Allergan has a very strong aesthetics business as well as 6 potential blockbusters in clinical trials. However can it deliver ?
Allegan (NYSE:AGN) is a stock that I’ve been watching closely due to the huge decline its stock underwent from mid 2015 to December of last year. Allergan’s share price lost 40%+ but I don’t think that decline was warranted as I still believe the company is fundamentally strong. In saying this, Allergan relies more on acquisitions than other big biotech companies as it doesn’t have big in-house R&D budgets. The company is always on the watch for smaller companies especially within areas currently such as Nash where a huge unmet need remains unaddressed. If a company such as Allergan for example sees any potential among smaller companies, it usually comes in and acquires in aggressive fashion. We saw this behavior recently when Allergan bought Tobira for $1.7 billion and also Akarna for $50 million i the space of 48 hours.
The company has basically availed of three Nash treatments out of these two acquisitions and is rolling those out currently by getting them into trials in an attempt to get something approved from the FDA. Also Allergan has gone into partnership with Novartis (NYSE:NVS) as it wants to use a combination therapy of it so on C.V. C. oral treatment along with Novartis’ FXR agonist in an attempt to again just get their name stamped on some indication or an approved treatment within this sector. There are no prescribed treatments for NASH at present so its a sector with a huge unmet need. There’s an awful lot of M&A activity at present so I don’t see the level of these acquisitions and mergers slowing down anytime soon. So that’s one of the big six drugs that Allergan has in R&D at present.
Another one which again I like because of the market it wants to address is right past in this drug is Rapastinel for the depression sector which again has a huge unmet need. The benefits that Rapastinel has over other treatments in the sectors is that it provides instant relief which lasts for more time. Furthermore there seems to be less side effects over other drugs which again this looks very promising. Allergan should have results of these trials again by the back end of this year. So shareholders are definitely optimistic about at least two to three of the company’s six treatments that it has in late stage clinical trials at the moment. My own picks would be Rapastinel and its NASH treatments.