FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Medicis Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MDRX)") else Response.Write("(NASDAQ: MDRX)") end if %>
4343 East Camelback
Suite 250
Phoenix, AZ 85018-2700
(602) 808-8800
http://www.medicis.com

UNION CITY, Ca., October 25, 1996/FOOLWIRE/ --- Medicis Pharmaceuticals released their first quarter 1997 results this Wednesday afternoon. Their sales increased 59% over the year ago quarter from $4.6 million to $7.3 million.

STRONG SALES RESULTS FOR DYNACIN, TRIAZ, & ESOTERICA. Their sales increases were driven by the very strong performance of their prescription products, notably Dynacin and Triaz. It was also a quarter where they saw a very strong performance from their Esoterica over-the-counter brand and they believe that this performance, both in units and in price per unit is directly attributable to an increase in their advertising and promotion against that brand, notably the sponsorship of regional radio advertising. They have seen a significant uptake in volume in certain markets and they intend to turn the gas on even further in the quarters ahead and improve sales of their over-the-counter product group as well.

FINANCIAL HIGHLIGHTS FOR Q1. Income from operations increased 137% from about $655,000 to $1.6 million (this year's Q1 versus last year's Q1). Because of the tax effect of about $0.25 per share, Medicis had a very significant increase in their earnings per share (up $0.36 per share), from $0.10 per share in Q1 1996 to $0.46 per share in Q1 1997. Still, $0.21 of this $0.46 per share were directly attributable to operations. They are always concerned about gross profit margins as they seek to increase their overall profitability by product and are pleased to note that gross profit margins increased 2 points to 73% in Q1 this year from 71% in Q1 last year. Their income from operations increased to 22% of sales from 15% in last year's Q1, again a very important move in the right direction by a significant economic measure. Medicis' cash position is also very strong. It was strong last quarter and is stronger yet today as a result of the secondary offering that the company completed in the quarter. They have, at this point, close to $10 per share in cash value.

CLINICAL STUDIES. They are very aggressively in the clinical studies area to support both their existing products and new products. They were very pleased to release to the dermatology community last week a very strong study that compares Triaz on a controlled, blinded basis, against two of its major competitors in the market. And they are pleased to say that in this two-week study there was a dramatic and statistically significant favoring of Triaz in terms of its antimicrobial affect, a 20-fold improvement for Triaz versus the Upjohn product and no improvement at all was seen in the patients using the third product in the study. Medicis overlays this on a number of other studies they have conducted and they believe that as they go out in the field and tell the story for Triaz, that the weight of evidence really favors switching patients from their existing therapies to Triaz. They have now completed 8 different clinical protocols and, again, the results have been uniform in their favoring of Triaz over competitive brands. They plan to make use of additional studies going forward to support Triaz and Dynacin. They also expect to spend heavily in R&D to get new products ready for market introduction.

ACQUISITION STRATEGY. During the recent road show accompanying the secondary offering, they were asked a lot about acquisition strategy. Their comment during the road show was that they believe there are a number of suitable candidates for acquisition that either are available or perhaps can become available in the months and years ahead. They are in a constant process of evaluation and when a product meets what they think are very stringent criteria they would hope to move ahead and seek acquisition of either a brand or a business that strategically complements their own. Those criteria would include the quality and leadership of the product (i.e., is the brand or are the brands ones that Medicis would be proud to sell, would they be consistent with Medicis' winning and leading image of product presentation with dermatologists). If the answer to that question is "yes" they would very carefully examine the gross profit margin characteristics. If they are high, understanding that Medicis is already at 73% and want to move even higher in their gross profit margins, they would obviously look to see the economic factors associated with acquisition (i.e., is a brand purchasable on a basis that is acretive to shareholders and are their other complementary strategies they might employ). They are going through this process right now and will continue to. While they make no prediction or representation as to their success, they are hopeful. They are also hopeful that there are technologies, either on a finished or near finished basis, that the company will be able to acquire or license to serve as an important source of new product and new product revenue.

SUMMARY/OUTLOOK. For the balance of the year, they see continued strong performance of their major brands. They see the introduction of new products as something that is a very important objective and they work hard to achieve that objective in this fiscal year with a high degree of confidence. They have had a capacity issue in terms of management time and sales resources. They are finding a very strong response in the dermatology community to their products and their message. They are likewise finding a very strong response to their liquidity among those companies that have technologies or products that they would like to see introduced to market. So, they find themselves busy selling and busy in the evaluation process. They think that a lot of their stretch is probably attributable to the time they spent on the roadshow in connection with the secondary offering, so they don't want to overstate it. As far as the sales organization, Medicis intends to expand to perhaps 4 or 5 additional territories to increase their effectiveness in sales, to shorten the cycle of time between visits to the doctors. They don't see any noteworthy expansions in personnel.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.