Big Setback In Lasers for Wrinkles, Cellulite, and Acne (PMTI, JNJ)
Palomar Medical Technologies Inc. (NASDAQ: PMTI) has seen better days. The company disclosed that Johnson & Johnson (NYSE: JNJ) dropped its partnership and licensing for Palomar’s home-use light-based devices used to reduce or reshaping body fat including cellulite, reducing skin aging appearance, and the prevention of acne.
J&J cited the primary reason for dropping the partnership as being “weak economic conditions” in the disclosure. The sad part about this is that the new development is probably going to put a serious dent in the market for home-use lasers. We were never contacted back by company representatives over pricing of models in June, but Palomar’s $120+ million cash arsenal is probably going to be used up faster now on a standalone basis if it cannot secure a new partner. And J&J probably would not have dropped the deal if sales were tracking well.
The full description of the news is available at 24/7 Wall Street, but the damage is being done to the stock. Palomar shares are down some 15% at $12.90 on the news. and it is seeing exponential trading volume.
JON C. OGG
OCTOBER 16, 2009
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