Biotech Values

[DewDiligence]

Amid an array of problems,
MNT drops bid for MRX

[“…they seem to be doing the right things. They're just doing them slowly.” Sounds Goddard-like, doesn’t it?]

http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060206...

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Mentor posts lower profit, pulls '06 forecast

Mon Feb 6, 2006 6:55 PM ET
By Bill Berkrot

NEW YORK, Feb 6 (Reuters) - Mentor Corp. <MNT> on Monday reported a lower quarterly profit and revenue that missed Wall Street estimates, and the company withdrew its 2006 earnings forecast due to uncertainty over approval of its silicone breast implants and other business disruptions.

Shares of the maker of breast implants and other products used in cosmetic procedures fell more than 7 percent in extended trading after the company pulled its outlook and said it could make no assurances as to the timing and outcome of its discussions with U.S. regulators over the silicone implants.

Mentor, which had previously forecast 2006 earnings of $1.60 to $1.65 per share, also took a 6 cents per share charge related to its strategic initiatives and said it hopes a decision on the future and likely sale of its urology business will be announced within 90 days.

"There's short-term uncertainty on almost all fronts and Wall Street doesn't like uncertainty," said Piper Jaffray analyst Thomas Gunderson.

"The upside is they seem to be doing the right things. They're just doing them slowly," Gunderson said.

The Santa Barbara, California-based company said net earnings for its fiscal third quarter ended Dec. 31 fell to $12.7 million, or 26 cents per share, from $16.3 million, or 34 cents per share, a year ago.

Excluding items, Mentor earned 33 cents per share for the quarter. Analysts, on average, had expected 37 cents per share, according to Reuters Estimates.

Mentor also said it decided not to pursue a "strategic relationship" with Medicis Pharmaceutical Corp. < MRX > at this time. In December, Medicis rejected an unsolicited takeover bid by Mentor. At the time Mentor said it remained committed to its bid for Medicis.

Analysts had expected the silicone gel implants to be approved by the U.S. Food and Drug Administration by the end of 2005. However, the company said the FDA has expressed concerns about patient monitoring once sale of the implants is allowed.

"That doesn't bode well for quick resolution," Gunderson said.

In addition to uncertainty over the silicone implants and its urology business, Mentor said there will be a delay in filing for approval of its experimental hyaluronic acid-based wrinkle treatment. The company said it had identified "potential issues" with some of the data from a pivotal clinical study that will require further evaluation.

Mentor said sales for the quarter were $120.5 million, down from $120.6 million in the year-ago quarter and well below the $129.5 million analysts had estimated.

Mentor shares fell to $40.65 in after-hours trading on Inet electronic brokerage from their New York Stock Exchange close at $43.90.
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