Allergan Inc. (AGN) has inked an agreement to acquire the dermatology company Vicept Therapeutics, which we believe will substantively boost the former's skincare product portfolio. For the acquisition, which is expected to close in the third quarter of 2011, Allergan will make an up-front payment of $75 million. Vicept is also entitled to receive up to $200 million on the achievement of certain development, regulatory and sales milestones.
V-101, Vicept’s lead pipeline candidate, is a topical cream for the treatment of erythema (redness) associated with rosacea. The candidate demonstrated positive results in two mid-stage trials.
Erythematotelenagietic rosacea (ETR), Type I, is a skin disorder that is characterized by frequent episodes of transient facial erythema (flushing) and non-transient, or persistent, erythema. It can also be accompanied by facial edema, burning, or stinging, and sensitivity of the skin and intolerance to topically applied products.
We note that the acquisition of Vicept will expand Allergan’s dermatology product portfolio with the addition of V-101 and help the company gain a foothold in the untapped ETR market.
Allergan has been quite active in its bid to overcome the significant challenges it is facing due to the European pricing pressure, safety issues surrounding the use of Botox, and increased competition from companies like Johnson & Johnson (JNJ) and Medicis Pharmaceutical Corp. (MRX”>MRX).
The recent licensing agreement with Molecular Partners AG for the development and commercialization of MP0112 is a case in point. The candidate, which is being evaluated as a treatment for retinal diseases, is currently in mid-stage testing.
We currently have a Neutral recommendation on Allergan. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.
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