Allergan Again Exceeds Estimates, With Caveat

Allergan Inc. posted strong gains in fourth-quarter earnings, but warned Wednesday that it expects profits to fall short of Wall Street’s projections early this year as it prepares to launch a promising new glaucoma drug.

The Irvine company, which makes eye medicines, skin-care treatments and contact lens cleaners, earned $65.1 million, or 48 cents a share, in the period, up nearly 10% from $59.3 million, or 44 cents a share, a year earlier when the company recorded one-time gains of about $20 million on sales of investments and the divestiture of certain skin-care products. It was the 12th consecutive quarter that the company has exceeded Wall Street’s estimates. Analysts expected Allergan to post earnings of 47 cents a share, according to a survey by First Call/Thomson Financial.

But marketing and sales costs to launch Lumigan, a new glaucoma drug, will eat into the bottom line during the first six months this year, said Eric Brandt, chief financial officer.

The drug, which drains fluid to relieve pressure on the eye, has fewer side effects than rival treatments, clinical studies showed. Allergan, which expects the drug to be approved by the end of March by the U.S. Food and Drug Administration, is training sales staff.

Lumigan sales could reach $150 million next year and $300 million in 2003, said Marc Goodman, a health-care analyst at Morgan Stanley Dean Witter in New York who has a buy rating on the stock.

But for the first quarter this year, Allergan is projecting earnings of 35 cents a share, up 10% from the first quarter last year but below analysts’ estimates of 37 cents a share. Earnings per-share should climb 20% in the second half of the year, the company said.

Allergan’s stock fell $2.50 a share to $81.75 on the New York stock Exchange.

In the recent quarter, the company’s results were bolstered by sales of its neuromuscular drug Botox, acne and psoriasis medication Tazorac, and the company’s eye surgical products business. Sales of Botox, a highly purified form of botulinum that doctors have long used to treat migraines, wrinkles and a host of other conditions not yet approved by regulators, jumped about 24% to $66.7 million. Tazorac sales increased nearly 74% to $10.6 million, while ophthalmic surgical product revenue rose 8.4% to $69.8 million.

The biggest fourth-quarter blemish was the performance of the lens care business, which fell off by 14.1% to $83.2 million. Brandt, the chief financial officer, attributed the decline to to the popularity of disposable contact lenses and Lasik eye surgery.

For the year, net income increased more than 14% to $215.1 million, or $1.61 a share. from $188.2 million, or $1.39 a share, in 1999. Sales rose 11% to nearly $1.6 billion.