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Allergan, Inc. (AGN - Analyst Report) recently gained approval for using its key drug, Botox, for another indication. The FDA granted approval to Botox Cosmetic for the temporary treatment of moderate to severe lateral canthal lines, which are commonly known as “crow’s feet” lines.

The FDA approval makes Botox the first and only product of its kind to gain approval for this indication. Allergan had conducted two randomized, multi-center, placebo-controlled studies to establish Botox’ safety and efficacy for this indication.

Botox is approved for therapeutic as well as aesthetic use. Therapeutic indications include treatment of overactive bladder symptoms (adults), prevention of chronic migraine headaches (adults), treatment of increased muscle stiffness in elbow, wrist, and fingers in adults with upper limb spasticity, treatment of abnormal head position and neck pain related to cervical dystonia (age ≥16), treatment of certain types of eye muscle problems or abnormal spasm of the eyelids (age ≥12) and treatment of the symptoms of severe underarm sweating (adults).

Cosmetic indications include the temporary improvement of glabellar lines (frown lines between the brows) in adults below 65 years of age.

Botox is a major contributor to Allergan’s top line. First half 2013 sales came in at $970.9 million, up 12.9% from the year-ago period. Allergan expects Botox sales of $1.94 billion - $2.00 billion in 2013. Botox’ label expansion should help Allergan achieve the guidance. The chronic migraine, bladder and upper limb spasticity indications represent significant potential.

Allergan currently carries a Zacks Rank #3 (Hold). Although we believe Allergan’s presence across different segments will help maintain growth, we remain concerned about the generic and competitive challenges being faced by the company.

Currently, companies that look well-positioned include Roche (RHHBY - Analyst Report), Bayer (BAYRY - Analyst Report) and Novo Nordisk (NVO - Analyst Report). While Roche is a Zacks Rank #1 (Strong Buy) stock, Bayer and Novo Nordisk are Zacks Rank #2 (Buy) stocks.

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