Medicis Pharmaceutical Corporation Q1 2008 Earnings Call Transcript

May.30.08 | About: Valeant Pharmaceuticals (VRX)

Medicis Pharmaceutical Corporation (MRX) Q1 2008 Earnings Call Transcript May 8, 2008 5:15 PM ET

Executives

Jonah Shacknai – Chairman and CEO

Mark Prygocki – EVP and COO

Ric Peterson – EVP, CFO and Treasurer

Analysts

James Kelly – Goldman Sachs

Edmund Kim – JPMorgan

Gary Nachman – Leerink Swann & Co.

Lei Huang – Summer Street Research Partners

Hudson Boyer – Wachovia Capital Markets

Greg Fraser – Merrill Lynch

Tim Chiang – FTN Midwest Securities

Enrique Iribarne – Roth Capital Partners

Operator

Thank you for calling the Medicis first quarter 2008 financial results conference call. Today's call is being recorded and is being webcast live on the company's Web site at www.medicis.com. I would like to remind you that all discussions today include forward-looking statements. These statements are based on current assumptions made by Medicis. Based on historical trends, current conditions, expected future developments and other factors it believes appropriate today.

Factors may cause actual results to differ materially from those projected in forward-looking statements. You can find a discussion of these factors and more information about Medicis in Medicis' filings with the Securities and Exchange Commission. The assumptions underlying the forward-looking statements can change and Medicis disclaims any obligation to update those statements.

At this time I would like to turn the call over to the Chairman and Chief Executive Officer of Medicis, Mr. Jonah Shacknai. Please go ahead, sir.

Jonah Shacknai

Thank you very much, and welcome to the first quarter 2008 financial results. As was noted this call is being webcast live on our corporate Web site, www.medicis.com, and it will be in the Investor Relations section available for two business days following this call. For our first-quarter financial highlights references to non-GAAP figures in this webcast are reconciled to GAAP figures as noted in today's press release, which can also be found at www.medicis.com.

Medicis reported revenue for the first quarter of 2008 of approximately $131.3 million. This I note was within the guidance range and gross profit margins of approximately 91.5%, a bit of wishful thinking there, so 91.5%.

Total revenue increased approximately 38% year over year, primarily due to the strength of SOLODYN. Non-GAAP earnings per share for the first quarter of 2008 was $0.38 per diluted share, an increase of 146% as compared to the same quarter in the previous year. This compares favorably to the previously published non-GAAP EPS guidance of $0.32 to $0.35 per diluted share for the first quarter of 2008.

The company reported approximately $33.1 million in cash flow from operations, 28% increase over first quarter of 2007. Total cash, cash equivalents and short and long-term investments were $842 million as of March 31, 2008.

Highlights in terms of brand performance for the first quarter starting with Restylane, we are celebrating our one-year anniversary of Perlane's FDA approval, and we are very excited about this, we'll send ourselves a little cake. Perlane now presents represents approximately 35% of total Restylane product sales. I think most of you know that when we launched Perlane, we believed that it would reach 40% or more of total franchise sales in the category, and certainly we are well on our way at our one-year anniversary at 35%.

In a survey of nearly 5000 patients in our Restylane rewards database, which is obviously vastly larger, we found that 93% of those responding are likely to recommend Restylane to a friend, 92% are satisfied with the results of their Restylane treatments, so very encouraging news. And also the American Society for Aesthetic Plastic Surgery or ASAPS, which just concluded its annual meeting on Tuesday of this week published its data for 2007, noting that hyaluronic acid procedures where we are the dominant player still ranked number two in the top five nonsurgical cosmetic procedures in 2007.

So, now withstanding any economic considerations, the procedure itself Restylane and Perlane injections remains very much of interest to consumers, still the secondly most commonly performed procedure of this type. And we are obviously very excited that when the economy rebounds that we are going to be in an excellent position to see significant growth in this franchise.

Our focus today continues to be on market expansion, and we, of course, on the air waves with a very aggressive direct-to-consumer campaign. So again, we have a contracting economy, but we remain steadfast in our belief that there are many, many consumers that would benefit from Restylane and Perlane treatments, who are not yet in the market and not withstanding the economic conditions can afford to be in that market. So we still see many prospects for expansion.

If we move to SOLODYN, we continue here to maintain our strong leadership position among dermatologists in the branded oral antibiotic market for acne. We had 28% total prescription growth in quarter 2008 from the corresponding quarter in 2007, 174,000 prescriptions versus 136,000, and we saw greater than 4% total prescription growth quarter over sequential quarter, so the last quarter of '07 to the first quarter of '08, 174 prescriptions versus 167 prescriptions. It's important to note that there was 4% price increase in quarter two of this year, so that was not included in the first quarter numbers.

With ZIANA, ZIANA's clinical data has been discussed recently; the number of continuing medical education programs involving our physician and healthcare provider customers. These have included scientific roundtables, a number of podium discussions and a number of publications have occurred and are forthcoming. So, we continue to feel very, very good about the brand and its prospects, believing that it has a very strong position in the clinical management of acne, and we look forward in the quarters ahead to speaking a lot more about the attributes of ZIANA based on new data and other information. There was a 6% increase in ZIANA in quarter-one, and an additional 3% price increase in quarter two.

With Reloxin, upon the acceptance of filing the FDA is expected to provide us with a ten-month review date which would have begun in mid-March 2008. I now look forward to participating in a very important meeting to be taking place June 12 to 15 in Baveno, Lake Maggiore, Italy called Toxins 2008. This is a very important meeting. All the world figures in neurotoxin use will be present, and of course, a number of clinicians from the United States and other markets. And I think this open invitation format provides an excellent opportunity for shareholders and physicians to learn a lot more about the reality of toxins.

They would have an opportunity to hear some of the stories that are around, to hear those stories debunked with very sound, credible scientific evidence, and I think to gain a very interesting perspective on the world market scientifically and commercially. So, a very important meeting, and while we can't arrange for anyone to attend, certainly it would be a worthwhile undertaking for interested shareholders.

I also note that the committee has signed inventory management agreements or so called IMAs with its two largest customers, McKesson and Cardinal Health. There were no significant adjustments to inventory levels as a consequence of signing these contracts. They really have formalized a process that had been underway for many years of close communication with our valued wholesale customers, and we've taken that to a level of formality that seems to be the trend in the industry.

We've given 2008 guidance in the press release adjusted only for first quarter actual results. The company expects gross profit expansion to approximately 91%. The company announced $0.04 dividend in March, payable on April 30 to stockholders of record as of the close of business on April one. This represents 33% increase over the previous dividend and is the first dividend increase since September 2004. As always, the company has several important projects under development and is concentrating its business development efforts in enhancing the company's pipeline for 2009 and beyond, and certainly this has been an area of great activity here at Medicis.

In terms of an event calendar, as I mentioned the ASAPS or Aesthetic Society of Plastic Surgery meeting occurred from May 1 to 6 in San Diego. I thought it was a great session, both from a customer interactive standpoint and an educational standpoint, some very important information discussed among plastic surgeons, and I think rather favorably to our product line. In terms of upcoming events, our Annual Meeting of stockholders will take place on May 20 at 9:30 am local time, at the Hyatt Regency Scottsdale, Gainey Ranch, and of course we invite all interested shareholders to attend.

The Aesthetics show, which is an interesting venue, will occur from May to June 1 in Las Vegas, and it's certainly an interesting place to observe what's going on in the industry. The Skin Disease Education Foundation or SDEF cosmetic dermatology seminar will take place June 4 to 8 in Santa Monica, California. The Cosmetic Bootcamp 2008, which is an excellent meeting, will take place June 12 to 15 in Colorado Springs, California. The Facial Cosmetic Surgery meeting, which is a meeting of facial cosmetic surgeons, those that are Board certified in otolaryngology, who have taken special training in facial plastic surgery, will take place June 18 through 22 also in Las Vegas. In the summer, American Academy of Dermatology meeting will take place in Chicago, Illinois June 30 to August 3. We will be well represented at each one of these meetings, and I think they may prove interesting, again, for shareholders wishing to make observations about the market.

We plan to present in two upcoming shareholder conferences, those in the near future. The first is the Citicorp Healthcare Conference taking place on May 21 in New York. My colleague, Joe Cooper will present for the company, and the Goldman Sachs Healthcare Conference, June 13 in Dana Point, California, and I will be presenting on behalf of the company. So, it's an interesting time in the market.

We are obviously very pleased with the scope and focus of our prescription business. Also very pleased with where we are in the market on the aesthetic side of our business, but I think it's impossible to escape the reality that the economic conditions presently in the United States have certainly affected us and our competitors. We remain hopeful of an early economic recovery and feel that because we are doing the important groundwork to poise ourselves for this recovery, it should be very favorable and hopefully will occur on or before the time that we are launching Reloxin. So, we hope to be going to an economy with a better wind at our back with all of our products, and especially those that will be new to market. So, with that said, I would be very happy to turn the call back over to our thoughtful operator, Evan [ph] for questions that shareholders may have.

Question-and-Answer Session

Operator

Thank you, sir. (Operator instructions) Let's begin with James Kelly with Goldman Sachs. Sir, you may proceed.

James Kelly – Goldman Sachs

Great. Thank you very much. I will start with, you did mention on SOLODYN or you did mention in general that we didn't see any stocking; but I was just wondering if there was any important pre-buying ahead of the price increase inside the second quarter for SOLODYN. And also if you would comment on the fact that the tax rate I think came in lower than where the guidance looking for the year. So, any update there or it's a reason why it will trend back up towards the end of the forecast period for the year?

Jonah Shacknai

I am joined by Mark Prygocki, our Chief Operating Officer, Rick Pederson, our Chief Financial Officer, Joe Cooper, our Executive Vice President for Corporate and Research and Development. We actually account for revenue by booking prescriptions, so Mark, perhaps can comment on any buying that may have occurred at the trade level, but that's relatively irrelevant to our revenue calculations.

Mark Prygocki

Jim, this is Mark. We did not experience any purchasing ahead of the price increases. The price increases are unannounced. In fact, the latest one was on April 18 in which we don't announce it to the trade. So, there really isn't pre-buying ahead of those purchases. I'll turn it over to Rick as far as the question regarding the tax rate for the quarter.

Ric Peterson

The tax rate for the quarter is actually 39% actual. If you take out the adjustment that we had for Revance, it actually is 36%. So, slightly lower than we had guided due to a couple of discrete items that happened during the quarter, but we would expect the rest of the year to come back into the normal range that we guided at in that 38% range.

James Kelly – Goldman Sachs

Great. And if I could just have one quick follow up, would you talk a bit to the ZIANA trend, just taking a look at the prescriptions that we saw the product trending down, let's say in the high single digits in the first quarter sequentially? And also there is a continuation of that in the second quarter. What are some of the plans for addressing that and turning that around? Thank you.

Mark Prygocki

ZIANA has been more or less on plan for the company, but I have certainly said in several public foray, that I am personally disappointed with the progress that ZIANA has made in the market. It's a superb product that really has an important place in the acne therapeutic medicine, and our sales force is aware of that. I guess the good news is that in those offices where the product has been accepted, it's been used very widely and has really become foundational therapy in the treatment of acne. So, our mission as we go forward very clearly understood by everyone at Medicis is to in essence rebrand the product in those dermatology offices that have not adopted the product aggressively, and provide them additional information and perspective that's going to help them to change their prescribing habits. So, we don't have a lot of negative information or vibe about the product, but certainly we expect to see it do much better. It has huge potential in terms of what it can achieve when it gets some momentum back, and we are working very aggressively to do that, Jim.

James Kelly – Goldman Sachs

Great. Thank you. I will get back in line.

Mark Prygocki

Sure.

Operator

Your next question comes from the line of Edmund Kim with JPMorgan. Sir, please go ahead.

Edmund Kim – JPMorgan

Thanks for taking the question. With the price increases, would you expect the dollar (inaudible) to go up? Could you just speak to that? Secondly, could you provide more details on your plans for bringing additional reps for the potential Reloxin launch, the incremental increase of the size and when you think you would actually hire the reps?

Mark Prygocki

Ed, this Mark Prygocki. As far as the price increases, we are assuming about an average price per script of about $360 for SOLODYN and about $160 to $170 for ZIANA. I'll turn it over to Jonah for the reps and Reloxin.

Jonah Shacknai

Sure. We do expect a significant expansion of our aesthetic sales force anticipating the launch of Reloxin, and to add further muscle to the Restylane franchise. Likely that ramp up would occur as we approach the third quarter of the year and fourth quarter. We have had a great deal of interest from the pharmaceutical and device representative community. So, already there is the sense that we will be expanding, the word is on the street and the response has been enthusiastic. We've been almost overwhelmed with very, very competitive resumes and from those working in the industry. So, it's going to be a big job to interview as complexly as we do here at Medicis all of those candidates, but we will get them hired. There'll be great representatives joining our already terrific sales force in aesthetics and dermatology. So, we approach this with great excitement as a chance to get to know a lot of very talented, aggressive sales representatives so that we can really maximize our potential at the launch of Reloxin.

Edmund Kim – JPMorgan

Great. Thank you.

Operator

Your next question comes from the line of Gary Nachman with Leerink Swann.

Gary Nachman – Leerink Swann & Co.

Hi, good afternoon. Jonah, when do you expect to hear about the acceptance of the Reloxin NDA? Is it the thing where there are discussions with the agency that are ongoing, or they just let you know?

Jonah Shacknai

Presumably the letter is in the mail, Gary. We would expect a communication in writing from the agency. It would occur relatively rapidly, so mid-May is approximately 60 days from when we filed or refiled with Ipsen's ownership, and we'll certainly make a public announcement within some period after receiving the notification.

Gary Nachman – Leerink Swann & Co.

Okay, they haven't indicated anything that would lead you to believe that it won't be accepted?

Jonah Shacknai

Absolutely not.

Gary Nachman – Leerink Swann & Co.

Okay. And then non-acne had a pretty big sequential decline from the fourth quarter. I know some of that is seasonality. Some of that is the weak economy but Allergan in their call said that they took some share from you guys with Juvederm. So, have you found out to be the case, and if so what are your initiatives to try and counter that?

Jonah Shacknai

It's not our impression that they have taken share from accounts that we call on. I think Allergan has done a good job of expanding the market, not necessarily among consumers but certainly among physicians and healthcare providers that are injecting these product. We've said from the beginning that we thought there was a great place for Juvederm in the down market, that is to say the non-core physicians, dermatologists and plastic surgeons, ocular plastic surgeons and facial plastic surgeons that perhaps it was a product very well suited to the non-core market, and our purpose is to be calling on those core specialties. So I think it's true that Juvederm has done well in those accounts that we don't call on, that we don't defend. But we are very, very pleased with the way the brand is doing in our top decile accounts, which is really the territory that we mean to defend. So, I can't comment on how they are doing. There are no data to really indicate it, but we are extremely comfortable with the share or position of the brand in those top decile practices that for us have always been the bedrock of our business.

Gary Nachman – Leerink Swann & Co.

Okay, and has pricing remained stable with the dermal fillers, and at some point if the challenges with the economy continue, is there a reason to revisit that?

Jonah Shacknai

Our prices certainly remained stable, yes, and I won't comment on the pricing regimes of others. All that will get filed with the federal government and we all will have some transparency. But suffice it to say that there are specials and promotions that occur from time to time with other companies, and there are several companies in the market now. And some give away television sets, others give away syringes. We of course, do none of those things. So, as we look forward, we do not see the benefit of reducing price, and we do not believe that even in a challenged economy that price reductions that may occur at the physician level are necessarily going to be passed on to patients. I think physicians value very highly their unit of time, and they have a cost and overhead structure within their practices, and there is little evidence to suggest that when they acquire a product at a lower cost and they certainly have that opportunity now with many companies that they pass on any savings whatsoever to patients. Now it may be that some of the down market operators do that because they are providing a lower-cost service to their patients and are really competing against more established practices on the basis of price, but we certainly see no evidence of that in our core markets.

Gary Nachman – Leerink Swann & Co.

Okay, thanks. And then just lastly, any word on a generic for LOPROX shampoo yet, and how is that factored into your guidance for this year? Thanks.

Jonah Shacknai

There is no word on a generic LOPROX shampoo. I think we guided with an expectation that it would occur around mid-year, but we have absolutely no information to base that up. It's really just a wild guess.

Gary Nachman – Leerink Swann & Co.

Okay, thanks.

Operator

Your next question comes from the line of Mr. Lei Huang with Summer Street Research Partners.

Lei Huang – Summer Street Research Partners

Hi, just looking at your share count for first quarter, it looks like it declined a bit from fourth quarter. Did you do any stock buybacks during the first few months of the year, or was there any other reason for this share decline?

Mark Prygocki

Lei, there were just the (inaudible) there were no buybacks under the share repurchase in the first quarter. Really it's just a matter of the price, the stock price and how it affects the weighted shares outstanding. That was the only impact.

Lei Huang – Summer Street Research Partners

Okay. Fair enough. And then just in terms of SOLODYN and ZIANA sales for the quarter, I just want to be clear that there weren't any unusual inventory or buying trends in the quarter that made the numbers, that would be inconsistent with the prescription trend.

Mark Prygocki

That is correct.

Lei Huang – Summer Street Research Partners

Okay, so if we see prescription trend continue to decline, let's say in the second quarter, sales should climb from first quarter level?

Mark Prygocki

Depending on the product, yes, but you may not see the category fluctuate because other products may make up for other items. But on an individual line basis that's correct except you also have to take into account price increases that we've mentioned throughout the call also.

Lei Huang – Summer Street Research Partners

Fair enough. And is your Smartcard still out there for SOLODYN?

Mark Prygocki

It is.

Lei Huang – Summer Street Research Partners

Okay. So the price per script you provided, that's net the effect cut the Smartcard?

Mark Prygocki

That's correct.

Lei Huang – Summer Street Research Partners

Okay, great. Thank you.

Operator

Your next question comes from Hudson Boyer with Wachovia Capital Markets.

Hudson Boyer with Wachovia Capital Markets

Hi, thanks for taking the question. Could you just tell us the price per prescription you're seeing for VANOS?

Mark Prygocki

On VANOS, yes, I think it's about – hold on one second – we are seeing about $140 to $150.

Hudson Boyer – Wachovia Capital Markets

Okay, thanks. Then also on your annual guidance, looks like you tightened that range up. Is that entirely because of Q1 or were there other factors in the tightening of your EPS guidance range?

Mark Prygocki

It is solely based on the actual numbers from the first quarter. The Q2 through Q4 guidance has not changed a bit.

Hudson Boyer – Wachovia Capital Markets

Okay. Thanks a lot.

Mark Prygocki

Sure.

Operator

Your next question comes from Greg Fraser with Merrill Lynch.

Greg Fraser – Merrill Lynch

Greg Fraser for Gregg Gilbert. Did you give the ASPs for SOLODYN and ZIANA for the first quarter?

Mark Prygocki

We did. We said it's about three – we've given guidance in general, not specifically for the first quarter but they are about $360 for SOLODYN per prescription and about $160 to $170 for ZIANA.

Greg Fraser – Merrill Lynch

Okay. In your other revenue line you said before that you expect that to go down to about $8 million a quarter, and that was in the guidance. Is that still the case?

Mark Prygocki

It is at $8 million to $9 million, yes. The item that we had licensing revenue from Taro in previous quarters, that's gone away. So, we had some good performance from some of the other items in that category.

Greg Fraser – Merrill Lynch

Okay, and would you care to make any comments on the year-over-year performance for the Restylane franchise?

Mark Prygocki

We haven't given out specific guidance on the Restylane franchise.

Greg Fraser – Merrill Lynch

Okay, thanks.

Operator

(Operator instructions) Your next question comes from Tim Chiang with FTN Midwest.

Tim Chiang – FTN Midwest Securities

Hi, thanks. Jonah, I wanted to get your thoughts on additional pricing flexibility and SOLODYN especially. Have you gotten any resistance from Managed Care or is that really a non-factor for you?

Jonah Shacknai

I don't want to say it's a non-factor because of course we value our relationships and formulary inclusion with Managed Care providers. But we see SOLODYN as being very competitively priced with other therapies of this kind, particularly those that confer such significant benefit and have such attractive compliance features as SOLODYN does. So, certainly we are always in conversation. We want it to be included as broadly as possible in formulary decisions. But no, we take our pricing pretty independently.

Tim Chiang – FTN Midwest Securities

Then just one follow-up question. In preparation for approval and potential launch of Reloxin next year, have you quantified how much bigger your sales force needs to get? Would you consider hiring a contract sales force initially just to lower the cost? Or is your intent to hire your own sales force and expand it much larger around the fourth quarter?

Jonah Shacknai

We would expect that all of these representatives will be Medicis employees. We like it that way being able to ensure their compliance is extremely important to us, and having them as captive employees I think improves that responsibility of ours. Secondly, we feel that they are more committed, that our compensation program very significantly incentivizes our sales reps to do a great job, to work to the utmost of their ability in servicing customers and promoting our brands appropriately. So yes, we would expect these all to be Medicis employees. We will begin our recruiting surge in the third quarter and would expect that most of our new sales representatives would attach around the time of Reloxin approval.

Tim Chiang – FTN Midwest Securities

Okay, just one last question. Have there been any updates on the SOLODYN IP front from the patent office?

Jonah Shacknai

No.

Tim Chiang – FTN Midwest Securities

Okay, great. Thanks.

Operator

Your next question is a follow up from the line of Edmund Kim with JPMorgan.

Edmund Kim – JPMorgan

Great, thanks for the follow up. I just have a big picture question directed at Jonah. When you look at your business development activities, is there a particular therapeutic area that excites you the most? Is there a technology or platform that you are most interested in? Is it particularly around the face or outside of the face?

Jonah Shacknai

We have, of course, a very broad interest in dermatology and aesthetics. So, in dermatology we are seeing a number of very, very interesting technologies that we think could help to revolutionize therapy in several of the important disease entities. I think most of you know that acne is the most common category occasioning a patient visit in dermatology and that, of course, represents an area where we have market leadership. So certainly that's a primary interest that we continue to be interested in inflammatory diseases of the skin, in skin affects of solar radiation certainly interests us. And so those are the big categories in dermatology where we are very interested, but we also look at things that might deal with fungal infections. That's an area where when we marketed our LOPROX brand, we had absolute market leadership. So, all these things are very much possibilities, and we are doing things. Our business development unit has been extremely active. In the aesthetics area, I think we view our portfolio very expansively with the introduction of Reloxin combined as an entity in our business with Restylane and Perlane, we certainly think that we are going to have a very good command of the facial aesthetics category. But obviously there are many other anatomical sites where there is an aesthetic sensibility, and where products could potentially be of interest, and we do not restrict ourselves to facial aesthetics.

Edmund Kim – JPMorgan

What's the demand for the RFID technology for the brow area?

Jonah Shacknai

Is that radiofrequency something, what does RFID stand for?

Edmund Kim – JPMorgan

Exactly, radiofrequency. Competitor recently signed a deal for a non-toxin product using RFID

Jonah Shacknai

In other words the immobilization of nerves with radiofrequency. I don't know that there's any demand currently. Obviously, it's a technology that needs to find a place. There are some that believe that with the introduction of these probes that nerves can be enervated temporarily or permanently. But I think we all need to learn a great deal more before predicting that this technology is going to be useful, that it is safe, that the pain threshold compares reasonably with neurotoxin injection. And that it is reversible, which would be obviously a very significant concern in the event that atosis or some other unfortunate outcome occurs, especially if there is a complete immobilization of nerves. So, all these technologies are very interesting. Many of them have a lot more attitude before they are studied carefully and approved by the FDA, but we are always enthusiastic about technology developments.

Edmund Kim – JPMorgan

Great. Thank you.

Operator

Your next question is a follow up from the line of Ms. Lei Huang with Summer Street Partners.

Lei Huang – Summer Street Research

Thanks for the follow up, just two quick ones. On Reloxin, is there any reason why your PDUFA would not be a standard ten month?

Mark Prygocki

No reason that we are aware of.

Lei Huang – Summer Street Research

Okay, and then just on the Revance charge, can you explain what that's for? Did something change about the development outlook for the product or is that purely an accounting change?

Mark Prygocki

Yes. It's purely an accounting change for us, so it doesn't reflect really our enthusiasm or prospects for that company whatsoever. It's certainly an accounting change for us under the new FAS 157 and 159 rules.

Lei Huang – Summer Street Research

So, do you revalue it every quarter essentially?

Mark Prygocki

We will revalue that each quarter based on the net assets of Revance or the change in net assets in Revance. This was anticipated as you would see in our full year guidance that we issued in February. The guidance excluded any charge associated with Revance, so we knew this was coming. But the amount is unpredictable because we are not in control of really their operating budget, their expenditures, the money they raised, things that would affect the amount in which we are required to write off.

Lei Huang – Summer Street Research

Okay, got it. Perfect. Thank you.

Mark Prygocki

Sure.

Operator

And our last question comes from Greg Gust with Roth Capital Partners.

Enrique Iribarne – Roth Capital Partners

Good afternoon. Actually this is Enrique Iribarne for Greg. I had a quick question on your guidance. Looking at the operating expenses, are you still looking at R&D to be still 8% of revs and SG&A 51% to 52%, or is there any shift in the categories?

Mark Prygocki

There's no shift in those categories.

Enrique Iribarne – Roth Capital Partners

Okay, thank you.

Operator

Gentlemen, do you have any closing remarks?

Jonah Shacknai

Just to thank everyone for their support, their time and attention this afternoon, and we look forward to communicating with you individually if you would so desire, and obviously the continuing our progression as a company. So, thanks very much for being with us.

Operator

Thank you, and we do apologize but we only have time for a limited number of questions. If you would like to have a question but did not have the opportunity, please contact the Medicis Investor Relations department directly. This concludes today's conference. You may now disconnect.

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