Fat treatment market expands to ultrasound, lasers

Medical device companies are developing targeted, nonsurgical ways to remove fat from a patient's body, a trend Medicis Pharmaceutical Corp. may be banking on in its purchase of LipoSonix.

Late Monday, the Scottsdale, Ariz.-based company which makes prescription acne and skin medications, agreed to buy LipoSonix for $150 million, along with up to $150 million in milestone payments. LipoSonix is developing a system that uses ultrasound to break up fat deposits, allowing the body to metabolize them. The device has been approved for sale in Europe, and Medicis hopes for U.S. approval by 2011.

The company is looking to attract patients who are concerned about their appearance but don't want to have surgery. These patients make up a growing portion of the cosmetic treatment market.

The American Society of Plastic Surgeons says 302,000 liposuctions were performed in the U.S. in 2007, which makes liposuction the second most popular cosmetic procedure after breast augmentation. The group documented 10 million minimally invasive procedures, a category that includes Botox and wrinkle filling, compared with 1.8 surgical procedures. Liposuctions are surgical, but newer treatments are designed to be minimally invasive, or in the case of the LipoSonix system, noninvasive.

By the end of the year, says Phil Nalbone of RBC Capital Markets, about six laser product makers will be offering body sculpting systems. Cosmetic treatment equipment maker Cynosure Inc.'s growth has been "off the charts" since the company introduced its Smartlipo laser system, he said in an interview.

Those companies include Syneron Medical Ltd. and Palomar Medical Technologies Inc.

Those products won't compete with weight-loss drugs and lap-band surgery devices, says analyst Ken Trbovich, also of RBC. The ultrasound and laser procedures are intended for cosmetic fat reduction in specific parts of the body, without surgery. The laser and ultrasound procedures may not even compete with each other _ or with injectable fat treatments _ if they turn out to be effective in different areas.

But Nalbone said Medicis and its rival UltraShape have to answer a lot of questions before their devices can be approved in the U.S. Among other issues, they will have to demonstrate the procedure's effects on blood cholesterol, show how the fat is metabolized and how long it might take to clear a patient's system. They also must determine how much treatment a patient can take at once, and how long the wait between treatments might need to be.

The companies will need to show the Food and Drug Administration that their devices are effective and safe, but as yet clinical testing has been limited. UltraShape completed a 164-patient trial in the U.S., and it is conducting another trial, Trbovich said. The only clinical data on the LipoSonix system appears to be from a 33-patient study in Mexico, he wrote.

"Back in 2004 management at LipoSonix estimated that its SonoSculpt device would enter U.S. clinical trials in 2005 and be on the market in 2006," said Trbovich. In Europe, he said the product is used in less than 20,000 procedures per year, with annual revenue reaching $20 million to $40 million.

The analysts noted an additional problem for Medicis and LipoSonix: UltraShape, a privately-held Israeli company, could get its product on the market first. That would put Medicis in the difficult position of trying to convince doctors to buy the LipoSonix system a relatively short time after they had paid for the UltraShape.

In afternoon trading, Medicis shares fell $1.58, or 7 percent, to $21.15. The stock has traded between $18.51 and $32.18 over the past 52 weeks, and is down 12.5 percent since the start of the year.

Syneron stock rose 73 cents, or 4.3 percent, to $17.80.

Cynosure dipped 47 cents, or 2.1 percent, to $21.63.

Shares of Cutera Inc. shed 2 cents to $9.90.