Medicis Sells LipoSonix Business - Analyst Blog
September 14 2011 - 12:17PM
Zacks
Medicis Pharmaceutical Corp. (MRX) recently
announced to have entered into a ‘Stock Purchase Agreement’ with
Solta Medical, Inc. (SLTM), under which the latter
will acquire all the outstanding shares of Medicis Technologies
Corporation (formerly LipoSonix, Inc.), a subsidiary of Medicis
Pharma. The deal is expected to close in the fourth quarter of
2011.
According to the agreement, Solta will make a payment of $15
million to Medicis Pharma following the closure of the deal.
Additionally, Solta will pay up to $20 million to Medicis Pharma on
the achievement of certain regulatory milestones.
Medicis Pharma is also entitled to receive payments based on the
future performance of the LipoSonix technologies. Solta's
obligation to make these additional future payments expires after
about 7 years.
We note that the LipoSonix system is currently marketed in
Canada, the European Union and Japan, for non-invasive waist
circumference reduction, and was approved by the US Food and Drug
Administration (FDA) last week, for the said use.
The divestment of Medicis Technologies Corporation was an
expected move, as Medicis Pharma had already announced its plans of
exploring strategic alternatives for the LipoSonix business in
February 2011. The company classified the LipoSonix business as a
discontinued operation while reporting first quarter 2011 results.
Until Solta assumes responsibility, Medicis Pharma will continue
catering to the existing worldwide customers of LipoSonix.
Our Take
We currently have a Neutral recommendation on Medicis Pharma.
The stock carries a Zacks #3 Rank (Hold rating) in the short-run.
We view this divestment as a positive for the company, as the
LipoSonix business is a stand-alone business, and now with its
sale, Medicis Pharma can focus on its medical dermatology and
facial aesthetics products.
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