) recently announced that it has entered into an agreement with a
privately held company, SkinMedica, Inc. to acquire the latter's
topical aesthetics skin care business. Allergan will make an
upfront payment of $350 million to SkinMedica and additional
milestone payments of $25 million on the achievement of certain
sales targets by the acquired products. The deal is expected to
close by year end.
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SkinMedica's product portfolio includes several products for skin
care benefit (including enhancing skin appearance and reducing
signs of aging). SkinMedica's key product, Vaniqa (eflornithine
hydrochloride) cream 13.9%, is the only prescription product for
the reduction of unwanted facial hair in women approved by the US
Food and Drug Administration (FDA). We note that the deal will
not include SkinMedica Colorescience aesthetic make-up line,
which would be spun-off by SkinMedica.
SkinMedica's products should complement Allergan's facial
aesthetics portfolio, which currently includes Botox, Juvederm
During the year a lot interested has been generated by the
dermatology business. In September 2012,
Valeant Pharmaceuticals International, Inc.
) entered into an agreement with to acquire
Medicis Pharmaceutical Corp.
), a specialty pharmaceutical company engaged in the development
and marketing of products for dermatological and aesthetic
conditions. In July 2012,
) acquired Melville, New York-based specialty dermatology
generics company, Fougera Pharmaceuticals.
While we believe that the Allergan-SkinMedica deal makes
strategic sense, we remain concerned about Botox's sales post
re-entry of Merz Pharmaceuticals' Xeomin in the market. The March
2012 injunction against Merz Pharma is only valid till January 9,
We also note that the obesity intervention segment of Allergan
has performed disappointingly for the past few quarters. The
company is considering a potential sale of the obesity
intervention segment as an option in its efforts to maximize the
returns from this business.
We currently have a Neutral recommendation on Allergan, which
carries a Zacks #2 Rank (short-term Buy rating).