Recently, Allergan Inc. (AGN) received a boost when the US Food and Drug Administration (FDA) approved its eye drug Ozurdex (dexamethasone intravitreal implant) for an additional indication. The injectable eye implant, a biodegradable capsule, has received the FDA nod for treating patients suffering from non-infectious ocular inflammation (uveitis), targeting the posterior section of the eye.
Uveitis results in the swelling and irritation of the uvea (the middle layer of the eye) of the eye. Even though uveitis affecting the front of the uvea is more common it does not impair vision. However, posterior uveitis has much more serious consequences such as blindness, cataracts, secondary glaucoma and macular disorders. Posterior uveitis is the reason behind 10% to 15% blindness cases in the US .
Prior to the approval, the efficacy of the drug was evaluated in a 26-week, multi-center, double-masked, randomized study. The study witnessed 77 patients being injected with 0.7 mg of Ozurdex while 76 patients received sham injections. The results from the study revealed that the proportion of patients free from inflammation was higher in the Ozurdex arm compared with the sham arm.
The eye drug was approved in the US in 2009 for treating patients suffering from macular edema (a disorder resulting in the build-up of fluid in the eye), making it the first drug to be approved for macular edema following retinal vein occlusion (RVO).
We believe that the approval of Ozurdex for the additional indication will not only provide more treatment options for patients suffering from the disease, but should also boost the top line at Allergan.
Our Take & Recommendation
From a fundamental standpoint, we are enthusiastic about the future of Allergan. Although the company is facing significant challenges in the form of slowing sales due to the global economic weakness, EU pricing pressure, safety issues surrounding the use of Botox, and increased competition, we think Allergan will be able to face these challenges well and will be back on its historical mid-to-high teens earnings growth trajectory from 2011.
We consider Allergan to be one of the premier specialty pharmaceutical companies in the world. Allergan has been pretty active on the acquisition and collaboration front over the past few years. We believe these acquisitions and collaborations will provide the company with the opportunity to drive growth in its existing business and to expand into new areas of business. Allergan’s presence across different segments and geographies should help maintain decent growth going forward.
Currently, we have a Neutral recommendation on Allergan, which is supported by a Zacks #3 Rank (short-term Hold rating).
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