Palomar Medical Technologies to continue commercialization of its wrinkle treatment laser device

Palomar Medical Technologies Inc. (Nasdaq: PMTI), a leading researcher and developer of light-based systems for cosmetic treatments, today announced the termination of its agreement with Johnson & Johnson Consumer Companies Inc ("JJCC"), a Johnson & Johnson company, to develop, clinically test and commercialize home-use, light-based devices for (i) reducing or reshaping body fat including cellulite; (ii) reducing appearance of skin aging; and (iii) reducing or preventing acne. Despite Palomar having met all of its deliverables under the agreement, JJCC terminated the agreement referencing the current unfavorable economic conditions as the reason for its decision. With this decision, JJCC avoids having to make a large commercialization payment to Palomar and avoids having to commit to the significant level of funding required to successfully launch a new product into the mass market. Upon termination of the agreement, JJCC's license to Palomar technology was terminated and all technology and intellectual property rights related to light-based devices developed under the agreement were assigned to Palomar. JJCC is also precluded from further development or commercialization of the light-based devices developed under the agreement.

Palomar will continue with the commercialization of the light-based devices developed under the agreement. In June 2009, Palomar was the first company to receive a 510(k) over-the-counter (OTC) clearance from the United States Food and Drug Administration (FDA) for a new, patented, home-use, laser device for the treatment of periorbital wrinkles. OTC clearance allows this wrinkle treatment device to be marketed and sold directly to consumers without a prescription. This consumer wrinkle treatment device was developed by Palomar and completed together with JJCC. Designed specifically for use in the home and based on years of research and clinical testing, this consumer device represents a major breakthrough in the aesthetic device industry.

In order to achieve FDA clearance, numerous clinical studies with hundreds of subjects and thousands of treatments were conducted. These studies demonstrated that the laser-based device delivers comfortable, effective, skin and eye safe wrinkle treatment around the eyes.

Commenting on this development, Palomar Chief Executive Officer Joseph P. Caruso said, "We have developed game changing technology in the consumer area. Over the past few years we have developed advanced patented technology that allows us to penetrate the home market. Wrinkle treatments using OTC products are a multi-billion dollar market opportunity and we plan on entering that market with our products during the second half of next year. The current economic climate does not warrant a large scale investment in a mass market launch at this time. Therefore, we have adjusted our launch plans to be more in line with current economic conditions. In the short-term, our goal is to establish our consumer products in the market using certain specialty channels and gather the valuable information needed to fully execute our long-term strategy of a full mass market launch. Our long-term goal remains the same; to tap into the mass market using our patented technology in a number of key areas with multiple product offerings and multiple channels worldwide".

Mr. Caruso continued, "We believe that light-based anti-aging applications will one day be an ordinary and necessary part of maintaining a healthy appearance done in the privacy and convenience of the home. We were fortunate to have advanced this technology with the help of a partner who invested significant resources along the way in research, development, clinical testing, consumer testing, and patent protection that will make this a reality and ensure that Palomar maintains a leadership position in this innovative technology. We envision a strong market for this OTC device and an increase in consumer awareness that will help drive growth in our professional business."