Replies to post #81118 on Biotech Values

[DewDiligence]

AGN – Thanks, srsmgja, for the Latisse update. I presume that your survey is the reason AGN was up 4.4% today :- )

Seriously, I’ve posted here on several occasions that AGN was low-balling investors regarding Latisse’s commercial prospects. I think Latisse is going to be considerably bigger than a $500M product in due course. Regards Dew

[DewDiligence]

AGN: The reason I think Latisse will become a big-selling drug
is that the alternatives are cumbersome and leave much to be
desired. This write-up is from Saturday’s WSJ.

http://online.wsj.com/article/SB10001424052748703894304575047612960253270.html

›Eyelash Lovers Clamor for Strokes of Genius

By ELLEN BYRON
February 27, 2010

Beauty for Janet Garaguso means heaping on layers of mascara every morning and then, ever so carefully, carving her clumped-up lashes into long, thick strands with a safety pin.

The 44-year-old court officer from Westbury, N.Y., has made this her routine for 30 years. She hasn't punctured her eye since she was a teenager, when it happened "just once." "Every now and then I prick my eyelid, but nothing serious," Ms. Garaguso says.

Ms. Garaguso is one of the many women who go to extreme lengths to enhance their lashes. Their numbers are big enough that the beauty industry gives them a name—"volume seekers." And it is plowing more time and money into products that might meet their needs. From dueling mascara-wand technologies to eyelash perms, lash-by-lash extensions and prescription medication, cosmetics executives are rushing to satisfy volume seekers' voracious appetite for full, separated lashes.

Researchers from Procter & Gamble Co.'s CoverGirl brand, who have studied the phenomenon, say 40% of mascara users are volume seekers who consume a tremendous amount of product. Typical women apply about six strokes of mascara per eye. Volume seekers ramp that up to about 30 or 40, then sometimes employ toothpicks, paper clips, pins or the backs of their earrings to poke through the clumps, CoverGirl executives say. "When we asked them why they do this, they blamed their lashes, not their mascara," says Esi Eggleston Bracey, P&G's vice president of global cosmetics, shaking her head. "That's when we knew we had an opportunity."

To deliver volume without clumping, CoverGirl product designers developed an enormous brush with more bristles. Early mock-ups went too far. Internally dubbed "Titan" and "Brute," the brushes were so big that users couldn't see their eyes as they stroked their lashes.

Darkening the eyes for dramatic effect dates back thousands of years: Egyptian Queen Cleopatra is believed to have done so. Mascara—a blend of waxes, polymers and pigments—coats lashes, making them thicker and longer. The House of Rimmel, founded in 1834, is often credited with pioneering modern mascara. After Maybelline formed in 1915, a lash darkener was its first product.

One challenge is meeting volume seekers' need for bulk without scaring off normal users worried about clumps. For its "LashBlast" product, CoverGirl pursued a formula with "single-stroke payoff," or heavy coverage after just one brush stroke. Still, the black liquid had to be pliable enough for those who habitually apply layers, an activity CoverGirl calls "playtime."

"A lot of women like to reapply mascara throughout the day," says Sarah Vickery, a scientist for P&G's CoverGirl. "We have to accommodate that."

LashBlast has become the top-selling mascara in the U.S. in terms of dollar sales since its launch two years ago, according to market-research firm Information Resources Inc. The firm says overall mascara sales were $537 million last year, up 10% over the year before, although its figures don't include data from Wal-Mart Stores Inc. or club stores.

Maybelline New York, owned by L'Oréal SA of France, offers a vibrating, battery-powered mascara wand it says pulsates 7,000 times with every stroke. Pulse Perfection, introduced last summer, claims the vibrations uncross individual lashes "for more perfect separation."

"You don't have to use pins to remove the clumps or do zigzags," says David Greenberg, president of Maybelline. Zigzags mean applying mascara with short, horizontal strokes, a technique used by makeup artists that volume-seekers often try unsuccessfully to replicate.

Putting a vibrating wand up to the eye can be a little discomforting, Mr. Greenberg acknowledges. "This is for the highly involved, very demanding cosmetics wearer," he says.

That leaves a big market. About half of all mascara sales are for products that promise "volumizing" capabilities, says Karen Fondu, president of the L'Oréal Paris brand. Ms. Fondu, a self-identified volume seeker, uses about 100 rapid-fire mascara strokes on each eye every morning to create her extraordinarily dense lashes. Last month, L'Oréal Paris introduced a lash-boosting serum that promises in four weeks to deliver "fuller, thicker-looking lash fringe." [“Promises”—in other words, there are no hard data as there are with Latisse].

Some volume seekers are abandoning mascara altogether. After years of using safety pins, fine-tipped pens or tweezers to separate her lashes, New York publicist Leigh Rossini recently discovered eyelash extensions. Every two weeks, she spends $55 for an hour-long salon appointment to have half-inch extensions glued one by one to her individual lashes. "That expression, 'She bats her eyes,' has a whole new meaning for me now," says 35-year-old Ms. Rossini. "This is industrial-sized batting of your eyes."

Mary Ann Honstrater, a dog trainer in Los Angeles, visits the Natural Face Place salon every three months to have her eyelashes permed and dyed. The procedure is similar to the hair-do version: Her lashes are rolled in rods, then a chemical solution and a neutralizer are applied, a process that takes an hour. Afterward, Ms. Honstrater has her lashes dyed a deep black.

"Yes, I was nervous at first, thinking, what if a drop goes in my eye?" says 52-year-old Ms. Honstrater, who keeps her eyes closed the whole time. (Toni Ponzo, owner of the Natural Face Place, says she takes precautions, like using a thick gel to avoid dripping, and soft, pliable rods instead of rods that clamp lashes in place.) Ms. Honstrater says her permed lashes allow her to skip a lengthy morning regimen. "I just swirl my lashes with my finger, and I'm ready to go," she says.

Frustrated by thin, light-colored lashes, Teresa McMillan turned to Latisse, a prescription-only drug that promised longer, fuller lashes. After 11 months of brushing the solution across her upper lashes at bedtime, Ms. McMillan is "thrilled."

True, the drug has a side effect that could turn blue eyes brownish. "But my eyes already are brown," says the 55-year-old registered nurse in Atlanta, who pays $125 for a month's supply of the drug. "Now my lashes are so thick and long, I only wear mascara on special occasions."

The drug's maker, Allergan Inc. of Irvine, Calif., expects Latisse will post about $140 million in sales this year [#msg-46265367]. A spokeswoman says the brown eye effect is "uncommon," happening with about 1.5% of users in a clinical trial when put directly into the eye as a glaucoma treatment. The company's Web site says the effect wasn't reported in clinical trials using Latisse as an eyelash enhancer, but notes, "Patients should be advised about the potential for increased brown iris pigmentation, which is likely to be permanent."

Some have given up. For 20 years, Eleanore Robertson of Brainerd, Minn., dabbed Vaseline on her lashes every night, determined to get the "long, lush eyelashes" a fellow nurse promised the treatment would deliver. When sharing the ritual with a friend elicited a burst of laughter at Ms. Robertson's still short and sparse lashes, she called it quits. "I just kept hoping my lashes would get better," says Ms. Robertson, 80 years old. "I finally gave up."‹

[DewDiligence]

AGN’s 2Q10 Latisse sales were $23.9M, +27% quarter-over-quarter and +82% year-over-year. (Latisse received FDA approval in Dec 2008.)

Despite the strong growth rate, Latisse sales remain below where I thought they would be by now, about 1.5 years post-launch. Today, AGN lowered 2010 sales guidance for Latisse to $90-100M, which implies $47-57M sales in 2H10.

Part of the reason for the slow uptake of Latisse is competition from non-prescription knockoff products (some of which may be illegal). Competition from off-label Lumigan may also be a factor in the slow uptake, although AGN does not explicitly acknowledge this.