(By Balachander) Medicis Pharmaceutical Corp. (NYSE: MRX) shares are down sharply after disclosing that Q-Med has filed a suit against the company related to Medicis' merger with Valeant Pharmaceuticals International Inc. (NYSE: VRX).
Medicis holds exclusive U.S. and Canadian rights to market certain dermal filler products, including RESTYLANE, RESTYLANE-L, PERLANE, PERLANE-L and RESTYLANE FINE LINES, through certain license and supply agreements with Q-Med.
The lawsuit alleges that Q-Med has the right to withhold consent to a change of control of Medicis that would result in a transfer to Valeant of the exclusive rights to market and sell the dermal filler products.
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Valeant agreed to acquire Medicis for roughly $2.6 billion or $44.00 per share in cash in September.
Q-Med alleges that the action is in aid of arbitration to prevent Medicis from transferring such rights to Valeant as a result of the merger. Q-Med seeks a preliminary injunction prohibiting Medicis from transferring its rights to Valeant during the pendency of the arbitration proceedings that Q-Med will bring.
Medicis believes that Q-Med's action is without merit and intends to vigorously defend itself, the company said in a filing with the U.S. Securities and Exchange Commission (SEC).
Medicis shares, which have been trading in the 52-week range of $29.76 to $43.70, fell 4.96 percent or $2.16 to trade at $41.20 on Friday. Valeant shares added 0.39 percent.