We issued an updated research report on Allergan plc (AGN Free Report) on Oct 16.

Allergan boasts dominant growth franchises across several therapeutic areas. Allergan’s key products like Botox, Juvéderm collection of fillers, Linzess and new products such as Viberzi and Vraylar are supporting sales amid ongoing exclusivity challenges for older products like Alzheimer’s treatment, Namenda XR and Restasis.

Allergan has more than 65 projects in mid-to-late stage development including six key phase III programs including Ubrogepant and Atogepant for migraine, Abicipar for age-related macular degeneration (AMD), label expansion of Vraylar (cariprazine) for bipolar depression, and Bimatoprost SR for glaucoma.

A regulatory application for Vraylar was filed in the United States in September in bipolar depression indication while that for Ubrogepant, Bimatoprost SR and Abicipar are expected to be filed in 2019. So, this late-stage pipeline has the potential to lead to major product launches over the next couple of years.

Allergan has also delivered on its biosimilars pipeline this year, which represents significant growth opportunity. Allergan has a collaboration agreement with Amgen (AMGN Free Report) for the worldwide development and commercialization of four oncology antibody biosimilars. Amgen/Allergan’s biosimilar version of Roche’s Avastin, Mvasi, was approved in the United States in September 2017 and in the EU in January this year. Meanwhile, the biosimilar version of Roche’s another cancer drug Herceptin, Kanjinti was launched in the EU last month while it is under review in the United States. A biosimilar of Rituxan (ABP 798) is in phase III development.

Allergan also has cost saving initiatives in place. In January, Allergan announced that it is laying off over 1,000 employees as part of a cost-saving and restructuring program. The job cuts and other cost-savings measures are expected to save operating costs by approximately $400 million in 2018 at a time when Allergan is facing competitive and generic pressure related to some of its highest revenue generating products.

Meanwhile, Allergan is looking to divest its Women’s Health and Anti-Infective units to focus on four core businesses, Aesthetics, Eye Care, CNS, and GI, a prudent decision in our view. However, in August, the FDA issued a complete response letter (“CRL”) to the new drug application (NDA) for its pipeline candidate, Esmya/ulipristal acetate for the treatment of abnormal uterine bleeding in women with uterine fibroids. The rejection could negatively impact Allergan’s plan to divest its Women’s Health franchise to which Esmya belongs.

Allergan is facing loss of exclusivity for many blockbuster products. While the first generic versions of Alzheimer’s treatment, Namenda XR and Estrace cream were launched in the first quarter, that of blockbuster dry-eye drug, Restasis, Allergan’s second best-selling drug, is expected to be launched later this year. A generic version of Delzicol is also expected to be launched this year. Sales of these key products are expected to decline significantly as generics are introduced.

Also, possible new competition for key growth drivers, Botox, Restasis and Linzess, is a concern. Shire’s dry eye disease drug Xiidra, launched last year, is posing strong competition for Restasis. Meanwhile, Synergy’s Trulance (plecanatide) received FDA approval last year for CIC, which is posing competition to Linzess.

Also, there have been concerns regarding possible new competitors to Botox, its largest product. The entry of CGRP antibodies in 2018 may have a negative impact on sales of Botox Therapeutics, mainly for the chronic migraine indication. Amgen/Novartis, Eli Lilly (LLY Free Report) and Teva Pharma’s (TEVA Free Report) CGRP migraine treatments, Aimovig, Emgality and Ajovy, respectively were approved by the FDA in 2018.

However, we believe that continued strong sales of products like Botox (cosmetic), aggressive cost savings and strategic initiatives, consistent pipeline success and frequent collaboration/partnership deals will keep Allergan afloat through the rest of the year.

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