Allergan Focuses On Aesthetics As Sales Dip For Dry Eye Leader Restasis

Allergan's second quarter exceeded expectations and full-year guidance was raised slightly, but while the aesthetics business grew, ophthalmology with a 9.4% Restasis decline was a notable outlier.

Allergan PLC touted the performance of its aesthetics business during its second quarter report, but while Botox (onabotulinumtoxinA) and sales of dermal fillers soared, the ophthalmology business fell due to a 9.4% drop for the blockbuster dry eye drug Restasis (cyclosporine).

The company reported a 9% year-over-year increase in total revenue to $4bn in the second quarter with non-GAAP earnings per share (EPS) jumping 20% to $4.02. Allergan believes that Restasis sales will stabilize and meet expectations for 2017, despite competition from Shire PLC's newer dry eye product Xiidra (lifitegrast), but the company is focused on growth from aesthetics as well as its research and development programs to keep overall revenue on the rise.

Allergan raised its full-year revenue guidance to a range of $15.85bn to $16.05bn – a $50m increase at both the bottom and top of the 2017 forecast – and EPS is expected to come in at $16.05 to $16.45 versus a prior guidance of $15.85 to $16.35.

The company said at the beginning of the year that sales of Restasis, its second-biggest seller, probably would be flat in 2017. Second quarter sales of $353.7m give the product $676.4m for the first half of the year, which means the product has some ground to make up during the second half to be on par with 2016 sales of $1.49bn. (Also see "Full Circle: Allergan's Revenue Growth Fuels Reinvestment In Sales, R&D" - Scrip, 9 May, 2017.)

"In eye care, we're maintaining our leadership position despite competitive headwinds," Allergan Chief Commercial Officer Bill Meury said during the company's earnings call. "Restasis continues to show durability with stable demand, offset by year-over-year trade buying patterns this quarter, which did not impact Restasis in the first quarter. We expect buying patterns to moderate for the remainder of the year and for Restasis to be at expectations for the full year."

Allergan continues to battle a long list of companies pursuing generics of Restasis before the drug's patents expire in 2024 and has settled with three of them to date, Chief Legal Officer Robert Bailey said during the earnings call. Hearings in separate Restasis patent litigation matters are scheduled for Aug. 28 in a Texas court and on Sept. 13 in regard to an inter partes review that's being heard by the US Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB).

Aesthetics Business Sees Double-Digit Gains

"Medical Aesthetics is our largest and fastest growing business … and it's built on three pillars – facial aesthetics, plastics, and regenerative medicine and body contouring. We are seeing strong momentum across our broad and deep portfolio," Meury said. "Botox Cosmetic's up 13% and our Juvederm collection of fillers – where we have launched several new products, including Volbella, Vollure and Volite – was up 18% and surpassed a 50% US market share, marking an all-time high."

Botox Cosmetic grew 10.7% year-over year to $210.3m in the second quarter while Botox Therapeutic for chronic migraine, overactive bladder and adult spasticity jumped 17.2% to $346.9m.

However, sales have been small and slow growing for Kybella (deoxycholic acid), a double chin-reducing injection purchased in the $2.1bn acquisition of Kythera Biopharmaceuticals Inc. in 2015. (Also see "Allergan buys chin fat firm Kythera for $2.1bn" - Scrip, 17 Jun, 2015.) Second quarter sales of $12.7m were unchanged from the same quarter in 2016.

"The fat reduction market is still in the early innings and it's a market we're committed to for the long term," Meury said. "Remember, the facial injectable market [for Botox] took five to seven years to develop. We're leveraging our existing commercial infrastructure to support Kybella."

Even so, medical aesthetics is seen as one of the fastest growing areas of Allergan's portfolio "and one of the best markets in all of health care," he said, noting that more than 30m people in the US are considering an aesthetic procedure, including a rise in interest among millennials and men.

Rising R&D And Marketing Expenses Pay Off

The company has spent more on research and development as well as on sales, general and administration (SG&A) expenses than analysts expected this year. In fact, Allergan raised its SG&A guidance by $50m to a range of $4.5bn to $4.6bn for 2017, while keeping its R&D budget at $1.6bn, but the investments are driving sales growth.

"R&D and, more significantly, SG&A expenses were higher than we forecast," Credit Suisse analyst Vamil Divan wrote in an Aug. 3 note, "but we are comfortable with this given the pace with which Allergan is advancing its pipeline and rolling out new products."

Indeed, Chief Research and Development Officer David Nicholson pointed out that Allergan has had eight major pharma and device approvals this year, including Rhofade for rosacea, Linzess 72mcg for irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC), and True Tear for tear production. "These approvals mark a strong start in advancing our pipeline in the first half of 2017," he said.

Allergan has highlighted six R&D "stars" since the beginning of this year, including its oral CGRP inhibitors for the treatment of migraine headaches. Nicholson reported that Phase III studies for ubrogepant in acute migraine and a Phase IIb study for atogepant in migraine prophylaxis are on schedule with data from both programs expected in the first half of 2018. He noted that there have been no safety concerns in the studies to date, including liver toxicity observed with previously developed oral CGRP inhibitors, like Merck & Co. Inc.'s telcagepant.

If the ubrogepant studies remain on track, Allergan continues to expect the drug to hit the market in 2020, serving patients who may prefer a daily pill over injectable CGRP inhibitors that are at least two years ahead of the company's migraine therapies. (Also see "Allergan’s Oral Drugs Overlooked In CGRP Inhibitor Development Race" - Scrip, 30 Sep, 2016.)

Amgen Inc. and its partner Novartis AG are likely to have the first CGRP-targeting injection on the market next year, followed by monoclonal antibodies from Eli Lilly & Co. and Teva Pharmaceutical Industries Ltd. Amgen/Novartis have submitted their Aimovig (erenumab) for US FDA approval and the agency has given the biologic license application (BLA) a May 17, 2018 user fee date. (Also see "Amgen Beats Consensus, Raises Earnings Guidance, But Is It Sustainable?" - Scrip, 25 Jul, 2017.)

In response to a question about the feasibility of an intravenous infusion for depression, Meury was optimistic about rapastinel, for which Allergan is also developing an oral formulation.

"If we can replicate in the Phase III trials what we saw in the Phase II trials, my sense right now is the health care system is completely equipped, whether it be through infusion centers or home care centers, to deal with an I.V. treatment for depression," he said. "But regular I.V. treatments – and this only takes about a minute to do on a weekly basis for people who have, in this case, failed multiple antidepressants and perhaps are suffering from suicidal thoughts and behaviors – it doesn't seem like it's going to be a big obstacle to me."

Nicholson added: "We've got 600 patients already recruited in those three [rapastinel (GLYX-13)] Phase III studies. Recruitment is going really well, and I think that points to the demand for an agent like this." (Also see "Naurex presents 'compelling' data for depression drug GLYX-13" - Scrip, 11 Dec, 2014.)

Other Major Upcoming R&D Milestones In Allergan's Pipeline
Drug	Mechanism Of Action	Milestone
Esmya (ulipristal acetate)	Selective progesterone receptor modulator	A new drug application (NDA) submission to the FDA for the treatment of uterine fibroids is planned for the second half of 2017. (Also see "VENUS II Paves Way For Allergan's Ulipristal NDA In Uterine Fibroids" - Scrip, 17 Jan, 2017.)
Abicipar pegol	A longer-acting vascular endothelial growth factor (VEGF) inhibitor	Phase III results in wet age-related macular degeneration (AMD) are expected and a Phase III program in diabetic macular edema (DME) will begin in the second half of 2017. (Also see "Allergan’s Ophthalmology Focus Grows Beyond Restasis And Glaucoma" - Scrip, 3 Feb, 2017.)
Cenicriviroc (CVC)	Inhibits chemokine receptors 2 and 5 (CCR2/5)	CVC has entered Phase III for non-alcoholic steatohepatitis, but two-year results from the completed Phase II study are expected during the second half of 2017, while a Phase IIb study in combination with the Novartis farnesoid X receptor (FXR) agonist LJN452 is expected to begin in the first half of 2018. (Also see "Could High Profile Combo Be Allergan/Novartis Answer To Late-Stage NASH Programs?" - Scrip, 19 Apr, 2017.)
Rapastinel	Partial agonist of the NMDA receptor	Phase III studies in major depressive disorder (MDD) are under way with data for the intravenous infusion anticipated in mid-2019. (Also see "Allergan paying $560m for Naurex; stays quiet on rumored generics sale to Teva" - Scrip, 27 Jul, 2015.)
Relamorelin	Ghrelin agonist	A Phase III program will begin in the second half of 2017. (Also see "‘Open Science’ In Action: Allergan Exercises Option For Motus After Gastroparesis Study" - Scrip, 28 Oct, 2016.)