Irvine-based Allergan Inc., maker of wrinkle-fighting Botox and other drugs, is gaining more attention on Wall Street.
At least one analyst even crafted a pun—intended or otherwise—to lay out a case that Allergan’s current market value of about $20 billion points to a “great company at a valuation that assumes few wrinkles.”
That came from Seamus Fernandez, an analyst with Leerink Swann LLC of Boston, which recently resumed coverage of Allergan.
Fernandez listed several positive points for investors, including “solid” anticipated year-over-year earnings per share growth along with potential upside from new uses for Botox, Allergan’s flagship drug. Other strengths, according to Fernandez: product diversity and what he called “market leader status in cosmetic dermatology.”
The next big driver for Allergan’s shares could be the approval of Botox for treating overactive bladder, according to Fernandez. That could be worth $500 million to $1 billion in annual sales, he said.
Allergan’s positive factors are “evenly balanced” by some concerns, including what Fernandez called “intensifying competition” for Botox Cosmetic and lower face wrinkle filler Juvéderm.
Other challenges include tempered expectations for growth of Botox for treating chronic migraine headaches and what he called “patent trial overhangs” for glaucoma drugs Lumigan and Combigan coming up later this year.
On Botox for migraine, which was approved in October, Fernandez said he expects its “early uptake to be measured” because of the need to train doctors on how to use it, as well as reimbursement from insurers.
He quoted a doctor survey by Medacorp, a Leerink Swann research arm, showing that neurologists and primary care doctors estimate they’d use Botox on up to 20% of their chronic migraine patients within 18 months of approval.
Respondents also estimated that half their patients who already had been treated with Botox in “off-label” use discontinued due to cost or lack of efficacy.
Allergan is aware of such concerns.
Chief Executive David Pyott said late last year that getting insurers to pay for Botox migraine treatment stands to take time and effort, “but we’ve done that many times before.”
Fernandez also mentioned pending patent trials for Lumigan and Combigan, the glaucoma drugs that he estimates represent about $460 million of Allergan’s sales, or 11% of his projected $4.6 billion total for Allergan in 2010.
Lumigan’s growth prospects may be tempered by the pending availability of generic versions of Xalatan, a glaucoma drug made by New York-based Pfizer Inc., he said.
Clarient Investor Cashes Out
The $587 million sale of Aliso Viejo cancer-testing company Clarient Inc. in December to GE Healthcare, a British-based unit of Stamford, Conn.-based General Electric Co., will pay off for Safeguard Scientifics Inc.
Wayne, Pa.-based Safeguard is a longtime Clarient investor. It expects to net $144 million from the sale to GE Healthcare, according to the Philadelphia Business Journal.
Safeguard, which once was Clarient’s majority owner, owned 28% of the company at the time of the sale.
GE bought Clarient to help build up its medical diagnostic business. It had more than $120 billion in cash and equivalents on its books through the first nine months of 2010, and has been mentioned as a possible buyer of Brea-based Beckman Coulter Inc., which has put itself up for sale.
Hospital Buy
Santa Ana-based Grubb & Ellis Co. said its healthcare real estate unit bought the Humble Surgical Hospital in Humble, Texas, a Houston suburb.
Grubb & Ellis Healthcare REIT II paid $13.1 million for the building, according to Securities and Exchange Commission filings.
Humble Surgical Hospital has 30,000 square feet of space. It is a doctor-owned surgery center that moved to its current building in August. Grubb & Ellis said in a release that the hospital has the capacity to treat more than 1,000 cases a month.
The hospital has a 15-year lease for the entire building.
Grubb & Ellis Healthcare REIT II bought the building from Humble REP LLC, which was represented by Henry Hagendorf and Beth Young, both of whom are vice presidents in the investment group in the Houston office of Grubb & Ellis.
Bits and Pieces:
Alliance HealthCare Services Inc., a Newport Beach provider of diagnostic imaging and cancer treatments, said that it spent $2 million to buy a radiation therapy center in eastern Pennsylvania. It’s the company’s first location in Pennsylvania … Biomerica Inc., an Irvine maker of diagnostic tests, said it received some $357,000 in grants under the federal Qualifying Therapeutic Discovery Program. The program, which came out of federal healthcare reform passed earlier this year, is designed to encourage the development of new ways to prevent, diagnose and treat both chronic and acute diseases.
