On Aug. 21, Allergan, Inc. (AGN) received a warning letter from the U.S. Food and Drug Administration’s (FDA) Division of Drug Marketing, Advertising and Communications (DDMAC) regarding a misleading advertisement used by the company for its acne treatment Aczone Gel, 5%.

Aczone is a topical gel formulation, which is approved in the U.S. and Canada for the treatment of acne vulgaris in patients 12 years and older. Allergan acquired the product in July 2008 from QLT Inc. for $150 million in order to bolster its skin care franchise.

In the warning letter, the FDA stated that the claims made by the company in the advertisement are a misrepresentation of the clinical results. According to the agency, the benefits of Aczone have been overstated.

In the advertisement, Allergan claims that Aczone caused a 24% reduction in inflammatory lesions in two weeks. However, the advertisement failed to mention that the results are not statistically significant and that treatment with placebo resulted in a 22% reduction in inflammatory lesions over the same time period.

The agency also stated that Allergan failed to include important risk information regarding Aczone’s negative reactions with other products like benzoyl peroxide, which can lead to a temporary discoloration of the skin and facial hair.

A company spokesperson stated that the advertisement was discontinued earlier this year and has been replaced by a new ad. Allergan has until Aug. 28 to respond to the letter. If the company fails to comply with the agency’s request, the FDA could take several regulatory actions, including seizure or injunction, without further notice.

Any regulatory action would be a setback for the company’s skin care segment. Allergan launched the product in November 2008 and reported an encouraging feedback with several physicians prescribing the product.

Since its launch in the U.S. in November 2008, Aczone has helped boost skin care segment sales. According to the company, Aczone could achieve peak sales in excess of $75 million.

We currently have a Neutral rating on Allergan. The company has a broad range of products in its portfolio which face competition from players Alcon, Inc. (ACL), Medicis Pharma (MRX), Johnson & Johnson (JNJ) and Pfizer (PFE).
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