In FY23, pharmaceutical company Mayne Pharma (ASX: MYX) reimagined its business to focus on dermatology and other core businesses. In line with that, the Company has entered into an asset purchase agreement to acquire the global rights to the rosacea treatment RHOFADE (oxymetazoline hydrochloride) cream from medical dermatology companies Novan and its subsidiary EPI Health. 

The acquisition is worth $12.39 million in cash at closing plus associated cure costs are not to exceed $2.32 million. The deal finalisation is subject to court approval.  

RHOFADE is a topical treatment of persistent facial erythema, i.e. intense, long-lasting redness, associated with rosacea (a skin condition) in adults. For the 12 months ending March 2023, specialty dermatology company EPI Health had approximately $18.59 million in net sales for RHOFADE. 

For Mayne Pharma, this acquisition then represents the addition of a single source, immediately accretive asset to its portfolio of dermatology products.

Mayne Pharma’s CEO, Shawn Patrick O’Brien, said, “This acquisition is a great example of how we’re able to leverage our existing dermatology infrastructure to add immediately accretive, wellknown brands to our portfolio. We’re continuing to focus on identifying and taking advantage of strategic expansion opportunities, and RHOFADE fits well with our other products that help patients suffering from rosacea. 

“Our goal, as always, is to give patients access to high quality medications while reducing the burden on prescribers, ultimately allowing us to drive long-term revenue growth and deliver shareholder value.” 

The FDA-approved RHOFADE cream aims to reduce persistent facial redness, as evaluated by doctors and patients in two 29-day trials. Results on the 29th day, at hours 3, 6, 9, and 12, indicated improvement in 12% to 18% of RHOFADE users, compared to 5% to 9% in the control group.

In FY23, Mayne Pharma decided to focus its efforts on core businesses—women’s health, dermatology and international divisions—after recording an EBITDA loss of $102 million against a profit of $9 million in FY22. The Company spent more on its future growth, with investment in its dermatology division amounting to $28.3 million. The loss also included expenses related to securing the exclusive US rights to a range of women’s health products (ANNOVERA, IMVEXXY, and BIJUVA), as well as prenatal vitamins. 

Nonetheless, during this period, the Company’s revenues reached $183.6 million, marking a 17% increase compared to FY22, thanks to growth in its International division. Additionally, it successfully completed the sale of Metrics Contract Services and its US Retail Generics divisions, generating a total sale amounting to $875.36 million. 

Mayne Pharma’s focus on dermatology is a result of the growing desire for disintermediation in the industry. The Company boasts over 400 specialty pharmacy locations and has the Adelaide Apothecary for cash-pay claims, licensed to operate in 50 states.

Most dermatological conditions are not permanently cured, resulting in ongoing demand and continuous refills. There are long cycle times for treatment, and for non-acute conditions, people are willing to wait for shipping and shop online. This creates a lucrative opportunity for Mayne Pharma. 

For Dermatology, the Company plans to continue to enter into capital light, but profitable business arrangements in FY24. Accordingly, it is building its channel strategy and leveraging its ability to drive market share to expand partnerships.

Mayne Pharma is yet to ascertain how much the RHOFADE acquisition will contribute to its revenue. 

The Company ended the year with net cash of $172.6 million.