Good news flowed in at Allergan (AGN) recently when the National Institute for Health and Clinical Excellence (NICE) recommended Botox (botulinum toxin type A) in its final guidance. NICE has recommended the use of the product for the prevention 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.
Primary Care Trusts (PCTs) will now have to allocate funds within three months for migraine patients being treated with Botox. We expect that NICE’s decision will facilitate better access to the drug by patients. A final draft guidance was issued by NICE in May 2012, giving an indication about NICE’s final decision.
Botox is also approved in the US for the treatment of chronic migraine headache in adults. Last year in August, Botox received US food and Drug Administration (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. Of course, Botox Cosmetic is also used to temporarily improve the appearance of moderate-to-severe facial wrinkles in adults.
We note that Botox, which faces competition in the US from Medicis Pharmaceutical Corp.’s (MRX) 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 Botox sales guidance is achievable considering that Botox enjoys78% share 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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