UPDATE: Allergan 1Q Net Down 64% On Charges, Stronger Dollar
May 01 2009 - 1:25PM
Dow Jones News
Allergan Inc. (AGN), which reported a 64% slump in first-quarter
profit on Friday, said it will work with the U.S. Food and Drug
Administration to appropriately update labeling for its Botox and
Botox cosmetic products.
"We are pleased that the FDA has emphasized that the dosing
units are different between the products," Chairman and Chief
Executive David Pyott said on the earnings call, adding he was
happy with Botox's first-quarter sales, which declined 5.8%.
On Thursday, the FDA said it was strengthening warnings on
Allergan's Botox and similar products about the possibility of
life-threatening breathing and swallowing problems.
The FDA safety review was done based on some reports of
breathing problems and a small number of deaths of some patients
when the products were used for an unapproved, off-label use.
Most deaths and serious problems were seen in children treated
for cerebral palsy-associated limb spasticity, the FDA said. The
agency has not seen any serious issues with approved cosmetic uses
of Botox, where lower doses are used.
William Blair analyst Ben Andrew said in a note that he doesn't
expect the FDA's decision to significantly affect Botox sales.
"These requirements will have more of a headline effect ...
given Botox's long-term safety record and the broad uses of this
product in over 20 different applications around the world," Andrew
said.
The Botox relabeling comes as companies like Allergan, the
nation's largest seller of medical products for
appearance-enhancement treatments, are already feeling pressure
from the slumping economy as some customers trim cosmetic
procedures from their budgets and it becomes more difficult to
attract new ones.
Allergan shares, which fell 1.3% on the FDA news on Thursday,
dropped another 3.4% Friday to $45.08. The stock, up nearly 16% in
2009 before today, is still recovering from its 2008 stock decline
of 37%.
Allergan's first-quarter profits fell because of charges as
earnings were also hurt by the stronger dollar.
The maker of eye and skin care products reported first-quarter
earnings of $44.7 million, or 15 cents a share, compared with
$123.7 million, or 35 cents a share, a year earlier. Excluding
items, including charges from changing stock options, profit rose
to 55 cents a share from 53 cents.
Revenue fell 6.4%, with product sales falling 6.3% to $994.6
million on the stronger dollar.
In February, Allergan forecast per-share earnings, excluding
items, of 50 cents to 52 cents on product sales of $960 million to
$1 billion.
Pharmaceutical sales were down 3.6%, but rose 2.3% excluding
currency changes.
Allergan, which reiterated its 2009 forecast, sees
second-quarter earnings, excluding items, of 66 cents to 68 cents a
share, on product net sales of $1.05 billion to $1.1 billion.
Analysts, surveyed by Thomson Reuters, projected earnings of 68
cents and total revenue of $1.08 billion for that quarter.
In February, the company also said it would cut 5% of its work
force, targeting mainly its U.S. urology sales force and marketing
staff in the U.S. and Europe.
-By Kelly Nolan; Dow Jones Newswires; 201-938-4049;
kelly.nolan@dowjones.com
(Mike Barris contributed to this report.)