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PHOTOMEDEX AGREES TO ACQUIRE PROCYTE CORPORATION
Montgomeryville, Pa. and Redmond, Wa.—December 1, 2004—PhotoMedex,
Inc. (Nasdaq: PHMD) and ProCyte Corporation (OTCBB: PRCY.OB),
announced today that the companies entered into a definitive merger
agreement pursuant to which PhotoMedex will acquire ProCyte in a
stock-for-stock transaction valued at approximately $24.4 million.
Under the terms of the agreement, PhotoMedex will issue 0.6622 shares of
its common stock in exchange for each outstanding share of ProCyte
common stock. PhotoMedex expects to issue approximately 10.5 million
shares of common stock. In addition, certain options to purchase
ProCyte common stock will be assumed in the transaction. On a pro
forma basis, assuming that all ProCyte shareholders exchange their
ProCyte shares for PhotoMedex shares, and giving effect to the shares
underlying the ProCyte stock options to be assumed by PhotoMedex,
ProCyte’s stockholders would own approximately 21% of the combined
company’s common stock on a fully diluted basis. Based on the closing
prices of the companies’ common stock on November 30, 2004, the offer
represents a purchase price of $1.49 per share and a premium of 33%.
ProCyte develops and markets therapeutic and daily use skincare and
procedure based products to dermatologists. Many of ProCyte’s products
incorporate the company’s patented GHK Copper Peptide technology.
ProCyte sells its products directly to physicians through its 25-person
sales organization. Physicians use the company’s products to improve
healing following aesthetic procedures such as laser resurfacing, laser
hair removal and microdermabrasion and for daily use to promote healthy
skin and reduce hyperpigmentation, fine lines and wrinkles. ProCyte
also reaches the broader consumer markets through license and supply
agreements with strategic partners. For the twelve months ended
September 30, 2004, ProCyte reported total revenues of $13.0 million.
In addition, ProCyte currently has over $6 million in cash.
Jeff O’Donnell, President and CEO of PhotoMedex, commented, “PhotoMedex is
pleased to expand its presence in the dermatology community by acquiring
a company that is highly regarded by our customers and our scientific
advisory board. We immediately increase our dermatology sales force
five-fold, which will enable us to accelerate the roll out of our XTRAC
laser therapy. ProCyte also will provide us with a line of quality skin
care products supported by accepted science for our existing customers.
This increase in our sales resources is particularly timely to take
advantage of an improving reimbursement environment for laser therapy
for psoriasis. The combined company will be able to offer significant
value to our dermatology customers by providing a proven treatment
option for psoriasis and provide effective pre- and post-procedure
treatment products that generate recurring revenue and an opportunity to
improve practice profitability. Financially, we are extremely pleased
that this acquisition will accelerate our profitability and is accretive
to our shareholders.”
Jack Clifford, ProCyte’s President
and CEO stated, “We are very pleased to be joining forces with
PhotoMedex and are excited about the additional opportunities that the
combination offers our shareholders in terms of revenue growth and
improved liquidity. The companies share a vision for the future and
believe that, with our collective product offerings, we are well
positioned to further expand our presence in the marketplace. For the
past several years, ProCyte’s management and board have focused their
efforts to maximize stockholder value. We believe this combination best
positions ProCyte’s stockholders to capitalize on those efforts.”
The merger is subject to customary terms and
conditions including the approval by the stockholders of ProCyte and
PhotoMedex. The directors and officers of ProCyte,
who collectively own approximately 3.9% of the
outstanding ProCyte common stock, have agreed to vote all of their
shares in favor of the proposed transaction. The
merger is expected to close in the first quarter of 2005.
In this
transaction, CIBC World Markets and Wells Fargo Securities, LLC acted as
the financial advisors to PhotoMedex and ProCyte, respectively.
A conference call will be held on
Thursday, December 2, 2004 at 8:00 a.m. Eastern Time, during which, Jeff
O’Donnell, the President and CEO of PhotoMedex, and Jack Clifford, the
President and CEO of ProCyte Corporation, will discuss today’s
announcement. To participate
in the conference call, dial 800-289-0546 and confirmation code #982899
approximately 5 to 10 minutes prior to the scheduled start time.
If you are unable to participate, a
digital replay of the call will be available from Thursday, December 2
at 11:00 a.m. Eastern time until midnight on Thursday, December 16, by
dialing 888-203-1112 and
using confirmation code # 982899
The live broadcast of the PhotoMedex
and ProCyte conference call will be available online by going to
www.photomedex.com and clicking on the link to Investor
Relations, and at www.streetevents.com.
The online replay will be available shortly after the call at those
sites.
About
PhotoMedex:
PhotoMedex provides contract medical procedures to
hospitals, surgi-centers and doctors' offices, offering a wide range of
products and services across multiple specialty areas, including
dermatology, urology, gynecology, orthopedics, and other surgical
specialties. The company is a leader in the development, manufacturing
and marketing of medical laser products and services.
ProCyte Corporation develops and markets products
based on its patented, clinically proven Copper Peptide technology for
skin health, hair care and wound care. The Company sells directly to
dermatologists, plastic and cosmetic surgeons, spas and salons and
through licenses with strategic partners into the consumer market,
including its long-term worldwide license agreement with Neutrogena®, a
Johnson & Johnson company. ProCyte brands include Neova®, VitalCopper®
Simple Solutions® and AquaSanté® Skin Care products; Complex Cu3®
Post-Procedure Skin Care; GraftCyte® Hair Transplant Care; and Tricomin®
Advanced Care for Thinning Hair. The Company also has the exclusive
distribution rights in the physician market for Cutanix Corporation’s
Quadrinone® technology in the U.S., Canada and Puerto Rico. Additional
information is available by visiting the Company’s website at
www.procyte.com.
SAFE HARBOR STATEMENT
This press release contains
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based on managements' current expectations and
beliefs and are subject to a number of factors and uncertainties that
could cause actual results to differ materially from those described in
the forward-looking statements. The forward-looking statements
contained in this release include statements about future financial and
operating results of ProCyte Corporation (“ProCyte”) and PhotoMedex,
Inc. (“PhotoMedex”) and the proposed acquisition of ProCyte by
PhotoMedex .
The following factors, among
others, could cause actual results to differ materially from those
described in the forward-looking statements: the risk that ProCyte's
business will not be integrated successfully with that of PhotoMedex,
costs related to the merger, failure of the ProCyte or PhotoMedex
stockholders to approve the merger, risks relating to technology and
product development, market acceptance, government regulation and
regulatory approval processes, intellectual property rights and
litigation, dependence on strategic partners, ability to obtain
financing, competitive products and other risks identified in
PhotoMedex's and ProCyte's respective filings with the SEC. PhotoMedex
and Procyte are under no obligation to (and expressly disclaim any such
obligation to) update or alter these forward-looking statements, whether
as a result of new information, future events or otherwise.
In connection with the
proposed merger, PhotoMedex will file with the Securities and Exchange
Commission ("SEC") a registration statement on Form S-4. The
registration statement will include a proxy statement of Procyte and a
proxy statement of PhotoMedex for a meeting of their respective
stockholders to consider and vote upon the proposed merger. The
registration statement will also serve as a prospectus of PhotoMedex
with respect to the shares of PhotoMedex to be distributed to
stockholders of ProCyte in the proposed transaction. PhotoMedex and
ProCyte will file the proxy statement/prospectus with the SEC as soon as
practicable. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO CAREFULLY
READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER
TRANSACTION, WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION ABOUT PHOTOMEDEX, PROCYTE, THE MERGER AND RELATED
MATTERS.
In addition to the
registration statement and proxy statement/prospectus, both PhotoMedex
and ProCyte file annual, quarterly and other reports, proxy statements,
registration statements and other information with the SEC. You may
read and copy any reports, statement or other information filed by
PhotoMedex or ProCyte at the SEC's public reference rooms at 450 Fifth
Street, N.W., Washington, D.C. 20549 or at any of the SEC's other public
reference rooms in New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Investors and security holders may also obtain a free
copy of the proxy statement/prospectus (when it is available) and other
documents filed by the companies at the SEC's web site at http://www.sec.gov.
PhotoMedex, ProCyte, their
respective officers and directors and certain other members of
management or employees may be deemed to be participants in the
solicitation of proxies from stockholders of ProCyte and PhotoMedex with
respect to the transactions contemplated by the merger agreement. A
description of any interests that PhotoMedex's or ProCyte's directors
and executive officers have in the proposed merger will be available in
the proxy statement/prospectus.
This press release is not an offer to purchase shares of ProCyte, nor is
it an offer to sell shares of PhotoMedex common stock, which may be
issued in any proposed merger with ProCyte. Any issuance of PhotoMedex
common stock in any proposed merger with ProCyte would have to be
registered under the Securities Act of 1933, as amended, and such
PhotoMedex common stock would be offered only by means of a prospectus
complying with such act.
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