Medicis Pharmaceutical Corp. (MRX) posted second quarter 2010 earnings of 56 cents per share, beating the Zacks Consensus Estimate of 49 cents and 42.6% above the previous year earnings of 39 cents. Higher revenues accounted for the increased earnings.
Revenues
Quarterly revenues increased 23.2% year over year to $174 million, beating the Zacks Consensus Estimate of $170 million. Increased sales of Solodyn, Ziana, Restylane and Dysport helped boost revenues.
Medicis Pharma’s acne product sales amounted to $124.8 million during the second quarter, reflecting an increase of 32.5% from the year-ago quarter. Strong demand for Solodyn, Triaz and Ziana, the main products of the acne group, resulted in higher sales for this segment.
Non-acne product sales came in at $14.0 million, up 10.6% year over year, primarily due to increased sales of Dysport, Vanos and Restylane. The non-acne group consists mainly of Dysport, Perlane, Restylane and Vanos.
Revenues from other non-dermatological products declined 17.0% during the quarter to $8.3 million. Reduced contract revenue and sales of Buphenyl led to the decline. This group primarily comprises Ammonul, Buphenyl and Liposonix and contract revenue.
Other Details
Medicis Pharma’s second-quarter gross margin declined 20 basis points to 90.5%. Research and development (R&D) expenses were $10.5 million, compared with $12.1 million in the second quarter of 2009. An upfront payment to a partner during the prior-year quarter accounted for the year-over-year decline in expenses.
Selling, general and administrative (SG&A) expenses went up 12.8% to $80.9 million from $71.7 million in second-quarter 2009. SG&A expenses increased due to higher variable costs, as a percentage of total revenues, in the reported quarter.
Outlook
For fiscal 2010, Medicis Pharma expects earnings to lie in the range from $2.21 to $2.30 per share on revenues of $695 million to $705 million. The current Zacks Consensus Estimate for fiscal year 2010 is $2.26 per share.
Medicis Pharma has also provided guidance for earnings and revenues for the third quarter of 2010. The company expects earnings to be between $0.54 and $0.58 per share, and revenues to come in between $175 million and $180 million. The third quarter Zacks Consensus Estimate is 57 cents per share.
Our Take
Our current Zacks #2 Rank (Buy) on Medicis Pharma is based on strong second-quarter results, continued uptake of Dysport and the issuance of a second notice of allowance from the US Patent and Trademark Office for method of treatment for Solodyn’s acne patent. Medicis Pharma anticipates this patent to be issued in the near future, thereby strengthening Solodyn’s intellectual property.
However, longer term, we have a Neutral recommendation on Medicis Pharma, given the risk of generic competition for the company’s flagship product Solodyn in 2011, competitive threats for Dysport from Allergan Inc.’s (AGN) Botox and the lack of pipeline visibility.
ALLERGAN INC (AGN): Free Stock Analysis Report
MEDICIS PHARM-A (MRX): Free Stock Analysis Report
Zacks Investment Research
