Allergan nixes women's health sale in wake of Esmya rejection

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Allergan plans to keep its women's health business that analysts have said could generate $6 billion in a sale. (Allergan)

After resisting the idea of asset sales and then committing to offload its women's health unit, Allergan CEO Brent Saunders has changed course again. But the drugmaker still plans to offload its infectious disease unit, and it disclosed a $622 million write-off as it pursues that goal.

Allergan “concluded that the highest value proposition” for its women’s health business “at this time is to continue managing it and optimizing it,” Saunders said Tuesday, as quoted by Reuters.

Though Saunders didn't expand on the rationale behind the turnaround on Tuesday's call, Allergan's Esmya setback likely played a big part in the about-face. The uterine fibroids drug, which once Allergan described as a potential blockbuster, failed to secure an FDA approval last year; worse still, the agency cited liver damage cases in Europe, where the drug is already approved. European regulators have put their own limits on Esyma, and on a conference call last year, Saunders said the infectious disease unit was getting more attention from buyers due to the Esyma safety concerns. Allergan previously said it would meet with the FDA to discuss next steps for Esmya.

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Despite pressure from analysts, Saunders and Allergan originally resisted asset sales. Instead, the company last year laid off 1,400 employees to cut costs in advance of Restasis generics. But those layoffs didn't do much to improve the company's struggling shares, so in March, Allergan kicked off a strategic review. Finally, in May, the company made its decision to pursue the sales. At the time, Allergan planned to sell the units to focus in on its four key areas of medical aesthetics, CNS, eye care and GI.

RELATED: Allergan's Esmya rejection deals a blow to women's health sale prospects

Meanwhile, Allergan's anti-infectives sale is still on track, Saunders said on Tuesday, telling investors he believes the unit will "more likely than not" be sold.

That wasn't all the bad news for Tuesday, though, as Allergan also disclosed a $1.6 billion pretax impairment charge related to Kybella thanks to declining sales of the chin fat reducer that Allergan picked up in its $2.1 billion Kythera buyout. The news didn't surprise Wells Fargo analyst David Maris, who wrote in a note to clients that "it is a sign of what we already knew—Kybella is a disappointment.”

RELATED: Allergan extends deal spree with $2.1B Kythera buyout

The latest developments came as Allergan announced fourth-quarter numbers for 2018. In Q4, the company pulled in $4.08 billion and recorded earnings per share of $4.29. Those “results were strong in our view and several key franchises continue to do well," Maris wrote.

Next year, though, Allergan is expecting $15 billion to $15.3 billion in sales and EPS of $16.36. The company expects to lose exclusivity for Restasis after March 31, so executives expect generics drag on performance for the year. Analysts pointed out that the company’s 2019 revenue guidance was low compared with consensus, but they didn’t raise alarm bells. Multiple analysts attributed Allergan’s negative stock movement in the morning to the lower-than-expected guidance numbers. Late Tuesday morning, Allergan's shares were down about 7%.

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