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Allergan’s Q2 Results Bolster Analyst’s View on Stock

Allergan Inc.’s second-quarter results have Morgan Stanley & Co. touting the drug maker’s shares.

The investment bank took a shine to the Irvine drug maker in a report last month after Allergan reported results that beat Wall Street estimates.

Morgan Stanley raised its target price for Allergan to $91 from $85, though Allergan already had surpassed that in mid-August and was trading at $93 last week.

Its recent market value of $12.1 billion makes it the No. 2 public company based in Orange County behind Broadcom Corp.

“Overall, this was a very strong quarter for the company, and it reinforces our view that Allergan remains a strong core holding in any growth portfolio,” Morgan Stanley said.

The report pointed to Allergan’s free cash flow and improving return on equity and capital as reasons.

Excluding restructuring costs, Allergan posted a second-quarter profit of $102 million, up 24% from a year earlier, on sales of $591 million.

Analysts were expecting $98 million in profit after charges.

Net income for the quarter was off by 64% from a year ago due to charges related to the end of a manufacturing pact with Santa Ana’s Advanced Medical Optics Inc., which spun off from Allergan in 2002, and changes to its research and development and European operations.

Allergan’s results “should continue to be driven by an unique anchor product in Botox,” according to Morgan Stanley, along with what it called a “solid and diverse product portfolio.”

Botox is Allergan’s flagship wrinkle-removing neurotoxin. The drug is being studied for other uses.

During the second quarter, Allergan said it met with the Food and Drug Administration regarding using Botox to control overactive bladders and to treat migraines.

Meanwhile, New York cosmetic company Elizabeth Arden Inc. said it plans to sell Prevage, an anti-aging treatment developed with Allergan, in department stores this fall and overseas in 2006.

Elizabeth Arden, in published reports, said it expected to have Prevage in 2,000 stores in time for the holiday season. Prevage also is set to be in about 200 upscale stores that didn’t previously carry Elizabeth Arden products.



Smoking Ban’s Effects

Christopher Carpenter, a professor of economics and public policy at the University of California, Irvine’s Paul Merage School of Business, received a couple of grants totaling $109,000 from the Robert Wood Johnson Foundation and the University of California to study substance abuse-related laws.

Carpenter’s smaller study, supported by a grant from UC’s Labor and Employment Fund, is set to look at the effects of California’s 1998 ban of smoking in restaurants and bars.

Carpenter said in a release that current research on the smoking ban generally ignored bar and restaurant workers, which are the focus of his research.

He’s planning to look at several things: secondhand smoke exposure, the smoking rates of restaurant and bar workers compared to other indoor workers who faced smoking bans, and comparing bar and restaurant workers in states without bans.

Bar and restaurant workers, according to Carpenter, are exposed more to secondhand smoke, have higher smoking rates, lower incomes and lower rates of health insurance coverage compared with others who work inside.

Besides the smoking study, Carpenter also plans to look at how alcohol use by teens leads them to smoke cigarettes and marijuana.



Home Healthcare Company Sold

Newport Beach’s Building Blocks Home Pediatric Services Inc. earlier this month was sold to EncounterCare Solutions Inc. for an undisclosed price.

Building Blocks provides home nursing care and related services for medically fragile children. It has revenue of $2.9 million.

EncounterCare is a Pink Sheets-traded company out of Columbia, S.C., with three divisions,a physician management unit, a healthcare procurement unit and a technology unit.

The deal also led to management changes. John Stanton, Building Blocks’ former president, becomes a board member of EncounterCare and acting chairman. Ronald Mills, EncounterCare’s chief executive, is set to become Building Blocks’ president.

EncounterCare said in a release that it wanted to use the combined company to expand the Building Blocks service nationwide.



Bits and Pieces:

Toshiba America Medical Systems Inc., Tustin, recently introduced Infinix, a flat-panel diagnostic imaging system for cardiac conditions. Toshiba worked with Columbus Children’s Hospital in Columbus, Ohio, to develop the system Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University, plans to present his “Orange County Economic Health Care Forecast” at the Sept. 22 meeting of the Orange County Employee Benefit Council. The program runs from 7:30 a.m. to 9:30 a.m. at the Beckman Center across the street from UCI Doctors Telehealth Network, Newport Beach, has a system that it said would allow healthcare professionals to perform remote patient examinations, exchange medical data, hold videoconferences, conduct distance learning and allow users to access a complete network of doctors and medical specialists.

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