Part of Valeant Pharmaceuticals International’s strategy: promote select products with cash generated by scores of others in its lineup.
“We have 400 products right now,” said Timothy Tyson, the Costa Mesa drug maker’s chief executive. “Of those 400 products, we’re focusing on about 20.”
A handful of drugs, 5%, generate 60% of Valeant’s sales, Tyson said. The company had $389 million in product sales through the first six months of 2006.
Promoted products include Kinerase, a skin care line endorsed by Courteney Cox Arquette; Infergen, a hepatitis C drug bought earlier this year for $113.5 million; Migranal, a headache remedy; and Diastat, which fights epileptic seizures.
Valeant plans to promote a couple of new products, according to Tyson. They include Zelapar, a treatment for Parkinson’s disease, and Cesamet, which treats chemotherapy-induced nausea and vomiting.
Valeant actually has cut its products down in recent years from 650. Further cuts aren’t coming, according to Tyson.
“Those 41% (of non-promoted products) are getting no investment, so they’re generating a lot of cash,” Tyson said. “To get rid of them would take a lot of cash, a lot of profits out of the company.
“The message here is that we’re focusing our investment on 5% of the products (and) those 5% are generating 60% (of sales), so it makes it a lot more efficient to focus your efforts on a few,” Tyson said.
Valeant’s shareholders, particularly those who spurred the company’s board and management shake-up back in 2002, “are pleased with the things that have taken place since the transition,” he said.
Trestle Sells Assets to Clarient
Irvine-based Trestle Holdings Inc., a maker of microscopes and other medical diagnostic devices, said late last month that its shareholders approved the sale of assets to Clarient Inc., an Aliso Viejo-based company that does cancer and other diagnostic testing.
Trestle didn’t disclose terms of the deal. In a June news release, Clarient said it would pay about $3 million in cash for Trestle’s assets.
The assets included Trestle’s product line and inventory, manufacturing, high-speed scanning technology and patents.
Clarient said the deal would allow it “to cover virtually all the pathology samples needing anatomical laboratory analysis.”
Clarient was founded 10 years ago as ChromaVision Medical Systems. The company used to make lab instruments for doctors to manage breast cancer cases and shifted gears when Chief Executive Ron Andrews took over in 2004.
Andrews, whose experience includes a shift at Hoffmann-La Roche Ltd., moved the company into cancer diagnostics. Clarient took on its current name in 2005.
Device Maker Raises $9M
MiCardia Corp., an Irvine medical device maker, raised $9 million late last month in a second round of financing.
HBM Biocapital, a Switzerland-based fund, led the investment.
A pair of Orange County investors took part: MedFocus Family of Funds and the BioStar Private Equity Fund LLC. MedFocus and BioStar are connected to Michael Henson, a longtime local device entrepreneur and investor. Henson is MiCardia’s chairman.
MiCardia said it would use the money to develop implantable devices for treating late-state congestive heart failure and mitral heart valve disease.
Quality Regrets
Quality Systems Inc., the Irvine medical software maker that’s been a Wall Street darling, got another piece of praise in a recent Motley Fool investor Web site article.
In it, author Jim Gillies, who calls himself “TMF Canuck,” discussed some selling decisions that he said “cost me a lot of money,” including getting out of Quality Systems.
Quality Systems “made me ‘four-bagger happy’ over the two-plus years I owned it. The company’s rise combined strong execution and growth with the market’s willingness to pay a higher premium for that strength,” Gillies wrote.
But Gillies said he became concerned with Quality Systems’ valuation in the middle of 2005 and sold call options,with the risk the stock would continue to run and he’d lose his shares for far less than the market price.
“Guess what happened? Even though Quality Systems is 14% off its high, it’s still 34% higher than when I was forced to sell, and I’m including the option premium I received,” Gillies said.
Bits and Pieces:
Fullerton-based Beckman Coulter Inc., and Irvine-based Edwards Lifesciences Corp. were among the Orange County healthcare companies that took part in last week’s UBS Global Life Sciences conference in New York Sally Pipes, chief executive of the Pacific Research Institute, discusses “How to Solve America’s Healthcare Crisis” at the Oct. 12 morning meeting of the Orange County Employee Benefits Council. The event is at the Beckman Center on the University of California, Irvine, campus. Information: www.ocebc.org Speaking of UCI, the university said it enrolled 25 freshmen and 25 sophomores in pre-nursing courses to begin work toward what the school called the first four-year baccalaureate degree program in nursing ever offered in OC.
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