Watch Allergan into Revance ‘better Botox’ trial data
Shares of Allergan (AGN) are on the rise after Morgan Stanley analyst David Risinger upgraded the stock to Overweight, a buy-equivalent rating as he believes the shares can outperform over time and fears about a “better Botox” from a competitor may be overdone.
RT002 is a new injectable BoNTA product. This formulation limits the spread of BoNTA, potentially permitting safe administration of larger doses and possibly extending its duration of action.
Revance Therapeutics, Inc. (RVNC) is developing botulinum toxin products (RT002) for use in treating aesthetic and therapeutic conditions, today announced duration of effect of at least 24 week. The product is dubbed “better Botox” since it promises to last longer.
Botox is owned, manufactured and sold by Allergan. Botox had an annual sales of about $2.78 billion in 2016. Botox effect lasts anywhere from 12-16 weeks.
In a research note this morning, Morgan Stanley’s Risinger upgraded Allergan to Overweight from Equal Weight while maintaining a $200 price target on the stock.
The analyst told investors that Allergan’s risk-reward looks favorable following a significant stock decline due to reductions in out-year estimates, pipeline concerns, competitive threats to Botox, and negative perception associated with licensing of Restasis patent to an Indian tribe.
#Risinger believes the negatives have largely been priced into the stock, and given investor concerns about the safety of new drug candidates for migraine and eye disease, he sees the risk-reward on 2018 Phase 3 pipeline news flow as skewed to the upside.
Additionally, the analyst pointed out that he thinks investor enthusiasm for rapastinel for severe depression will rise as three Phase 3 studies reach their conclusion at the end of 2018. Compelling Phase 2 data indicated that #rapastinel may be a blockbuster, he contended.
Meanwhile, Risinger believes fears about a “better Botox” may be overdone.
While Revance’s (RVNC) botulinum toxin RT002 Phase 3 data is expected “any day now,” he thinks it could be difficult for the company to demonstrate that RT002 is materially longer-lasting than Botox, which has been a concern for Allergan investors.
Further, the analyst pointed out that mechanistically it would be difficult to create a significantly longer-lasting Botox because botulinum toxin gradually loses efficacy over four months due to neuronal regeneration. If he is correct, Allergan shares could benefit, he said.
In Wednesday’s trading, shares of Allergan have gained almost 4% to $178.14.
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