New Botox Wrinkles Raised for Allergan on Mylan Copycat Plan

(Bloomberg) -- Allergan Plc faces another risk after the generic drugmaker Mylan NV announced plans to align itself with a small-cap competitor and develop a biosimilar to Allergan's top-selling wrinkle treatment and therapeutic agent, Botox.

While threats to Allergan's Botox franchise are nothing new, just how real this one may be is still up for debate.

Mylan's plan with Revance is “a headline issue, not a fundamental concern” for Allergan, Cowen analyst Ken Cacciatore writes in a note to clients. He goes so far as to suggest that the specialty pharmaceutical company should buy Revance. Allergan could position Revance's lead product, the neuromodulator RT002, for therapeutic use among neurologists, Cacciatore said, citing its purported longer-acting efficacy.

There are a number of Botox competitors already on the market in the U.S. and elsewhere including Dysport, Xeomin and more recently Daewoong Pharmaceutical Co.'s Nabota. “We have lived through Botox competitive concerns before,” Cacciatore writes, adding that they've failed to steal away significant market share even at prices lower than Botox.

The selloff in Allergan shares shows that investors may still be concerned about Botox as well as other key franchises. Credit Suisse analyst Vamil Divan notes that just as the market thought Allergan shares may have reached a bottom and were poised for a turnaround, the Mylan deal adds a new worry. “Risks to longer term drivers, especially Botox, will likely outweigh any 2018 comfort,” he writes. 

A Botox biosimilar presents a “credible” threat, although approval and commercialization are likely “a long ways off,” Divan writes. Meanwhile, Morgan Stanley's David Risinger cut his 12-month price target on Allergan to $181 from $200, calling Mylan's pact “a long-term overhang” even as developing a biosimilar is likely to be “technically challenging.”

When reached for comment, an Allergan spokeswoman expressed confidence in the brand loyalty and popularity of the treatment. She noted that the company is spending on research and development for possible future indications as well as next-generation neurotoxins.

“There is only one brand named Botox,” she wrote in an email.

Allergan shares declined 2.9 percent to $149.80 at 11:36 a.m., the lowest intraday since October 2013. Newark, California-based Revance wasn't immediately available.

To contact the reporter on this story: Cristin Flanagan in New York at cflanagan1@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Will Daley

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