about 2- to 12-fold greater than in nonusers, and appears dependent on duration of treatment and on estrogen dose. Most studies show no significant increased risk associated with the use of estrogens for less than 1 year. The greatest risk appears associated with prolonged use, with increased risks of 15- to 24-fold for use over 5 to 10 years or more, and this risk has been shown to persist at least 8 to 15 years after estrogen therapy is discontinued. Clinical surveillance of all women taking estrogen/progestin combinations is important. Adequate diagnostic measures, including endometrial sampling when indicated, should be undertaken to rule out malignancy in all cases of undiagnosed persistent or recurring abnormal vaginal bleeding. There is no evidence that the use of natural estrogens results in a different endometrial risk profile than synthetic estrogens of equivalent estrogen dose. Adding a progestin to postmenopausal estrogen therapy has been shown to reduce the risk of endometrial hyperplasia, which may be a precursor to endometrial cancer. b. Breast cancer. Estrogen and estrogen/progestin therapy in postmenopausal women has been associated with an increased risk of breast cancer. In the CE/MPA substudy of the Women's Health Initiative (WHI) study, a 26% increase in invasive breast cancer (38 vs 30 per 10,000 person-years) after an average of 5.2 years of treatment was observed in women receiving CE/MPA compared to women receiving placebo. The increased risk of breast cancer became apparent after 4 years of treatment with CE/MPA. The women reporting prior postmenopausal use of estrogens and/or estrogens with progestin had a higher relative risk for breast cancer associated with CE/MPA than those who had never used these hormones. In the WHI, no increased risk of breast cancer in CE-treated women compared to placebo was reported after an average of 5.2 years of therapy. These data are preliminary and that substudy of WHI is continuing. Epidemiologic studies have reported an increased risk of breast cancer in association with increasing duration of postmenopausal treatment with estrogens with or without a progestin. This association was reanalyzed in original data from 51 studies that involved various doses and types of estrogens, with and without progestin. In the reanalysis, an increased risk of having breast cancer diagnosed became apparent after about 5 years of continuous treatment and subsided after treatment had been discontinued for 5 years or longer. Some later studies have suggested that postmenopausal treatment with estrogens and progestin increases the risk of breast cancer more than treatment with estrogen alone. 3. Gallbladder disease. A 2- to 4-fold increase in the risk of gallbladder disease requiring surgery in postmenopausal women receiving estrogens has been reported. 4. Hypercalcemia. Estrogen administration may lead to severe hypercalcemia in patients with breast cancer and bone metastases. If hypercalcemia occurs, the drug should be stopped and appropriate measures taken to reduce the serum calcium level. 5. Visual abnormalities. Retinal vascular thrombosis has been reported in patients receiving estrogens. Discontinue medication pending examination if there is sudden partial or complete loss of vision, or a sudden onset of proptosis, diplopia, or migraine. If examination reveals papilledema or retinal vascular lesions, estrogens should be discontinued.

The following adverse reactions have been reported with estrogen therapy: 1. Genitourinary system. Changes in vaginal bleeding pattern and abnormal withdrawal bleeding or flow; breakthrough bleeding, spotting; increase in size of uterine leiomyomata; vaginal candidiasis; change in amount of cervical secretion; changes in cervical ectropion; ovarian cancer, endometrial hyperplasia; endometrial cancer. 2. Breasts. Tenderness, enlargement, pain, nipple discharge, galactorrhea; fibrocystic breast changes; breast cancer. 3. Cardiovascular. Deep and superficial venous thrombosis; pulmonary embolism; thrombophlebitis; myocardial infarction; stroke; increase in blood pressure. 4. Gastrointestinal. Nausea, vomiting; abdominal cramps, bloating; cholestatic jaundice; increased incidence of gall bladder disease; pancreatitis. 5. Skin. Chloasma or melasma that may persist when drug is discontinued; erythema multiforme; erythema nodosum; hemorrhagic eruption; loss of scalp hair; hirsutism; pruritis, rash. 6. Eyes. Retinal vascular thrombosis, steepening of corneal curvature, intolerance to contact lenses. 7. Central Nervous System. Headache, migraine, dizziness; mental depression; chorea; nervousness; mood disturbance; anxiety; irritability; insomnia; somnolence; exacerbation of epilepsy. 8. Miscellaneous. Increase or decrease in weight; reduced carbohydrate tolerance; aggravation of porphyria; edema; arthralgia; leg cramps; changes in libido; anaphylactoid/anaphylactic reactions; hypocalcemia; exacerbation of asthma; increased triglycerides.

MetroGel-Vaginal(R):

MetroGel-Vaginal is contraindicated in patients with a prior history of hypersensitivity to metronidazole, parabens, other ingredients of the formulation, or other nitroimidazole derivatives. WARNINGS: Convulsive Seizures and Peripheral Neuropathy: Convulsive seizures and peripheral neuropathy, the latter characterized mainly by numbness or paresthesia of an extremity, have been reported in patients treated with oral or intravenous metronidazole. Psychotic Reactions: Psychotic reactions have been reported in alcoholic patients who were using oral metronidazole and disulfiram concurrently. Metronidazole vaginal gel should not be administered to patients who have taken disulfiram within the last two weeks. PRECAUTIONS: MetroGel-Vaginal affords minimal peak serum levels and systemic exposure (AUCs) of metronidazole compared to 500mg oral metronidazole dosing. Although these lower levels of exposure are less likely to produce the common reactions seen with oral metronidazole, the possibility of these and other reactions cannot be excluded presently. General: Patients with severe hepatic disease metabolize metronidazole slowly. This results in the accumulation of metronidazole and its metabolites in the plasma. Accordingly, for such patients, metronidazole vaginal gel should be administered cautiously. Known or previously unrecognized vaginal candidiasis may present more prominent symptoms during therapy with metronidazole vaginal gel. Approximately 6-10%of patients treated with MetroGel-Vaginal developed symptomatic Candida vaginitis during or immediately after therapy. Disulfiram-like reaction to alcohol has been reported with oral metronidazole, thus the possibility of such a reaction occurring while on metronidazole vaginal gel therapy cannot be excluded.

Metronidazole has shown evidence of carcinogenic activity in a number of studies involving chronic oral administration in mice and rats. Adverse events reported with the use of MetroGel Vaginal include: Reproductive: Vaginal discharge (12%), Symptomatic Candida cervicitis/vaginitis (10%), Vulva/vaginal irritative symptoms (9%), Pelvic discomfort (3%). Gastrointestinal: Gastrointestinal discomfort (7%), Nausea and/or vomiting (4%), Unusual taste (2%), Diarrhea/loose stools (1%), Decreased appetite (1%), Abdominal bloating/gas; thirsty, drymouth. Neurologic: Headache (5%), Dizziness (2%), Depression. Dermatologic: Generalized itching or rash. Other: Unspecified cramping (1%), Fatigue, Darkened urine.

NOTE: Full prescribing information for any Medicis prescription product is available by contacting the Company or by visiting www.Medicis.com. All trademarks are the property of their respective owners.

1 IMS Health NPA MAT 9/11

Contact:

MedicisKara Stancell (media)(480) 291-5454Sean Andrews (investors)(480) 291-5854


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