Label Expansion for Botox

Allergan, Inc. (AGN) recently received good news with the US Food and Drug Administration (FDA) granting approval to Botox for the treatment of increased muscle stiffness in the elbow, wrist and fingers in adults with upper limb spasticity.
 
The FDA approval comes after the company submitted additional data following the receipt of a complete response letter from the agency in May 2009.
 
Botox was originally developed for the treatment of certain ophthalmic movement disorders, but has since seen strong growth thanks to approval for additional indications.
 
Although Botox is known more for its cosmetic uses, therapeutic indications accounted for 52% of total Botox sales in 2009. Allergan has been working on gaining approval for additional indications for Botox. Botox sales declined marginally in 2009 mainly due to weak consumer spending, concerns regarding its safety record, and increased competition from Medicis Pharma’s (MRX) Dysport.
 
In order to drive growth, Allergan is currently conducting studies for several indications including chronic migraine, lower limb spasticity, neurogenic overactive bladder, idiopathic overactive bladder and benign prostate hyperplasia.
 
The next round of approval could come for the chronic migraine indication for which Allergan filed a supplemental Biologics License Application (sBLA), with the FDA in the third quarter of 2009. Allergan has also submitted regulatory files in the fourth quarter of 2009 to the authorities in the United Kingdom, France, Switzerland and Canada.
 
While the chronic migraine indication could be a multi-hundred million-dollar opportunity for Botox, the spasticity indication, which affects about 1 million Americans, especially after a stroke, could bring in incremental sales in the range of $200 - $300 million. Allergan expects Botox sales in the range of $1,330 million - $1,370 million in 2010.
 
We currently have a Neutral recommendation on Allergan. We believe that the company’s presence across different segments and geographies will help maintain decent growth going forward. Although growth slowed down in 2009, we believe the company will be back on its historical mid-to-high teens earnings growth trajectory from 2011.
 

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