Medicis Pharmaceutical enters pediatric market by agreeing to acquire Ascent Pediatrics

Medicis Pharmaceutical Corporation and Ascent Pediatrics, Inc. today announced that they have entered into a definitive merger agreement under which Medicis will acquire Ascent, a specialty pharmaceutical company focused on the marketing and sale of prescription products to U.S. based pediatricians. The Ascent Board of Directors has unanimously recommended the transaction to its stockholders. The closing of the transaction is contingent upon approval by Ascent stockholders and customary closing conditions. Under a separate agreement, entities affiliated with FS Private Investments have agreed to vote shares, which today represent 53.9% of Ascent's outstanding shares, in favor of the transaction.

Under the terms of the agreement, Medicis will pay approximately $60 million, less certain retention payments and transaction fees and expenses, upon the closing of the transaction for the outstanding capital stock and retirement of indebtedness of Ascent and has agreed to pay to the holders of Ascent's common equity up to an additional $10 million per year for each of the first five years following closing based upon reaching certain sales threshold milestones on the Ascent products (as defined under the agreement). Assuming that the transaction closes as of December 31, 2001, Ascent expects that holders of its common equity will receive upon the closing approximately $0.41 per share in cash. For federal tax purposes, holders of Ascent's common equity will calculate gain or loss by taking into account the cash received at closing and the value of the contingent payments as of the closing.

Ascent's portfolio of specialty pharmaceutical pediatric products currently includes ORAPRED® (prednisolone sodium phosphate), an oral liquid steroid for children with asthma and other respiratory inflammatory conditions; PRIMSOL® (trimethoprim HCl), an antibiotic oral solution for children with acute otitis media, or middle ear infections; and PEDIAMIST®, an over-the-counter saline nasal mist, as well as certain projects that are under development. Sales of ORAPRED® comprise the majority of the Ascent product sales. Ascent currently supports these products with a dedicated pediatric sales force, numbering approximately 70 representatives and sales management.

In addition to the acquired brands, Medicis believes the pediatric market represents an untapped growth opportunity for several of its existing dermatological products such as OVIDE®, LOPROX® and certain other products. This transaction provides Medicis with critical mass to assist with the entrance into the category of pediatrics.

According to IMS Health, the U.S. pediatric market is estimated to be approximately $5 billion annually with annual prescriptions written growing in excess of 17% over the past five years. There are approximately 55,000 office-based pediatricians nationwide with over 70% of pediatricians practicing in group-office locations. Over 53% of pediatric diagnosis visits are for infections or illnesses to the ear, nose, eyes or respiratory system. Pediatricians write approximately 2.8 million total prescriptions for oral glucocorticoids, 68.3% of the prescriptions were in liquid form. The total U.S. market for liquid steroids is estimated to be approximately $70 million annually.

"We are pleased to announce our carefully planned entrance into the pediatric market with a transaction we expect to be accretive," said Jonah Shacknai, Chairman and Chief Executive Officer of Medicis. "This natural extension of our existing business model is expected to broaden both our business development and research and development opportunities. Ascent Pediatrics is a highly respected company in the field of pediatric medicine and we look forward to integrating our two dynamic organizations. We are especially excited about the strength of the Ascent sales organization."

Emmett Clemente, Ph.D., Chairman, President and Treasurer of Ascent said, "We at Ascent are extremely pleased to have entered into this arrangement as it provides us the best opportunity to transfer the mission of Ascent to a strong and innovative organization, which can provide the pediatric community with creative and valuable products. Additionally, it provides the required resources for the development of our pipeline products. Over the last decade Medicis has established itself as a vibrant organization dedicated to the field of dermatology and understands the opportunities and challenges in establishing a strong presence in a niche business."

Medicis recently released fiscal year 2002 revenue guidance of $192.0 million and earnings per share guidance of $1.88. First quarter fiscal year 2002 (for the quarter ending September 30, 2001) revenue guidance of $44.0 million and earnings per share guidance of $0.42 remain unchanged. Assuming a January 2002 closing, Medicis expects to adjust its fiscal year 2002 earnings guidance upon the transaction's closing and anticipates raising estimates absent special charges associated with the transaction by approximately $0.03. Medicis is still evaluating the impact of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142) on the amortization of intangible assets and therefore any potential impact of the new statement is not currently included in the earnings guidance provided by Medicis. Medicis is still conducting an evaluation of the potential effect of certain in-process research and development projects included in this transaction, the potential effect of possible net operating loss carryforwards and the potential effect of the valuation of certain intangible assets. Any potential impact of these items is expected to be reported at the time of the transaction's closing date.

Based in Wilmington, Mass., Ascent is a pharmaceutical company primarily dedicated to the specialty of pediatrics. Founded in 1989, Ascent markets pediatric prescription pharmaceutical products including ORAPRED (prednisolone sodium phosphate 20.2mg/5mL), a liquid steroid for children with asthma and other inflammatory conditions, PRIMSOL (trimethoprim HCl oral solution, 50mg/5mL) for children with acute otitis media, or middle ear infections and PEDIAMIST, an over-the-counter saline nasal mist.

Medicis is the leading independent pharmaceutical company in the United States focusing primarily on the treatment of dermatological conditions. Medicis develops and markets leading products for major segments within dermatology, including acne, fungal infections, rosacea, hyperpigmentation, photoaging, psoriasis, eczema, skin and skin-structure infections, seborrheic dermatitis, head lice and cosmesis (improvement in the texture and appearance of skin). The Company's primary products include the prescription brands DYNACIN(R) (minocycline HCl), TRIAZ(R) (benzoyl peroxide), LUSTRA(R) (hydroquinone), LUSTRA-AF(R) (hydroquinone) with sunscreen, ALUSTRA(TM) (hydroquinone) with retinol, LOPROX(R) (ciclopirox), PLEXION(TM) (sodium sulfacetamide/sulfur), PLEXION-TS(TM) (sodium sulfacetamide/sulfur), OMNICEF(R) (cefdinir), OVIDE(R) (malathion), LIDEX(R) (fluocinonide), SYNALAR(R) (fluocinolone acetonide), TOPICORT(R) (desoximetasone) and A/T/S(R) (erythromycin); the over-the-counter brand ESOTERICA(R); and BUPHENYL(R) (sodium phenylbutyrate), a prescription product indicated in the treatment of Urea Cycle Disorder.

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements are those concerning Medicis, Ascent and the combined companies' merger and strategic plans, expectations and objectives for future operations. All statements included in this press release that address activities, events or developments that Medicis or Ascent expects, believes or anticipates will or may occur in the future are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. This includes completion of the proposed merger, earnings estimates, future financial performance and other matters. These statements are based on certain assumptions made by Medicis and Ascent based on their experience and perception of historical trends, current conditions, expected future developments and other factors they believe are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Medicis and Ascent. Any such projections or statements include the current views of Medicis and Ascent with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and there are numbers or important factors that could cause actual results to differ materially from those projected, including the ability to consummate the transaction, the ability of Medicis to successfully integrate Ascent's operations, the ability to realize anticipated synergies and benefits of the transaction. The risks and uncertainties normally incident to the pharmaceutical industry, dependence on sales of key products, the uncertainty of future financial results and fluctuations in operating results, dependence on Medicis' acquisition strategy, the timing and success of new product introductions and other risks described from time to time in Medicis' SEC filings and in Ascent's Annual Report on Form 10-K for the year ended December 31, 2000, and its most recent quarterly report filed with the SEC. Forward-looking statements represent the judgment of Medicis' and Ascent's management, as of the date of this release, and Medicis and Ascent disclaim any intent or obligation to update any forward-looking statements.

Source: Medicis