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Pyott: Depend on Botox to ‘Cruise’ Past $2 Billion in Sales

The head of Irvine drug maker Allergan Inc. is brushing off concerns about whether the company is too dependent on Botox, its longtime flagship drug.

Botox is sold in therapeutic and cosmetic versions. It now makes up about 30% of Allergan’s $5 billion-plus in annual sales.

Allergan has forecasts full-year sales of $1.55 billion to $1.59 billion in overall sales for Botox. The company does not break out revenue by categories of use.

Allergan ranked No. 38 on the Business Journal’s list of fastest-growing public companies based here. The drug maker had overall sales of $5.2 billion for the 12 months through June, a 21.3% hike from two years earlier (see Special Report, page 27; list, page 32).

Allergan Chief Executive David Pyott recently predicted more increases for Botox—and he dismissed any concerns about the product’s 30% share of the company’s total sales.

“It’s just a question of when do we cruise past the $2 billion mark,” Pyott recently told Reuters. “In theory, it could even grow be-yond” the 30% mark.

Analyst Michael Waterhouse of Chicago-based Morningstar Inc. told Reuters that he’s concerned about what he calls Allergan’s “reliance” on Botox.

While smaller companies have struggled to challenge Botox’s lead in the market, Waterhouse said he believes that there’s a looming threat from PurTox, a product from New Brunswick, N.J.-based Johnson & Johnson that could reach the market by 2013.

“Because we do see more competitors emerging—companies like Johnson & Johnson that have the wherewithal to go toe-to-toe with someone like Allergan—I do think they’ll need to continue to diversify the business,” Waterhouse said.

Investors haven’t necessarily agreed—Allergan’s stock is up 19% since the beginning of 2011. The drug maker, a perennial contender for Orange County’s most valuable public company, counted a recent market value of about $25.6 billion.

Allergan is working on product diversification as part of its standard approach, according to Pyott.

He said he was interested in adding to the company’s portfolio across the six therapeutic areas that involve drugs prescribed by specialists.

Allergan is due to report its third-quarter results Oct. 26. It has forecasts a profit of $272.8 million to $279 million, compared to a Wall Street estimate of $279 million.

The company said its third-quarter product sales, which are slightly less than total sales, could come in at $1.27 billion to $1.34 billion. Analysts expect Allergan’s sales to come in at $1.33 billion.

Pyott also discussed Levadex, an acute migraine headache treatment for which the company expects to get FDA approval next year.

U.S. Rights

Allergan bought U.S. rights to Levadex in January from Mountain View-based Map Pharmaceuticals Inc. for $60 million.

Levadex is part of a migraine franchise that Allergan’s developing in the wake of last year’s FDA approval of Botox for treating chronic migraine headaches.

Because many migraine drugs have gone off patent, Pyott said that he expects Allergan to have an advantage because its sales force will be able to offer both Levadex and Botox to doctors with little branded competition.

“We like quiet places, because if you’re the only guy, you’re appreciated,” he said.

The company also is looking at possibly going into drugs for epilepsy and Parkinson’s disease, he said.

Allergan could also make a deal valued at $1 billion or more, Pyott said.

Allergan’s last deal for $1 billion or more came in 2006, when it paid $3.3 billion for Inamed Corp. in Santa Barbara. The buy brought breast implants and the Lap-Band, a device used to assist in losing weight, to Allergan’s portfolio.

Separately, an analyst said he believes that Allergan may benefit from a favorable regulatory decision issued last week concerning rival Medicis Pharmaceutical Corp. of Scottsdale, Ariz.

Food and Drug Administration regulators said the agency approved Restylane, a Medi-cis facial filler for augmenting lips. Restylane competes with Allergan’s Juvéderm.

“Overall, we view this approval as a positive for both (Medicis and Allergan) because we believe it is most likely to result in expansion in the overall U.S. filler market with modest market share gains for Restylane,” Seamus Fernandez of Boston-based Leerink Swann LLC said in a research note.

Allergan should benefit from the Restylane approval because respondents to a survey conducted by Medacorp, which is Leerink’s research arm, said they used Juvéderm in 57% of their lip augmentation procedures, according to Fernandez.

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