Reliant successes lead to Solta Medical creation

NORWALK, CT--“The aesthetics industry is becoming increasingly competitive and there are very few intellectual property barriers to entry,” said Mary Stuart of Windhover Information in a report titled “Thermage/Reliant: Evidence of Tightening in the Aesthetics Market,” released this past summer.

NORWALK, CT--“The aesthetics industry is becoming increasingly competitive and there are very few intellectual property barriers to entry,” said Mary Stuart of Windhover Information in a report titled “Thermage/Reliant: Evidence of Tightening in the Aesthetics Market,” released this past summer. She added that sales and marketing account for the biggest costs of medical aesthetic companies, and one-product companies find themselves bumping into their competitors in physicians’ offices and at trade shows.

Into this environment was born the acquisition of Reliant (Mountain View, CA), the pioneer of fractional resurfacing and market leader of aesthetic laser skin treatments, by Thermage (Hayward, CA), known for its skin-tightening device. The acquisition was meant to create a stronger competitor. Since 2002, approximately one million Thermage and Fraxel procedures have been performed in nearly 80 countries.

Fractional technology delivers laser or high-powered light in a pattern that leaves untreated areas of skin between the treated areas. The untreated sections promote faster healing of the treated portions and stimulate increased clinical response as compared to standard full-surface treatments.

Reliant was the first to supply such systems to the aesthetic market, beginning in 2001. The company has been extremely active throughout 2008, beginning with receipt of first U.S. FDA 510(k) approval for its Fraxel systems in January 2008, followed by FDA clearance for three new Fraxel re:pair handpieces for skin resurfacing and surgery in October.

In November, Reliant presented study results comparing fractional laser technology to pseudo fractional laser technology during the American Society for Dermatologic Surgery (ASDS) annual meeting. The data indicates that fractional systems provide superior safety and efficacy as compared to systems that use altered ablative lasers.

Also in November, Reliant and Palomar Medical Technologies (Burlington, MA) launched a technology licensing program for skin therapy. Their Fractional Technology Open Patent Program (FTOPP) contains six fundamental fractional patent families including issued patents and pending patent applications owned or controlled by Reliant, Palomar, and Massachusetts General Hospital (MGH).

A few months earlier, Reliant and consumer products company Philips (Amsterdam, The Netherlands) had announced a partnership on home-use skin rejuvenation laser systems. The agreement calls for the partners to develop skin care technologies for use in the home, and was designed to combine Reliant’s expertise with Philips’ design, marketing, and global distribution capabilities. According to the American Society of Aesthetic Plastic Surgeons, laser skin resurfacing treatment grew 230% from 1997 to 2007, and more consumers have begun seeking home-use aesthetic treatments.

Then, Inc. magazine named Reliant 5th in the top 50 businesses in Silicon Valley and 8th among the top health companies in the U.S. In a press release announcing the win, Reliant reported that increased sales of the Fraxel laser systems contributed to Reliant’s 2007 revenue of $70.5 million, a 1450% increase since 2004.

Just last month, Reliant buyer Thermage changed its name to Solta Medical, and at the open of the NASDAQ exchange on January 12, 2009, began trading under the symbol SLTM. At the same time, Solta Medical announced the expansion of its industry exclusive customer loyalty program which allows physicians to lock-in preferred pricing for Thermage and Fraxel treatment tips along with other preferred customer benefits to help physicians grow their practices and increase profitability.

Last week, Solta announced preliminary financial results for the fourth quarter of 2008; its earnings release and conference call are slated for February 23. Revenue for Q4 is expected to be $9.3 to $9.6 million and includes revenue from the sale of Fraxel products post-acquisition of Reliant Technologies on December 23, 2008. On a pro forma combined basis as if the acquisition of Reliant Technologies was effective October 1, 2008, revenue for the fourth quarter is estimated to have been between $19.9 million to $20.2 million. This compares to revenue for both companies of $35.5 million in the fourth quarter of 2007 on a pro forma combined basis.

“The fourth quarter of 2008 was challenging for many companies including Solta Medical,” said Stephen J. Fanning, chairman of the board, president, and CEO of Solta Medical. “With the integration of Reliant nearly complete, we look forward to competing in the market place with two premier brands in Fraxel and Thermage, and one of the largest U.S. sales forces in the industry.”

--Barbara Goode

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