Allergan Inc.’s interest in “unmet medical needs” has led it to a new market.
The Irvine-based drug maker is paying $370 million for Esprit Pharma Inc., a New Jersey maker of a drug to treat overactive bladders.
Allergan’s paying cash for Esprit, which is privately held. The deal’s expected to close in the fourth quarter.
Lazard Capital Markets analyst Alexander Arrow believes the Esprit deal is setting the stage for another potential use for Allergan’s longtime flagship Botox.
“The clear underlying reason for the acquisition, in our view, is to prepare for Allergan’s likely 2009 approval of Botox for the same indication,” Arrow said. “Esprit comes with 160 (sales) reps, a number which Allergan is likely to expand.”
Allergan has been testing Botox, best known as a wrinkle remover, for other uses including migraines and overactive bladders.
Approval of Botox as a treatment for overactive bladders could come in a few years.
The next major catalyst for Allergan would take place early next year, according to Arrow, with sales of its Lap-Band device for treating obesity and its Restasis drug for dry eyes.
“If we are correct about the effect of the (direct-to-consumer) ad campaigns we are in for additional guidance raising (in the second half),” Arrow said.
Another factor in Allergan’s growth: Wall Street is likely to learn the results of the company’s late-stage trial for Memantine, a glaucoma drug, Arrow said.
The biggest risk to Allergan is the upcoming loss of its monopoly in the Botox market, Arrow said.
Scottsdale-based Medicis Pharmaceutical Corp. “is likely to launch a comparable nerve-paralyzing anti-wrinkle product in 2008,” followed by Santa Barbara’s Mentor Corp. in 2010, Arrow said.
Allergan has downplayed any competition, saying that Botox’s safety record and 15-plus years of sales will help it withstand competition.
As for Esprit, Allergan said it sees the acquisition adding $6 million to $12 million in fourth-quarter sales. Before the deal, analysts expected Allergan to do $970 million in fourth-quarter sales.
The Esprit acquisition is seen lowering 2007 profits by up to $18 million as Allergan expands its sales force and launches Sanctura, Esprit’s lead drug, Allergan said.
Wall Street had expected $670 million in profit for 2007 before the deal.
Allergan also said the Esprit buy could impact profits moderately in 2008 but sees it “significantly” adding to profits and revenue after that.
Sanctura is expected to do $40 million to $48 million in sales this year. Allergan thinks the drug has the potential to do $300 million to $400 million in yearly sales.
The drug is taken twice a day to treat overactive bladder. The Food and Drug Administration also has approved a once-a-day version.
Symptoms of overactive bladder include having to go to the bathroom often and with urgency.
Besides Botox, Allergan makes eye and skin drugs and other medical cosmetic products. It’s OC’s most valuable company on Wall Street with a recent market value of $19 billion.
New Officer, Share Buyback
Edwards Lifesciences Corp., the Irvine heart valve company, said it appointed Paul Redmond as its corporate vice president, global vascular operations. Redmond, 43, replaces Keith Reisinger, who left to pursue other opportunities.
Redmond came to Edwards in June and most recently was vice president, cardiovascular technologies at Cordis Cardiology, a Johnson & Johnson unit. Redmond has more than 20 years of medical device experience.
Edwards also said its board voted to approve a $250 million share buyback. Since Jan. 1, Edwards has bought back some 2.2 million of its shares for $107.2 million. Edwards had 57 million shares outstanding as of Aug. 31.
BioLucent Sold; New Company
Hologic Inc., a Bedford, Mass.-based medical device maker, has completed its $70 million buy of Aliso Viejo’s BioLucent Inc.
BioLucent, which had $17 million in sales last year, makes the MammoPad, a cushion used during mammograms to relieve discomfort.
Hologic, a public company, makes medical imaging systems for women’s healthcare, such as digital radiography and breast imaging.
Meanwhile, BioLucent also completed its split off of its brachytherapy device business into a new Aliso Viejo-based private company, Cianna Medical.
Cianna’s key product is the Savi device, which places radiation at or near the source of cancer.
Most of BioLucent’s executives, including Chief Executive Steven Gex, are remaining at Cianna.
Bits and Pieces:
Cortex Pharmaceuticals Inc., an Irvine drug maker that’s been working for years to commercialize Ampakine compounds discovered at the University of California, Irvine, said it did a $14.2 million stock offering at the end of August. Cortex plans to use the proceeds for general purposes, including development of compounds for memory and other brain conditions. Separately, Cortex said it filed an investigational new drug application with the FDA to use Ampakine CX717 for attention deficit hyperactivity disorder Marcus & Millichap Real Estate Investment Services’ Newport Beach office said it sold the Fullerton Chiropractic Wellness Center for $1.9 million to an undisclosed buyer.
