The anti-wrinkle drug Botox dramatically lifted Allergan Inc.'s first-quarter earnings but couldn’t smooth out Wall Street’s concerns about the rest of the year.
Allergan said Monday that quarterly profit rose 60% thanks to strong Botox sales. The company warned, however, that an acquisition would push second-quarter earnings below expectations. That sent Allergan’s shares down $1.56 to $71.03 on the New York Stock Exchange.
Irvine-based Allergan said first-quarter net income was $70.2 million, or 53 cents a share, up from $43.8 million, or 33 cents, in the year-earlier quarter. Total sales rose 23% to $391.2 million from $318.2 million -- and sales of Botox jumped 39% to $123.1 million from $88.6 million.
Botox, an injectable drug that combats various muscle disorders, last April became a favorite of cosmetologists in the war on wrinkles after it was approved for that use by the Food and Drug Administration.
A purified form of a deadly poison called botulinum toxin, it has been used for two decades to treat patients with rare muscle disorders, such as blepharospasm, a condition that causes excessive blinking and can force patients’ eyes shut.
Excluding nonrecurring costs, Allergan’s pro forma quarterly income was 54 cents a share. Wall Street expected Allergan to have pro forma earnings of 53 cents a share, according to Thompson First Call.
Allergan Chief Executive David Pyott said the company would acquire research partner Bardeen Sciences Co., a privately held concern, for $250 million to $260 million in cash. Bardeen is co-developer of an oral acne treatment and three eye medications with Allergan.
Pyott said the Bardeen purchase would shave Allergan’s second-quarter profit by 3 cents. But he added that full-year earnings would be in line with analysts’ estimate of $2.31 a share.
Analyst Wellington Chang of Friedman Billings Ramsey in Arlington, Va., said the second-quarter profit shortfall means Allergan must control expenses to meet Wall Street’s profit estimate for the year.
But Chang expects the company to meet the full-year earnings forecast, as Botox use grows in the U.S. and the drug is rolled out in Europe for cosmetic use.
“The story here is Botox,” he said.
Allergan said Botox sales growth remained strong in the cosmetic market, as well as for therapeutic muscle treatments. The company declined to break down its Botox cosmetic sales, which accounted for 40% of total Botox revenue in 2002.
Pyott also said that sales of Botox for muscle disorders were unaffected by a 30% cut this year in Medicare reimbursement for hospital outpatients.
Few patients receive Botox in hospital outpatient clinics, Pyott said. In fact, Medicare, the government insurance plan for the elderly, processed less than 12,000 claims for the drug in 2001, the last year for which government data are available. But the company is lobbying in Washington to reverse the cut, which makes the drug unprofitable for hospitals that do administer it.
Meanwhile, sales of another Allergan drug, Alphagan P, a glaucoma treatment, rose 3% in the first quarter, ahead of expectations.
A federal patent lawsuit by Allergan against rivals Alcon Laboratories Inc. and Bausch & Lomb Inc. has delayed generic competition for the drug.