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Analyst Blog

Recently, Allergan, Inc. (AGN - Analyst Report) announced positive data from two phase III trials of Botox (onabotulinumtoxinA). The trials evaluated the drug in patients with idiopathic overactive bladder (OAB), who were suffering from urinary incontinence and responded inadequately or were intolerant to anticholinergic treatment (current standard of care).

The trials witnessed significant reduction in the episodes of urinary incontinence when Botox was used as compared to placebo. The company plans to present the full results from the trials at an upcoming scientific meeting.

Armed with the encouraging results, the company has filed for regulatory approval in both US and Europe for the use of Botox in adult patients who suffer from OAB with symptoms of urinary incontinence, urgency and frequency, and do not show adequate response to anticholinergic treatment.

Last year in August, Botox received US Food and Drug Administration (FDA) approval for the treatment of neurogenic OAB. We note that neurogenic OAB was the seventh indication for which Botox has received approval in the US. In October 2010, the FDA approved Botox for the treatment of chronic migraine headache in adults.

The other uses of the drug comprise treatment of increased muscle stiffness in elbow, wrist, and finger muscles in adults with upper limb spasticity; treatment of abnormal head position and neck pain that happens with cervical dystonia in patients aged 16 years and above; and treatment of certain types of eye muscle problems (strabismus) or abnormal spasm of the eyelids (blepharospasm) in patients aged 12 years and above.

Botox is also used to treat the symptoms of severe underarm sweating in adults. Additionally, Botox Cosmetic is used to temporarily improve the appearance of moderate to severe facial wrinkles in adults.

Our Take

We note that Botox, which faces fierce competition in the US from Medicis Pharmaceutical Corp.’s Dysport, posted sales of $1.6 billion in 2011 (up 12.4% from the year-ago period). Botox is the key product of Allergan, representing almost 30% of net product sales. Cosmetic and therapeutic indications contribute equally to total Botox sales.

Allergan expects Botox sales in the range of $1.7 billion – $1.8 billion in 2012. We believe that the 2012 Botox guidance is achievable considering the 78% share Botox enjoys of the $2.1 billion global neuromodulators market, which is growing at a rate of 16%. We expect that positive results in the idiopathic OAB indication can translate into a regulatory approval thus contributing to an upside in sales.

We currently have a Neutral recommendation on Allergan, which is supported by a Zacks #3 Rank (short-term Hold rating).

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