What is Topokine Therapeutics?
Allergan (AGN) announced the acquisition of Topokine Therapeutics, a biotechnology company that develops fat reducing medicines, in April 2016. The company acquired Topokine for an upfront payment of $85 million with further milestone payments based on the development and sales of the product XAF5.
What does the deal mean for Allergan?
Allergan acquired Topokine Therapeutics for its XAF5 technology and pipeline. Allergan is a leader in medical and facial aesthetics products, and XAF5 is a potential treatment for Steatoblepharon (or under-eye bags). Topokine has over 75 issued and pending patents worldwide. With the addition of XAF5 to Allergan, the company now has over 70 innovative products in its mid-to-late stage pipeline.
XAF5 and its function
XAF5 is a product from Topokine’s portfolio recently acquired by Allergan. XAF5 is an ointment formation developed to treat steatoblepharon. XAF5 is presently under the phase IIb/III clinical study known as XOPH5-OINT-3. XAF5 is applied to lower eyelids at night. It penetrates the skin and acts on the fat cells to shrink under-eye bags. As per Allergan’s press release, estimates suggest that around 40 million Americans have steatoblepharon.
Investors can consider ETFs like the Fidelity MSCI Healthcare ETF (FHLC), which holds ~2.3% of its total assets in Allergan or the iShares US Healthcare ETF (IYH), which holds ~4.2% of its total assets in Allergan in order to divest the risk. Apart from Allergan, IYH also holds 4.2% of its total assets in Amgen (AMGN), 5.2% in Merck & Co. (MRK), and 4.0% in Bristol-Myers Squibb (BMY).