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• GSK 100% Rate It

GlaxoSmithKline ( GSK ) recently announced that its subsidiary Stiefel's Fabior (tazarotene) Foam, 0.1%, received approval from the U.S. Food and Drug Administration (FDA). Fabior Foam, 0.1% is approved as a topical treatment for acne vulgaris in patients 12 years and above.

The approval was based on data from two pivotal phase III studies conducted with Fabior Foam. The 12-week, randomized and double-blind trials were conducted in a total of 1,485 patients with moderate-to-severe acne vulgaris. Patients receiving Fabior Foam demonstrated significant reductions in lesion counts.

In the U.S., acne is the most common skin related problem and affects primarily adolescents and young adults. Hormonal changes, heredity, certain medications and greasy cosmetics are believed to be the possible causes of acne.

Neutral on Glaxo

We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold rating) in the short run. A major part of Glaxo's revenues will be exposed to generic competition as multiple drugs are scheduled to lose exclusivity in the next few years.

We expect the company's top line as well as gross margins to remain under pressure in the coming quarters. In addition to generic competition, the U.S. health care reform and E.U. pricing pressure will continue to affect sales.

Glaxo recently launched a hostile bid to acquire the outstanding shares of Human Genome Sciences, Inc. ( HGSI ) for a cash payment of $13 per share.

Glaxo would get exclusive rights to Benlysta as well as other candidates such as darapladib and albiglutide if it succeeds in acquiring Human Genome. The acquisition will raise the returns on research and development (R&D) expenses for Glaxo and lead to cost synergies of minimum $200 million by 2015. We believe this potential takeover would be accretive for the company from 2013.

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