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Fine Lines: Why Allergan's Botox Ain't Beat


Shares of Allergan (AGN) are higher on Wednesday, recovering from yesterday's tumble on news that Revance (RVNC) issued Phase 3 data suggesting its Botox-rival RT002 lasts six months, two months longer than Botox.

BP-AB170_Roller_D_20171113180513.jpg Getty Images

The trial was against a placebo, not Botox itself, and analysts are weighing in on the importance of Revance's news, writing that it isn't as bad for Allergan as some originally thought.

Morgan Stanley's David Risinger reiterated an Overweight rating and $200 price target on Allergan, writing that given that Botox is paid out-of-pocket by consumers, they might not be so easily swayed. From his note:

We think that the patient-assessed responder rates would most likely reflect patients' real world experiences. In that regard, even if FDA grants a 6-month duration label for RT002, we believe that it may not have a significant impact on patients' retreatment decisions. Furthermore, the 6-months duration of effect is based on the median time for ≥1-point improvement from baseline, but patients may seek tretreatment earlier than that.For comparison, Botox label states the "duration of effect of BOTOX Cosmetic for glabellar lines is approximately 3-4 months" but it is unclear on what the duration is based.

Wells Fargo's David Maris a lso reiterated an Outperform rating on Allergan shares following the news, writing that the stock sold off too much:

While this is good news for RVNC, the data remains to be seen in detail and at this point is it unclear how significant a competitor RVNC's product could be to AGN's Botox. While RT002 showed statistically significant results at week 24 versus placebo in a key secondary endpoint, the measurement of this endpoint does not seem to match the FDA's published draft guidance and it is unclear if the data will be enough to get a 6month duration claim on the RT002 label. It is also unclear to us if the longer duration of efficacy is driven by Revance's unique formulation technology or the larger dosing (RT002 is 40 units while Botox is 20 units). We believe the patient and physician loyalty programs and bundling discounts which AGN offers for its wide range of aesthetics franchises will be key to AGN's defense, but we also believe the aesthetics market has room to grow, with current penetration at approximately 10%. Given the potential launch timing for RT002 and AGN's strong dominance in the neurotoxin market, we believe the reaction to AGN's shares (which closed 1.57% vs the S&P 500's 0.19%) on this news is overdone.

The shares are up 0.6% to $165.25 in recent trading, although they've fallen more than 21% since the start of 2017.

Morgan Stanley previously argued that the worst is over for Allergan.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , US Markets
Referenced Symbols: AGN , RVNC


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