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NICE Rec for Allergan's Botox

AGN

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Allergan (AGN - Analyst Report) recently announced that Botox (botulinum toxin type A) has been recommended by the National Institute for Health and Clinical Excellence (NICE) in the final draft guidance.

NICE is recommending the use of the product for the prophylaxis treatment of headache in adults with chronic migraine, who have not responded to at least three prior preventative treatments and whose condition is appropriately managed for medication overuse in England and Wales. 

A final guidance by NICE is expected to be published in June. Primary Care Trusts (PCTs) will have to allocate funds within 3 months after the final guidance is issued.

Botox is already approved by the U.S. Food and Drug Administration (FDA) for the treatment of chronic migraine headache in adults. Last year in August, Botox received FDA approval for the treatment of neurogenic overactive bladder (OAB).

The other uses of the drug comprise treatment of increased stiffness of muscle 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.

We note that Botox, which faces competition in the U.S. from Medicis Pharmaceutical Corp.’s Dysport, posted sales of $398.9 million in the first quarter of 2012 (up 9.4% 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 currently have a Neutral recommendation on Allergan. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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