For those who do not already know, Radiesse is popular dermal filler that instantly corrects facial wrinkles and folds for results that we have seen last close to a year or longer. Radiesse’s tagline “The magic ingredient is you” refers to its differentiated benefit of stimulating the body’s own natural production of collagen.
This was not the first time we have heard of the possibility of Bioform going the way of Artes Medical (the makers of Artefill, which was recently reorganized after filing for Chapter 7), but it seemed like it could be legit, so we decided to take a look. The following is what we learned by parsing public filings and equity research.
- Research analysts unanimously agree that Bioform has at least 2-3 years of running room based on three key facts: 1) Cash balance is $41 million at the end of March 2009 and debt of less than $500,000, 2) Negative free cash flow (cash burn) will be around $10 million over the next 12 months leaving approximately $30 million in cash at March 2010, 3) Management has the flexibility to further reduce capital expenditures, slow sales force growth and put R&D projects on hold to get to cash flow breakeven within two years
- The timing of Bioform’s initial public offering (“IPO”) was fortunate. In November 2007, the Company succeeded in raising $83 million in cash by selling shares to the public. Had they waited for the possibility of a better market, the deal may not have gotten done given Bear Stearns melted down in mid-March 2008 and the equity capital markets virtually shut to new offerings
- Revenue has declined this year due to the slow economy, but Radiesse volumes are declining at a slower rate than dermal fillers overall. In fact, Radiesse was the only dermal filler to have a volume increase in 2008 with a 3% jump according to The American Society for Aesthetic Plastic Surgery. Bioform has been very competitive on price, and with the introduction of 0.8 cc syringes (in addition to their larger 1.5 cc syringe) seeks to throw its hat in the ring with other majors at the 0.8 cc size
All of this taken together, we would be very surprised if Bioform went out of business anytime soon. Hotchandani Laser & Vein Center will continue to monitor the situation closely and post any new developments in line with our unwavering commitment to bring the latest and greatest in aesthetic medicine to our clients. As a final note, since Bioform provides jobs in Wisconsin at its manufacturing facility in Franksville, which is just south of Milwaukee, we are pulling for them!
