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MRX’s beauty products array makes for a pretty stock

Dear Mr. Berko: An acquaintance told me that a public company called Medicis will soon have a vaccine or cure for acne.

The stock sells for $28 and, if this vaccine works, I think the stock could go to the moon or higher.

What do you know about this company and its acne research? I’m very familiar with acne because two friends suffered with it for years, and it’s terrible.

Any cure would almost be a wonder drug. –P.G., Troy, Mich.

Dear P.G.: There is no potion, salve, unguent, elixir or medicament that will prevent acne.

It’s a genetic affliction to which only the Eskimos, American Indians and Australian Aborigines seem to be immune.

Genghis Khan was said to have acne, which is what made him so mean. Even Moses had acne, and Egyptian writings tell us that the pharaohs also suffered from this malady.

There is only one certain cure, but seldom prescribed, which is the excessive consumption of cobra venom, and it also cures everything else.

There’s no known preventative for this disfiguring condition, which was given the name acne by Aulus Celsus, a Roman physician (25 B.C. to A.D. 50).

As certain as time and the tides, some observers are as certain (against all odds) that Medicis Pharmaceutical (MRX, $32.60) has found a preventative or vaccine for acne.

The Medicis research to which your source refers is the first to use a boron molecule — a derivative of the moron atom — in its formulary and which seems to have extraordinary promise.

The talk is that his new formulary is 65 percent to 90 percent more effective than Accutane, a Roche product that was removed from the market because of adverse side effects that our toxic tort lawyers believe are legally actionable. You gotta love those lawyers.

The research is still in progress and will be for a few years until a formulary is commercially available and approved by the FDA.

However the real sex appeal behind MRX is something called LipoSonix, a noninvasive fat-removing device used in body sculpting to destroy targeted body fat.

Many docs in the plastic business think this could revolutionize plastic surgery. LipoSonix is the rage in Europe, and MRX thinks it will have Food and Drug Administration approval by early 2012.

MRX is a specialty pharmaceutical company that focuses on dermatological and aesthetic conditions to make Americans beautiful, youthful, improve their self-images and stroke their egos. MRX’s Solodyn is the most commonly used acne dermatologic prescribed in the U.S., and its Ziana is not far behind in revenue dollars.

Meanwhile MRX’s popular Dysport and Restylane contribute millions to the company’s revenues, and products for facial wrinkles, seborrheic dermatitis, rosacea, glabellar lines, hyperpigmentation, psoriasis and photoaging pushed revenues to $705 million, net profit margins to 21 percent and share earnings to $2.19 last year.

This year, management expects revenues to exceed $800 million, up from $130 million a decade ago, and earnings to come in at $2.60 per share, up from 61 cents in 2000.

This $1.7 billion midcap company with 64 million shares has a balance sheet that’s strong as oak, a low debt-to-equity ratio, an attractive cash flow and a product line that is very nearly impervious to recession, inflation and the business cycle.

And at a modest 11 times 2011’s expected earnings, MRX may have strong appreciation potential in the coming few years. And if MRX does have an acne vaccine in the works, I believe the shares could sell in the $80 range during the coming few years.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com.

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