Valeant bid for Medicis clouded by Solodyn sales

An uncertain sales outlook for acne treatment Solodyn is raising early questions about the $2.6 billion purchase price Valeant Pharmaceuticals International Inc. VRX +0.91% agreed to pay for Medicis Pharmaceutical Corp. MRX -0.16% , the latest and biggest in a string of deals the Canadian company has clinched as part of its unorthodox deals-based growth strategy. 

Montreal-based Valeant announced the Medicis pact Sept. 3, cementing its leadership position in America's fast-growing dermatology-pharmaceuticals business. Since 2010, Valeant has snapped up more than a dozen drug firms, betting it can grow revenue more quickly through deals than with research and development--long the preferred route to growth among Big Pharma. Excluding Medicis, Valeant ranks as the world's 39th-largest pharmaceutical company by revenue, coming from relative obscurity just a few years ago. 

In the latest example of this strategy, Valeant Monday agreed to buy eye treatment Visudyne from Vancouver-based QLT Inc. (QLTI) for an upfront payment of $112.5 million, providing its ophthalmology sales force with another product to help boost revenue. 

The U.S. dermatology-aesthetics industry generates annual sales of about $12 billion, and Valeant would become the largest dermatological player, with annual sales of over $2.5 billion, when the Medicis deal closes, expected in the first half of next year. Medicis, Scottsdale, Ariz., is currently the U.S. industry leader in that market--which includes everything from anti-aging creams to acne treatments. Valeant is currently ranked third, measured by 2011 sales. 

Valeant's share price initially soared close to 15% on the Medicis deal. Analysts said they expect costs savings and a big earnings boost from merging the two businesses. More recently, however, the stock has fallen back amid worry that sales of Medicis's blockbuster drug, Solodyn, may be declining faster than expected. 

The stock was recently at $56.20 in New York, still up 9.6% from the day before the deal was announced. 

Solodyn generates about 40% of Medicis's annual sales, analysts say. Morgan Stanley & Co. estimates the treatment accounts for around 75% of the company's earnings per share. A Medicis representative declined comment. Valeant Chief Executive Michael Pearson, in an interview, said he agreed with the 40% revenue estimate, but declined comment on the profit projection. 

Some analysts are taking issue with the drug's growth prospects, amid signs of flagging sales. Solodyn prescriptions in the U.S. fell 44% during the last week of August from a year earlier, according to data from IMS Health, a healthcare information company. In the first two months of the third quarter, Solodyn prescriptions fell 24% from the first two months of the second quarter, according to Piper Jaffray & Co., based on IMS data. 

On Sept. 14, Morgan Stanley downgraded Valeant to equal weight from overweight, "concerned about Solodyn's growth outlook." 

Valeant, along with some bullish analysts, said declines in Solodyn prescriptions aren't as steep as they appear, because IMS data exclude prescriptions from Wal-Mart Stores Inc. (WMT) and pharmacy mail-order services. 

"We don't have a concern" about the prescription data, Mr. Pearson said. He said since Medicis is still its own company, he can't comment further on the numbers. 

Medicis has been trying to make Solodyn accessible to more patients with insurance coverage by offering rebates and discounted pricing. But those efforts have led to losses on a portion of Solodyn prescriptions. In March, Medicis introduced an "Alternate Fulfillment" plan to redirect unprofitable Solodyn prescriptions through a mail-order pharmacy service to reduce losses on prescriptions. 

The success of that program is still unclear. Morgan Stanley, based on talks with one physician in the Southeast U.S., said it appeared at least some pharmacies, perhaps to guard against customer loss, are "reluctant" to support this initiative. 

"Apparent lack of cooperation from retail pharmacies appears to be the weak link in the AF initiative," Morgan Stanley said. 

Mr. Pearson said Morgan Stanley's sample size is too small to identify a trend. "I don't call that market research," he said. 

Valeant's due diligence shows some doctors aren't as comfortable as others using the AF plan, but a higher percentage are "quite comfortable" with the initiative, he added, declining to be more specific.

Valeant Pharma to buy University Medical's OTC brand AcneFree and certain assets for $64 mn

Valeant Pharmaceuticals International, Inc.,a multinational specialty pharmaceutical company, has agreed to acquire certain assets from University Medical Pharmaceuticals Corp., a specialty pharmaceutical company focused on skincare products, for approximately $64 million plus potential milestones based upon attainment of future revenue targets. University Medical's main brand is AcneFree, a leading retail over-the-counter (OTC) acne treatment.

Total revenue in 2011 from the acquired assets was approximately $32 million. The transaction is expected to close by mid-year, subject to certain closing conditions including expiration of requisite regulatory waiting periods, and is expected to be immediately accretive.

“The addition of a leading OTC acne treatment will provide us with the ability to expand our OTC business,” stated J Michael Pearson, chairman and chief executive officer. “We believe that we can build upon our success with CeraVe in the retail channel through increased offerings to consumers. These new products will be immediately accretive to our operations and have not been factored into our 2012 financial guidance.”

Valeant Pharmaceuticals International, Inc. is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics.

Valeant Pharmaceuticals Agrees to Acquire Certain Assets from Atlantis Pharma in Mexico

Valeant Pharmaceuticals International, Inc. announced today that Valeant has signed an agreement to acquire certain assets from Atlantis Pharma, a branded generics pharmaceutical company located in Mexico with a broad product portfolio, including products in the gastro, analgesics and anti-inflammatory therapeutic categories, for approximately $71 million. 

The acquired assets' total revenue in 2011 was approximately $26 million and is expected to deliver double digit growth in 2012. The transaction is expected to close in the second quarter, subject to certain closing conditions including regulatory approvals, and is expected to be immediately accretive. 

"Atlantis Pharma's well-known brands in Mexico, and the potential to expand our export business to Central America and the Andean region, make this a strong addition to our current operations in Mexico," stated J. Michael Pearson, chairman and chief executive officer. "The ability to combine these assets with our existing operations in Mexico should provide distinct commercial synergies for our overall business."

Valeant Pharmaceuticals (VRX) Downgraded by Piper Jaffray (PJC)

Valeant Pharmaceuticals (NYSE: VRX) was downgraded by investment analysts at Piper Jaffray (NYSE: PJC) from an “overweight” rating to a “neutral” rating in a note issued to investors on Thursday.Separately, analysts at Morgan Stanley (NYSE: MS) upgraded shares of Valeant Pharmaceuticals from an “equal weight” rating to an “overweight” rating in a research note to investors on Tuesday, January 10th. Analysts at Jefferies Group (NYSE: JEF) reiterated a “buy” rating on shares of Valeant Pharmaceuticals in a research note to investors on Monday, January 9th. Also, analysts at Wells Fargo & Co. (NYSE: WFC) reiterated a “market perform” rating on shares of Valeant Pharmaceuticals in a research note to investors on Thursday, December 22nd.Valeant Pharmaceuticals International Inc., formerly Biovail Corporation, is a specialty pharmaceutical company. The Company focuses on developing and commercializing products in specialty central nervous system (CNS) disorders. As of December 31, 2009, the Company’s products within its development pipeline included Staccato loxapine, Pimavanserin, BVF-018, Fipamezole and GDNF. In May 2009, the Company acquired the United States commercialization rights to Wellbutrin XL from The GlaxoSmithKline Group of Companies (GSK). In June 2009, it acquired the worldwide development and commercialization rights to the entire portfolio of tetrabenazine products, including Xenazine and Nitoman, held by Cambridge Laboratories (Ireland) Ltd. (Cambridge).Valeant Pharmaceuticals opened at 50.72 on Thursday. Valeant Pharmaceuticals has a 52-week low of $32.05 and a 52-week high of $57.24. The stock has a 50-day moving average of $47.52 and a 200-day moving average of $43.95. The company has a market cap of $15.617 billion and a price-to-earnings ratio of 216.75.

VALEANT PHARMACEUTICALS INTERNATIONAL UP 14.3% SINCE SMARTREND UPTREND CALL (VRX)

SmarTrend identified an Uptrend for Valeant Pharmaceuticals International (NYSE:VRX - Snapshot Report) on October 25th, 2011 at $38.27. In approximately 1 month, Valeant Pharmaceuticals International has returned 14.29% as of today's recent price of $43.74.Over the past year, Valeant Pharmaceuticals International has traded in a range of $25.10 to $57.24 and is now at $43.74, 74% above that low. In the last five trading sessions, the 50-day moving average (MA) has climbed 0.4% while the 200-day MA has remained constant.Valeant Pharmaceuticals International is a research-based, specialty pharmaceutical company that markets its products worldwide. The Company discovers, develops, manufactures, and markets a range of pharmaceutical products, focusing on products in the areas of infectious disease, neurology, and dermatology.SmarTrend will continue to scan these moving averages and a number of other proprietary indicators for any shifts in the trajectory of Valeant Pharmaceuticals International shares.Log in and add Valeant Pharmaceuticals International (VRX) to your watchlist today so you can receive a real-time alert when the shares are about to change trend.

Valeant Pharmaceuticals Agrees To Acquire iNova

Valeant Pharmaceuticals International, Inc. (NYSE: VRX and TSX: VRX) announced today that it has signed an agreement to acquire iNova, a private pharmaceutical group which sells and distributes a range of prescription and over-the-counter (OTC) products in Australia, New Zealand, Southeast Asia and South Africa from Archer Capital, Ironbridge and other minority management shareholders. iNova owns, develops and markets a diversified portfolio of well established and innovative prescription and OTC pharmaceutical products in the Asia Pacific region and South Africa, including leading therapeutic weight management brands such as Duromine, as well as leading OTC brands in the cold and cough area, such as Difflam and Duro Tuss.Valeant will pay iNova shareholders A$625 million upfront and up to an additional A$75 million in potential milestones based on the success of pipeline activities, product registrations and overall revenue. iNova's total 2011 revenues are expected to be approximately A$200 million and has an operating margin of approximately 40%. Revenues have grown at a rate of approximately 10% per annum over the last four years. The transaction is subject to certain closing conditions and post-closing adjustments, and is expected to be immediately accretive."This transaction not only transforms our operations in the Australian market, but provides us with a beachhead in both Southeast Asia and South Africa," stated J. Michael Pearson, chairman and chief executive officer. "iNova has a talented management team that has created a strong business operation ahead of an intended initial public offering and with the current market softness, Valeant has a unique opportunity to acquire iNova and integrate our Australian operations into the broader iNova Asia Pacific business."

Valeant Pharmaceuticals Files a Notice of Intention to Make a Normal Course Issuer Bid

Valeant Pharmaceuticals International, Inc. (the "Company" or "Valeant") announced today that it has filed a Notice of Intention to make a normal course issuer bid with The Toronto Stock Exchange (the "TSX") and that the TSX has accepted the Notice of Intention. Under the bid, the Company will have the right to purchase for cancellation, commencingAugust 25, 2011, 1,000,000 of its Common Shares (representing approximately 0.33% of Valeant's Common Shares issued and outstanding as of the date hereof) through the facilities of the TSX, or such other means as may be permitted by the TSX. The Company may, at certain times, purchase its Common Shares if it believes that the market price of its Common Shares is attractive and that the purchase would be in the best interest of the Company and an appropriate use of corporate funds in light of potential benefits to remaining shareholders. The Company currently has approximately 299,587,764 Common Shares outstanding, and its average trading volume on the TSX for the six months prior to the date hereof is 462,572. For purposes of the TSX rules, a maximum of 115,643 common shares may be purchased by the Company on any one day under the bid, except where purchases are made in accordance with the "block purchase exception" of the TSX rules.
The normal course issuer bid is part of the Company's previously announced Securities Repurchase Program, pursuant to which the Company's Board of Directors has approved the purchase of up to 16 million Common Shares (representing approximately 10% of the Company's public float at the date of the announcement of the Securities Repurchase Program), 15 million of which have been approved for repurchase through the facilities of the NYSE (representing approximately 5% of Valeant's issued and outstanding common shares as of the date of the announcement of the Securities Repurchase Program). The Company currently intends to purchase the remaining one million common shares through the facilities of the TSX under this normal course issuer bid. The Securities Repurchase Program will terminate on November 7, 2011 or at such time as Valeant completes its purchases. The normal course issuer bid will remain in effect until the earliest of November 7, 2011, the termination of the bid by the Company, or until the Company has purchased the maximum number of shares permitted under the bid. To date, the Company has purchased 14,969,599 Common Shares through the facilities of the New York Stock Exchange at a volume weighted average purchase price of U.S.$39.46 per share.