Allergan's Lap-Band Finds Support - Analyst Blog

Allergan Inc. (AGN) recently announced that a US Food and Drug Administration (FDA) panel recommended the extension of the use of the company's gastric band. The Gastroenterology and Urology Devices Panel of the Medical Devices Advisory Committee voted 8 - 2 in favor of extending the use of Allergan's Lap-Band System based on the product's benefit-risk profile.

Allergan is seeking to expand the use of Lap-Band System for weight reduction in obese adults who have failed conservative weight reduction alternatives and have a Body Mass Index (BMI) of at least 35 or a BMI ≥30 with at least one co-morbid condition.

The Lap-Band System is already approved for use in severely obese adults with a BMI of 35 with at least one severe co-morbid condition or a BMI of 40, or those who are at least 100 pounds or more overweight.

The Committee's decision was based on 12-month data from a five-year study involving 149 obese patients, who on average had been obese for 17 years and were treated with the Lap-Band System safely and effectively.

Allergan faces competition from Johnson & Johnson's (JNJ) Realize Band.

Neutral on Allergan

We currently have a Neutral recommendation on Allergan, which is supported by a Zacks #3 Rank (short-term Hold rating). Although the company is facing significant challenges in the form of slowing sales due to the global economic weakness, EU pricing pressure, safety issues surrounding the use of Botox, and increased competition, we think Allergan will be able to deal with these challenges effectively and will be back on its historical mid-to-high teens earnings growth trajectory from 2011.

 
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