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Growth in Botox and eye drugs and a resurgent medical cosmetics business boosted Allergan Inc.’s first quarter.
Allergan, Orange County’s most valuable company with a market value of about $25 billion last week, posted an adjusted quarterly profit of $239.3 million, up 18% from a year earlier and topping the $230 million analysts expected on average.
Revenue came in at $1.27 billion, up 10% and topping Wall Street’s expectation of $1.22 billion.
“We have, really, a tremendous breadth of growth drivers, both by product and by geography,” said David Pyott, Allergan’s longtime chief executive.
Eye drugs, Allergan’s core business, saw a 16% gain to $592 million in sales for the quarter. Double-digit growth abroad, including in Latin America, drove the company’s sales of glaucoma and other drugs, according to Pyott.
Allergan’s biggest product, Botox, grew sales by 10% to $365 million in the first quarter. Botox is sold as a temporary wrinkle remover and for more serious medical conditions.
In October, the drug saw regulatory clearance as a treatment for chronic migraines.
Allergan made “good progress” rolling out Botox for migraines in the first quarter, Pyott said.
“There was considerable physician interest,” he said.
Allergan’s trained about 2,000 doctors to use Botox for chronic migraines, according to Pyott. The company uses online and live injection training for doctors.
If doctors trained in Botox migraine injections end up performing patient procedures, “There could be significant upside” in Allergan’s 2011 revenue, analyst Amit Hazan of New York-based Gleacher & Co. wrote in a note to clients.
Analysts on average expect Allergan to see $5.3 billion in sales this year, which would be up about 8% from 2010.
Allergan’s gotten two-thirds of commercial health insurance plans to cover Botox for chronic migraines, according to Pyott.
Even so, “the adoption of therapeutic uses of Botox is always a long cycle,” he said.
The star of the first quarter for Allergan was Juvéderm, an injection used to fill in wrinkles on the lower face.
Juvéderm sales grew 49% to $88.2 million in the quarter.
Pyott chalked up the jump to the latest version of Juvéderm, which includes numbing agent lidocaine and makes injections easier on patients.
A drag in the quarter came from Allergan’s Lap-Band weight loss device, which saw sales fall 15% to $52.1 million.
“The only thing we’re not happy about is Lap-Band,” Pyott said.
Lap-Band continues to “suffer from a lack of access for patients,” he said.
Some insurance plans cover the Lap-Band surgeries, but only with high co-payments and evidence that prior dieting and exercise have failed to reduce obesity, Pyott said.
An Allergan group is working to try and expand insurance coverage and patient access for Lap-Band.
“We have dedicated special resources to this area, not only at the management level but also at the field account level,” Pyott said.
The Food and Drug Administration’s February decision to clear Lap-Band for a wider range of overweight people “will be a tool to put pressure on insurance companies for improving access,” Pyott said.
Pyott, known for issuing conservative forecasts, offered what some could see as a twist with his outlook for for the current quarter and the rest of 2011.
For the current quarter, Allergan forecasts a profit of $289 million to $295.3 million, above the $285.9 million that analysts had been expecting.
Second-quarter product sales—slightly less than total sales—could come in at $1.31 billion to $1.36 billion. Wall Street had been looking for sales of $1.31 billion.
Pyott shrugged off any breaking with pattern.
“We moved up the guidance for the year by $30 million, and $20 million was for dermal fillers and $10 million for Botox,” he said.
For 2011, Allergan said it could see a profit of $1.106 billion to $1.125 billion, up from a prior forecast of $1.1 billion to $1.119 billion.
Analysts had been expecting a full-year profit of $1.121 billion.
The company sees its 2011 product sales coming in at $5.05 billion to $5.25 billion, compared to analysts’ expectations of $5.21 billion.
“Given the favorable commentary on Botox reimbursement progress in the chronic migraine setting, as well as strength in a number of business units across a number of regions, we believe guidance is still conservative,” said David Amsellem and Michael Dinerman, analysts with Minneapolis-based Piper Jaffray.
Botox remains under FDA review as a treatment for overactive bladder. Allergan said it expects a decision later this year.
The company recently made a deal for a potential eye drug.
Allergan is paying up to $420 million to Swiss drug maker Molecular Partners AG to license an experimental compound for retinal disease.
Molecular Partners’ MPO0112 is being tested for treating “wet” age-related macular degeneration, a disease caused by leaky blood vessels near the center of the retina. Age-related macular degeneration is a common cause of blindness.
“This is a drug, if successful, that will be approved in the second half of this decade,” Pyott said. “Of all the things we’ve looked at in recent years, this is probably the most singular interesting technology.”