As the FDA reviews the safety of silicone, Inamed and Mentor are examined.

April 12, 2005

Inamed appeared before an FDA panel on Tuesday in its bid to get silicone breast implants back on the U.S. market.

"We believe the risks are acceptably low," said Dan Cohen, vice president of corporate affairs at Inamed, Reuters reported. Inamed, based in Santa Barbara, California, is asking the Food and Drug Administration to approve its Style 410 silicone implants.

A committee for the FDA continued to hear testimony on the safety of silicone breast implants, part of a three-day review of the cosmetic medical devices. It is scheduled to vote by Wednesday on whether two types of silicone gel-filled breast implants, made by Inamed and Mentor, should go back on the U.S. market.

Inamed shares rose $0.76 to $66.91 on Tuesday. Mentor shares were unchanged at $34.56.

If the panel votes "yes," both Inamed and Mentor shares could rise up to 10 percent, said Thom Gunderson, an analyst at Piper Jaffray. But he warned that Wall Street is being cautious because the last time silicone implants were reviewed in October 2003, an FDA panel approved them, but the final FDA ruling kept the products off the market.

The FDA’s recent review of Inamed and Mentor’s data (see Silicone Comeback Looking Grim) was "harsh," according to a report by investment firm Adams Harkness. The report goes on to say that both Mentor and Inamed are subject to "headline risk" that could negatively affect shares due to public concern about silicone breast implants.

Inamed has lost share in the U.S. dermal market to competitor Medicis Pharmaceutical, according to the Adams Harkness report. However, Medicis plans to acquire Inamed for $2.8 billion (see Aesthetic Medicine Makeover). The report says that Mentor could be a risky bet if it halts its path of acquiring other companies, something the company has historically relied on to drive revenue growth. Mentor, based in Santa Barbara, California, is expected to testify before the FDA panel on Wednesday.

Adams Harkness has business ties to both Inamed and Mentor. It makes a market in the shares of Inamed and it has received compensation for non-investment banking securities-related services from Mentor in the last 12 months.