Collins Stewart Comments On Allergan's Lap Band Vote

Colins Stewart is maintaining its Neutral rating and $75 price target on Allergan AGN shares post the FDA Advisor y Committee's (AdCom) vote in favor (8 to 2) for the approval of Lap Band (device to treat obesity) to treat patients with lower body mass index (BMI). This is clearly good news for AGN, but the lower BMI indication on its own is an incremental opportunity for the company. If approved, Collins thinks that reimbursement hurdles and high unemployment will slow the launch of an expanded indication. The Lap Band procedure costs about $15K on average, and most of the surgeries are cash pay. The FDA will likely make a decision on the approvability of the lower BMI indication by 1H11. Collins estimates Lap Band could be a $500MM+ global opportunity over the next 3 to 5 years. AGN closed Friday at $68.60