(Updates with Medicis comment in third paragraph)
Nov. 23 (Bloomberg) -- Graceway Pharmaceuticals LLC, a maker of skin treatments and asthma medication, won court permission to sell virtually all its assets to Medicis Pharmaceutical Corp. for about $455 million.
U.S. Bankruptcy Judge Peter J. Walsh approved the sale, according to court documents filed yesterday in Wilmington, Delaware.
“We are pleased to announce this strategic acquisition of the Graceway product portfolio, and the ability to broaden our presence within dermatology,” Jonah Shacknai, chief executive officer of Medicis, said in a Nov. 18 statement announcing the acquisition.
Medicis, based in Scottsdale, Arizona, makes wrinkle treatments and acne drugs. The company will expand its portfolio with Graceway’s dermatology, respiratory and women’s health treatments.
Graceway filed for bankruptcy on Sept. 29 after the loss of patent protection on its top-selling product, the skin cream Aldara, led to a decline in sales. The company listed debt of as much as $1 billion and assets of as much as $500 million.
Graceway, based in Bristol, Tennessee, bought 3M Co.’s pharmaceutical business in the Americas, including Aldara, for $875 million in 2007.
Aldara, a cream used to treat precancerous skin growths and genital warts, generated about 85 percent of Graceway’s sales in 2009, a share that plummeted to about 16 percent in the first two quarters of 2011, according to court papers.
To make up for the lost sales, Graceway developed Zyclara, which is used to remedy the same conditions as Aldara.
Zyclara can be exclusively marketed for treating certain skin diseases related to sun overexposure until 2013 and for genital warts until 2014, according to court papers.
Zyclara accounted for more than a third of Graceway’s sales in the first two quarters of 2011. The Maxair Autohaler, a rescue inhaler used to treat asthma, generated about 16 percent of sales in the period.
Graceway owes first-lien lenders about $430.7 million, according to court papers. The drugmaker owes about $330 million to second-lien lenders and about $81.4 million to unsecured mezzanine lenders represented by Goldman Sachs Credit Partners LP as agent.
Trade and general unsecured creditors are owed about $30 million.
Medicis fell 82 cents, or about 2.6 percent, to $30.26 at 2:18 p.m. in New York Stock Exchange composite trading.
The case is In re Graceway Pharmaceuticals LLC, 11-13036, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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