Allergan is looking to sell its women’s health unit, but Tuesday's FDA rejection for uterine fibroids drug Esmya will take a big bite out of its potential price.
The Dublin drugmaker said Tuesday the FDA stiff-armed Esmya, a drug Allergan had talked up as a potential blockbuster. The FDA asked for additional info and, perhaps more worrisome, cited liver damage cases in Europe, where the drug is already approved. European regulators slapped limits on Esmya earlier this year..
Allergan said it plans to meet with the regulator to discuss next steps.
Meanwhile, though, the FDA's dismissal will hurt Allergan’s prospects for the women’s health sale it officially said it was weighing in May to boost its sagging shares. As CEO Brent Saunders told investors on Allergan’s second-quarter conference call, the company’s infectious disease unit—also on the block—was already getting more play thanks to the questions surrounding Esmya’s safety.
It’s “hard to put a valuation on Women's Health until we know the outcome of the Esmya PDUFA with the FDA,” he said, adding, “I think people are smartly and rightly waiting to see that outcome."
On the bright side, the Esmya development “should help the [sale] process move forward with better visibility now,” RBC Capital Markets analyst Randall Stanicky wrote in a note to clients.
The stumble for Esmya doesn’t mean Allergan will to sell to the first bidder. On the call, Saunders stressed that “there’s no fire sale” and that “getting to the right price for us is critical.”
Allergan once touted Esmya as a potential blockbuster, but that was before the European Medicines Agency began investigating the drug on reports of liver damage. That probe led the FDA to push back its own decision date to give the agency more time for its own analysis.
Since then, Wall Street hasn’t expected much from the candidate—Stanicky and his colleagues removed Esmya from their sales and profits expectations earlier this year, the analyst said—but the cold shoulder from the FDA “is still a disappointing outcome for a drug once touted as one of AGN's ‘six stars,’” he pointed out.
But Allergan, for one, isn't giving up on the product. "Allergan continues to believe in the need for novel treatment options for women who are looking for a non-surgical treatment for uterine fibroids," R&D chief David Nicholson said in a statement, noting that after the FDA meeting the company would "determine the potential next steps" for the application.