Valeant Pharmaceuticals has signed a definitive agreement to acquire Dow Pharmaceutical Sciences (DPS), Inc. According to a Valeant statement, the transaction will boost Valeant’s dermatology franchise in the U.S. through the acquisition of a specialized dermatology R&D organization, including a newly approved product and a robust pipeline of five dermatology products, three of which are in Phase II clinical development.

Valeant will pay Dow $285 million, subject to certain closing adjustments. Approximately $8 million in cash will be retained from current Dow accounts, making the net amount paid $277 million. In addition, there are commercialization milestones that may ultimately raise the price of the acquisition. DPS’ current annualized revenues are approximately $45 million, of which approximately $20 million represents royalty payments from products already out-licensed by DPS.

DPS recently received approval from the FDA for Acanya, a novel topical prescription medication indicated for the treatment of mild to moderate acne. Acanya is expected to be launched in the U.S. in early 2009. Dow has products in clinical development for the treatment of rosacea, moderate to severe acne, fungal infections and common warts. Valeant anticipates at least one DPS product will enter Phase III in 2009, with a product launch possible by 2012. In addition, DPS operates a topical products services business dedicated to working with external sponsors for the formulation and development of topical therapies.

“This acquisition grows our scale and capabilities in dermatology, thus solidifying Valeant’s future as a leading company in the development and commercialization of dermatology medications,” stated J. Michael Pearson, chairman and chief executive officer of Valeant. “Gordon Dow, the founder of Dow Pharmaceutical Sciences, and his team are highly regarded with innovative formulation and development expertise, exemplified by having worked on 10 dermatology approvals from the FDA in the past few years and with projects underway in eight of the top 10 dermatology diagnoses. We are excited that they will be joining the Valeant team as we believe the synergies between our newly acquired Coria franchise and Dow’s business will provide sustainable growth for many years to come.”