A Wrinkle in the Botox Plan

Allergan (NYSE: AGN  ) is trying to expand the use of its anti-wrinkle drug, Botox, but the Food and Drug Administration threw a wrinkle into its plan yesterday by turning down Allergan's application to market Botox for upper limb spasticity -- a disorder that causes muscles to tighten. Getting a complete response letter is rarely a good thing, but it wasn't all bad news for Allergan.

First and foremost, the FDA doesn't want any new clinical trials. It did request additional data from already completed trials, but Allergan thinks it should be able to put together that information in two to three months.

The agency also wants a Risk Evaluation and Mitigation Strategy (REMS) completed before it can approve the additional indication. Allergan has already turned in the REMS, so that's probably not the limiting factor for an approval at this point.

The best news is that the agency is actually being pretty easygoing. Allergan had proposed that the label indicate that Botox was approved for treating upper limb spasticity after a stroke, but the FDA said that the drug should be approved for treating any upper limb spasticity no matter what the cause. The agency even suggested that Allergan test the drug on kids who might have upper limb spasticity caused by cerebral palsy. Short of allowing the company to sell the stuff over the counter, that's about as much of a ringing endorsement on Botox's safety as investors could get.

Expanding Botox into fewer cosmetic procedures and more medical ones should help Allergan weather future recessions better. Breast implants from companies like Allergan and Johnson & Johnson (NYSE: JNJ  ) and aesthetic devices made by Syneron Medical (Nasdaq: ELOS  ) , Palomar Medical (Nasdaq: PMTI  ) , and others aren't exactly flying off the shelves these days.

Botox is also about to get a heavy dose of competition, since Medicis' (NYSE: MRX  ) Dysport was approved last month. Additional usage, even if delayed a little, will be needed, as sales of Botox were essentially flat in the U.S. last quarter.