Allergan PLC (AGN) Q3 2018 Earnings Conference Call Transcript

Allergan PLC  (AGN)
Q3 2018 Earnings Conference Call
Oct. 30, 2018, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Darla and I will be your conference operator today. At this time, I would like to welcome everyone to the Allergan Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. I would now like to turn the call over to Daphne Karydas. Please go ahead, ma'am.

Daphne Karydas -- Senior Vice President of Global Investor Relations and Strategy

Thank you, Darla, and good morning, everyone. I'd like to welcome you to the Allergan third quarter 2018 earnings conference call. Earlier this morning we issued a press release reporting Allergan earnings for the quarter ended September 30, 2018. The press release and our slide deck, which we are presenting this morning, are available on our corporate website at www.allergan.com. We are conducting a live webcast of this call, a replay of which will be available on our website after its conclusion. Please note that today's call is copyrighted material of Allergan and cannot be rebroadcast without the company's expressed written consent. Turning to Slide 2. (Forward-Looking Cautionary Statements)

All figures discussed during the call refer to non-GAAP. Our GAAP financial metrics and reconciliation from GAAP to non-GAAP metrics can be found in our earnings release issued this morning and posted on our website. In addition, all global and international growth rates referenced this morning are on an ex-FX basis. Turning to Slide 3 and our agenda this morning. With us on today's call are Brent Saunders, our Chairman and CEO; Bill Meury, our Chief Commercial Officer; David Nicholson, our Chief R&D Officer; and Matt Walsh, our Chief Financial Officer. Also on the call and available during the Q&A is Bob Bailey, our Chief Legal Officer.

With that, I will turn the call over to Brent.

Brent Saunders -- Chairman, President & CEO

Thanks, Daphne. And thank you, everyone, for joining our third quarter earnings call this morning. Let's turn to Slide 5. As we approach year-end, our business continues to show strong momentum across the board. Our focus on execution is evident in our performance and we continued to deliver solid results in the third quarter. We remain on track to meet our commitments as we advance our strategy to strengthen our leadership position in our four key therapeutic areas. Our third quarter performance highlights our strategic focus and the durability of our business. Our Medical Aesthetics business delivered another quarter of double-digit growth. As a global leader in the fast-growing market that is expected to double in the next five to seven years, we see exceptional prospects to continue to grow this business. At our Medical Aesthetics day in September, we provided further insights into the trends and dynamics that are driving the Medical Aesthetics market and our business.

In CNS, VRAYLAR and BOTOX Therapeutic continue to be our anchors, each growing at double-digit digit rates again in the third quarter. And concerning the richness of our CNS pipeline, the long-term outlook for our CNS business is very good. We continue to demonstrate significant progress in our pipeline with a number of potential key launches over the next three years. This quarter we sold our Medical Dermatology assets and acquired Bonti to continue to sharpen our focus. Finally, we continued to generate robust cash flows and maintained a disciplined approach to capital allocation with a strong balance sheet, strategic growth investments, and capital return to our shareholders. We achieved all this in a quarter where we also experienced some near-term headwinds, some of which were unexpected. During the third quarter, we recalled OZURDEX in certain international markets.

David will go over the details, but importantly, the issue that drove the recall was self-identified and no related safety issues have been reported to-date. Patient safety is always our Number 1 priority and we have already implemented corrective actions. We expect to restart the supply of OZURDEX in the impacted markets before the end of this year. Unfavorable currency movements, LOEs, and ongoing pressure from payers have been felt industrywide and we are well positioned to effectively manage through them. Given our strong underlying business momentum in each of our core therapeutic areas and our confidence in driving solid sales and earnings growth, we are raising our outlook for full-year 2018. Turning to Slide 6, let me run through our performance this quarter across our four key metrics. First, in the third quarter, we continued to drive double-digit growth and strong performance from most of our key promoted brands.

Despite the 3% decline in net revenue driven primarily by our LOEs, we maintained strong operating margins, continued to generate strong cash flow from operations, and grew non-GAAP performance net income per share by 2.4%. Our R&D pipeline also achieved significant milestones during the quarter including the acceptance of the sNDA for cariprazine and bipolar depression; successful completion of two safety studies for ubrogepant, our oral CGRP antagonist for the treatment of acute migraine, which now positions us to file the NDA by the first quarter of 2019; and encouraging Phase III results for Abicipar and Phase IIb results for Brimonidine DDS in geographic atrophy, which were presented at the American Academy of Ophthalmology just last week. We have also been very disciplined in our capital deployment. We continue to reinvest in the growth of our business where we are seeing compelling opportunities as demonstrated by our recent Bonti acquisition, which closed last week.

Bonti is a clinical stage biotech company focused on novel fast-acting neurotoxin programs and is complementary to BOTOX. We plan to develop this novel toxin as an introductory treatment or for an on-demand use. The addition of Bonti expands the potential of our best-in-class R&D pipeline in Medical Aesthetics. We also continued our track record of actively managing our debt levels and buying back shares using the proceeds from the sale of our Medical Dermatology assets. With this strong momentum in the business and based on our revised expectations for RESTASIS, we are increasing our full-year 2018 guidance for revenue and non-GAAP performance net income per share. Turning to our performance drivers on Slide 7. This chart illustrates the strength of our core business, which grew 6% versus prior year or 7.4% excluding foreign exchange.

This core business represents nearly 90% of our total revenue and is comprised of our promoted brands with ongoing exclusivity and other established products. As mentioned earlier, OZURDEX had a negative impact in the performance of our core business this quarter. Excluding this impact, our core business grew an impressive 8% excluding FX. I am proud of what our team has accomplished so far this year and excited about our potential to create more value for patients, employees, and shareholders for many years to come.

Now let me turn the call over to Bill.

Bill Meury -- Chief Commercial Officer

Thanks, Brent, and good morning. Slide 9 is a product level sales analysis for the third quarter ranked in terms of growth versus prior year. We had another very solid quarter with double-digit sales growth for a number of our major products; BOTOX, VRAYLAR, JUVEDERM, ALLODERM, and Lo LOESTRIN are at the top of the list and were standouts in the quarter. Other key brands including OZURDEX and CoolSculpting experienced trend breaks, which I'll discuss shortly. The core business continues to be in a strong sustainable position as we approach the end of the year. As you can see at the bottom of the graph and as expected, total sales growth was impacted by products already facing loss of exclusivity as well as RESTASIS sales decline ahead of anticipated generic competition. Turning to Slide 10. Our Medical Aesthetics business delivered growth in the third quarter of 12.4% versus prior year. Let me start with Facial Aesthetics, which had an impressive 17% growth this quarter.

Globally sales for BOTOX cosmetic increased 22% versus prior year with strong growth in both the US and international markets of 14% and 33%, respectively. International experienced the highest growth in the past two years driven in part by continued sales growth in China and in the Middle East partly due to timing of shipments. JUVEDERM sales also increased at a double-digit rate with the US up 10% and international up 17%. In the US, share was at an all-time high with our premium Vycross line; Voluma, Vollure, Volbella; contributing to these gains. As we discussed during our Medical Aesthetics Day, both products have been on a solid and sustainable growth trajectory and the global outlook for the business in the next several years is excellent. CoolSculpting sales increased 2% in the US while declining 3% internationally. In the US, consumables grew 10% off of a strong base in the prior year. System placements also continued strong double double-digit growth of 13%.

However, system revenues declined by 11% due to price discounting, which we used to drive system placements. Our CoolSculpting systems base is up approximately 30% in the past year and is approaching 6,000. System placements is key to strong and sustainable consumables growth in the future. International growth was impacted by ongoing integration activities across many of our markets. We expect an acceleration of sales in the fourth quarter bolstered by a relaunch in China. Overall, the prospects for this business continue to be very positive. Plastics and Regenerative Medicine showed solid 8% growth in the quarter versus prior year. ALLODERM, our tissue matrix for breast reconstruction, continues to exceed expectations with sales up 24%. Turning to Slide 11. Our CNS business is being driven by two cornerstone therapies; VRAYLAR, our atypical antipsychotic and BOTOX Therapeutics for migraine and other neurological and movement disorders.

VRAYLAR continues to be the fastest growing atypical antipsychotic brand in the market. Physician and patient experience and satisfaction with this product is very high. We continue to support VRAYLAR with a market leading peer-to-peer promotional program and direct-to-consumer advertising. Quarter-over-quarter demand for VRAYLAR is robust and consistent. With the filing of the bipolar depression indication, we're one step closer toward an important growth catalyst in 2019. On the right, you can see BOTOX Therapeutics on a solid growth trajectory. In the third quarter, global BOTOX Therapeutic sales grew 12% versus prior year driven mainly by volume. Growth is coming from all indications; migraine, spasticity, and overactive bladder; across all channels, office and hospital; and all specialties including neurologists, physiatrists, and urologists.

I want to take a moment to address the impact of CGRPs on BOTOX migraine. Demand for BOTOX has remained strong despite an additional quarter of promotion for Aimovig and the recently approved Emgality and Ajovy. We continue to expect Botox and the CGRPs will co-exist in a larger chronic migraine market. While the growth rate of BOTOX Therapeutics is likely to moderate, we expect it will remain strong in the mid-to-high single digits. Over the long term, migraine has the potential to be one of the largest businesses at Allergan with BOTOX and our oral CGRPs, Ubrogepant and Atogepant. Turning to Slide 12, we have a robust franchise in GI. In the third quarter, LINZESS sales grew 7%. Demand growth was up 12%, but was partially offset by trade buying patterns. Almost seven years into launch, we expect LINZESS demand growth to remain at mid-to-high single-digit levels and we anticipate continued strong formulary access into 2019 as well.

However, we expect that industrywide pricing dynamics will negatively impact the net price for LINZESS in the future. As a result, we estimate LINZESS growth in the low-to-mid single-digit range going forward. Zenpep and Viberzi continued to contribute positively to the franchise growth in the quarter and are collectively heading toward $0.5 billion on an annual basis. On the right, Eye Care performance was significantly impacted this quarter by OZURDEX and a decline in RESTASIS. In dry eye, RESTASIS declined 18% versus prior year due to a lower net price, demand, and continued prudent management of trade inventory levels ahead of a potential US generic entry. Our glaucoma business remained stable with solid mid-single-digit growth internationally, partially offset by a moderate decline in the United States.

Turning to Slide 13. In international, sales were up 8% excluding the impact of foreign exchange fueled by strong medical aesthetics demand. BOTOX Cosmetic and JUVEDERM grew 33% and 17%, respectively. Also, BOTOX Therapeutic experienced significant growth at 17%. Sales for OZURDEX however declined 45%, which impacted overall international growth by almost 400 basis points in the quarter. Finally, Asia-Pacific, Middle East, Africa continues to be our fastest growing region led by China with growth of 64% this quarter compared to last year. China is on pace to be our largest market internationally. Latin America, Canada growth was stable versus the prior year due to the impact from the OZURDEX recall in Brazil and Canada and the Fibristal label change. Our performance in international this quarter was solid despite OZURDEX and foreign exchange and the outlook for this business remains excellent.

Now let me turn the call over to David.

David Nicholson -- Chief R&D Officer

Thanks, Bill. Good morning, everyone. Turning to Slide 15. In the third quarter, our R&D organization continued to deliver on our key pipeline projects building upon the success from the first half of the year. We advanced our pipeline across several key therapeutic areas including CNS, Eye Care, and Medical Aesthetics. The sNDA for cariprazine for bipolar depression was accepted by the FDA and we have a PDUFA date in May of 2019. This brings us one step closer to being able to offer new treatment option for patients suffering from bipolar depression. Turning to Ubrogepant, we successfully completed our two safety studies for the treatment of acute migraine. The results support the product's positive efficacy, safety, and tolerability profile positioning us to file an NDA in early 2019. As previously announced, Atogepant, our oral CGRP antagonist for the prophylactic treatment of migraine, demonstrated robust efficacy and safety in a Phase IIb/III study for the prevention of episodic migraine.

As such, we will be initiating Phase III studies for both episodic and chronic migraine prevention in the first half of 2019. We have already initiated the requisite long-term safety study. The potential of our oral CGRP antagonist to offer migraine patients a novel treatment option further strengthens our position in CNS. Before I move on to the development progress in Eye Care, I would first like to make a few remarks regarding the OZURDEX recall in some international markets. Nothing is more important than patient safety, it guides all that we do at Allergan. The issues that drove the OZURDEX recall was self-identified by our quality assurance group and corrective measures were immediately taken. Importantly, our review has not identified a related safety signal with nearly 10 years of post-marketing surveillance data.

We have met with European regulators to review the corrective actions and anticipate that we will start to resupply those markets affected during the fourth quarter of this year with full supply back during the first quarter 2019. We continue to make great strides in Eye Care innovation. Last week at the American Academy of Ophthalmology (AAO), we presented data from our Phase IIb BEACON study, which evaluated our cytoprotective, neuroprotective asset Brimonidine DDS in patients with geographic atrophy. We have identified the path forward based on our compelling Phase IIa and Phase IIb results moving us a step closer toward developing a potential therapy for this life-changing disease, which have no approved treatment options anywhere in the world. We remain excited about the potential of Abicipar as the only fixed 12-week therapy for neovascular AMD.

At AAO, we presented the secondary efficacy endpoints including changes in mean best corrected visual acuity and central retinal thickness from both Phase III studies, SEQUOIA and CEDAR. Those results corroborate the primary endpoint and we expect to file Abicipar with the FDA in the first half of 2019. We look forward to results from our MAPLE study examining the safety of a further optimized formulation of Abicipar, which are expected in the first half of 2019. Further in Eye Care, Bimatoprost SR represents our first-in-class sustained release biodegradable implant for the reduction of IOP in patients with open angle glaucoma. Earlier this year, we presented topline results from the first Phase III study in which we showed a reduction of IOP by approximately 30% over a 12-week period. These initial data also showed the potential for the majority of patients to remain treatment free for one-year after their last implant was inserted.

We expect topline results from the second Phase III trial in the first half of 2019 and we expect to file in the US in the second half of next year. With regards to our NMDA modulators, we expect data from our three acute adjunctive MDD studies with Rapastinel in the first half of 2019. As for our oral NMDA modulator 241751, we initiated a Phase II study in the second half of this year. Finally, at our Medical Aesthetics meeting in September, we provided investors with a deeper look into several of our pipeline assets. We highlighted Phase II data for BOTOX Masseter and we will be initiating a Phase IIb study for this indication next year. In addition, CoolSculpting received submandibular 510(k) clearance this quarter and we expect CoolSculpting 2.0 for muscle stimulation to obtain 510 clearance and CE Mark in the second half of 2019.

As you can see, we have had multiple successes this year. Our pipeline is strong and 2019 promises to continue to be a very busy and productive year within the R&D organization at Allergan. Turning to Slide 16, we have a table with an overview of the upcoming catalysts for our key programs through 2020. Year-to-date we have achieved multiple milestones, each of which brings us closer to several potential product launches in 2020 and beyond. We will hold a Type A meeting with the FDA concerning Esmya by the end of this year and we will keep you updated on our progress. The programs highlighted in this table remain on track and we are proud of our achievements year-to-date. We're working hard toward continuing our string of successes into 2019 and beyond. As always, I thank my colleagues in R&D for their hard work and I especially thank the patients who participate in our clinical trials.

And now, I will turn the call over to Matt.

Matt Walsh -- EVP & CFO

Thank you, David. Turning now to the key financial highlights. Our third quarter results exceeded the high end of guidance that we provided last quarter, both for revenue and non-GAAP performance net income per share. This was led by the continued delay in generic entrance for RESTASIS combined with solid performance of our core business. Besides the impact from LOEs, two smaller issues impacted results in the third quarter, none of which were significant individually; first is OZURDEX and second is foreign exchange translation. The strength of our reported results despite these issues speaks to the overall resiliency of our business today. As such, we're well positioned to achieve the goals we have set for the year as we'll see shortly when we discuss our improved guidance. Looking at Page 18 and starting with the upper left quadrant, you can see net revenues in the quarter were $3.9 billion, a 3% decline versus prior year. Shown at constant currency, the decline narrows to 1.8%.

The core business grew 5.9% year-on-year on a reported basis, 7.4% at constant currency. Normalizing for the impact of OZURDEX on the topline, underlying core business growth was 8.4% during the quarter, which more closely aligns with the good core business growth realized in the second quarter. LOE products declined 38% year-on-year during the quarter mainly attributed to NAMENDA XR and ESTRACE generic entrants as well as the significant decline in RESTASIS. To this group, we've now added the divested Medical Dermatology products and we'll continue to include divested products to this group as asset sales progress. Turning to the upper right quadrant, you can see non-GAAP gross margin for the quarter was 85.2%, a decline of 90 basis points versus prior year. This decline driven by product mix mirrors what we saw in the first half of the year with the addition this quarter of a 30 basis point impact from the OZURDEX recall.

Non-GAAP operating margins remained strong at 48.7% mainly due to lower operating expenses from successful execution of the restructuring program completed early in 2018. As a result and as a reminder, our operating margins throughout 2018 year-to-date and versus our expectations for the fiscal year have been running on the high side by approximately 200 basis points because we have had the exclusivity of RESTASIS while our P&L simultaneously reflects the lower costs achieved by the restructuring undertaken to help offset LOE products including RESTASIS. Moving to the lower left quadrant, third quarter non-GAAP performance net income declined 1% versus prior year due to the revenue and gross margin declines just mentioned, partially offset by lower operating expenses and lower net interest expense as we continue to reduce debt.

Trending in a positive direction, non-GAAP performance net income per share in the quarter of $4.25 grew 2% versus prior year as a result of lower share count due to buybacks executed over the last year. Included in revenue and non-GAAP performance net income per share for the quarter is the impact of OZURDEX, $32 million and $0.11 respectively; and foreign exchange translation of approximately $50 million and $0.05, respectively. In the lower right quadrant, we look at operating cash flow generation on a last 12-months basis for each ending period, which continues to be strong. I want to highlight, as I did last quarter, that these operating cash flows have no adjustments of any kind and represent the same operating cash flow figures you'll find in our GAAP reported results. In the third quarter, operating cash flow was $1.44 billion, which drives our last 12 months operating cash flow to $6.2 billion as of September 30th.

Nine month results continue to support our full-year guidance of $5.2 billion in operating cash flow, which remains unchanged despite the recent acquisition of Bonti for $195 million, which closed in the fourth quarter. As we do every quarter, we have provided more detail on the movements in cash and marketable securities in the appendix as well as our anticipated R&D milestone payments. On Slide 19, you can see a more complete look at our key P&L line items for the third quarter as compared to prior year. I've already covered most of the highlights, but a couple of items here I'd like to touch on. Net interest expense continues to improve largely due to lower average debt balances. Our gross debt balance at September 30th is 22% below the year-ago balance sheet. And our effective tax rate as anticipated was aligned with last quarter as we continue to see delay of RESTASIS generic entrance.

Turning now to our third quarter performance versus prior year by reporting segment on Slide 20. US Specialized Therapeutics revenue decline of 1.1% was mainly attributed to lower RESTASIS revenues as well as lower sales of the now divested Medical Dermatology business. However, this segment continues to be our highest contribution margin segment and in fact contribution margin increased 180 basis points as cost savings from our restructuring program more than offset downward pressure from lower volumes in gross margin. US General Medicine continues to be the segment most impacted by LOEs as reflected by the revenue decline of 7.8%. Contribution margin declined slightly 70 basis points as savings from restructuring initiatives partially offset the impact from lower volumes and product mix shift. International revenue growth of 1.7% was significantly impacted by foreign exchange translation and OZURDEX.

As you can see on the slide at constant currency, revenue growth was 7.8% versus prior year and 11.8% excluding the impact of the OZURDEX recall. Contribution margin moved in the right direction rising 40 basis points to 54.7% due to operating leverage. Turning to Slide 21, you can see on the left side of the slide our capitalization table and on the right hand side, the disciplined actions taken toward capital deployment and return of capital to stakeholders. Three points I'd like to address here. Point number one, we retired approximately $750 million of debt during the third quarter and the emphasis we're placing on reducing leverage is especially important given the pending generic entrance for RESTASIS. Point number two, total debt retired in the third quarter was actually a larger number at $1.8 billion. However, approximately $1 billion of the $1.8 billion is earmarked for a leverage neutral refinancing that we are in the process of executing as we speak as a normal part of debt portfolio management. As such, we expect to conduct one or more financing transactions in the fourth quarter subject to market conditions. These issuances together with any additional repurchases during the fourth quarter are expected to reduce our outstanding debt on a net basis by at least $750 million as I just mentioned. And please note, the leverage ratio as shown on the left side of the slide have been computed on a pro forma basis to exclude any temporary debt reduction that has happened as part of the leverage neutral refinancing. Point number three, last point; in conjunction with prior statements we made on asset sales, the $550 million in net proceeds from the sale of Medical Dermatology assets were immediately deployed through a combination of debt reduction and share buybacks, all of which were completed during the third quarter. The amount allocated to debt reduction is included in the $750 million of debt reduction that I discussed in point one.

As a reminder, our capital allocation priorities as stated previously remain unchanged and I'll reiterate them. First, reinvestment in our business for growth in our four key therapeutic areas. The acquisition of Bonti in Medical Aesthetics is a prime example of our commitment to deploying capital first and foremost to grow the business. Second, debt reduction to maintain our investment grade credit rating and to offset the otherwise leverage increasing impact of the anticipated RESTASIS loss of exclusivity. Third, funding the current dividend and prudently growing that dividend annually. And fourth, share buybacks to manage dilution created by long-term equity-based incentive plans as well as potential earnings dilution from asset divestitures we may complete. Moving now to Slide 22 on our updated guidance and let's start with net revenues. We are raising our full-year outlook and now expect 2018 net revenues to be between $15.55 billion to $15.70 billion, a $100 million increase at the bottom and top of the range compared to our prior guidance.

This increase reflects continued strong performance from our core business and additional three months of RESTASIS generic entry delay, which together more than offset a, impact in the fourth quarter from OZURDEX and foreign exchange translation, which combined are estimated at approximately $125 million in revenues and approximately $0.30 in non-GAAP performance net income per share; and b, the sale of the Medical Dermatology assets, which were expected to contribute about $35 million of revenue in the fourth quarter and approximately $0.08 in non-GAAP performance net income per share. Non-GAAP gross margin for the full year is expected at approximately 85.5%, slightly below our prior guidance of 85.5% to 86% to reflect the impact from product mix and OZURDEX.

Our SG&A and R&D expenses remain unchanged versus prior guidance and reflect approximately $150 million increase for the second half of the year for reinvestment of additional profits from the delay of RESTASIS generic competition. Non-GAAP net interest expense, tax rate, and share count also remain unchanged versus prior guidance. Moving to the last line of the slide reflecting the incremental revenue guidance, we are increasing our full-year 2018 non-GAAP performance net income per share to be in the range of $16.20 to $16.60. Our guidance for 2018 reported cash flow from operations remains at approximately $5.2 billion and now reflects one, generic RESTASIS entrance between November 1st and January 1st of 2019; restructuring and other M&A integration payments in the range of approximately $225 million as previously stated; and finally, success-based milestones from existing pipeline projects of approximately $735 million in 2018, which now includes the payment of $195 million for the acquisition of Bonti in Q4.

And with that, I'll turn the call back to Brent.

Brent Saunders -- Chairman, President & CEO

Thank you, Matt. Allergan's performance in the third quarter and so far this year highlights our business momentum and our keen focus on execution. We have accomplished a lot and we are gratified to see the strong momentum in our business, the continued growth of our key products, and the achievement of several key milestones within our R&D pipeline.

I'd like to open the call to questions and please remember to limit yourself to one question. Operator, we can open the line.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Liav Abraham, Citi.

Liav Abraham -- Citigroup Global Markets -- Analyst

Brent or Matt, I'm curious how we should be thinking about operating margins in 2019. I understand you're not giving guidance beyond 2018. But just given the expectations for RESTASIS generic competition and the relative profitability of the product, curious on how we should be thinking about operating margins beyond 2018? The Street's modeling roughly flat margins in 2019 versus 2018. And if I could sneak in a quick second. Bill, BOTOX in migraine; based on the data you have, to what extent is BOTOX being used in combination with the CGRP drugs at the moment and how are you thinking about the migraine opportunity beyond 2019 once the sampling and zero copay programs for the new class cease and end?

Brent Saunders -- Chairman, President & CEO

Matt, why don't you take the operating margin?

Matt Walsh -- EVP & CFO

So on operating margins, obviously we're not providing guidance today. There is a lot that will impact that in 2019. But one of the reasons why we decided to discuss the pro forma impact of RESTASIS on our 2018 results causing an uptick of about 200 basis points in operating margin is to at least provide some directional indication for what the business will do on an operating margin basis ex-RESTASIS.

Brent Saunders -- Chairman, President & CEO

Bill?

Bill Meury -- Chief Commercial Officer

And then, Liav, on BOTOX; look, we're above expectations for 2018 in terms of sales. We haven't seen any significant change in demand for BOTOX in migraine. To answer your question, we estimate only roughly 6% of patients on Aimovig are receiving BOTOX, which isn't surprising. I think if the market's going to move to adjunctive treatment, there's going to need to be data produced and then a fairly strong health economic argument made to health insurance companies and PBMs. I think a couple other data points that dimensionalize the dynamics around BOTOX here that are worth noting. First, 48% of patients on Aimovig were new patients, new to the market; 25% have been switched from Topamax; only 1.2% have been switched from BOTOX. And so I think the conclusion here is the market is large, it's growing, there is an unmet need, there's room for multiple treatment options. And I think to a certain extent, Aimovig will expand the market and could be a gateway for BOTOX. Only 50% of people are going to respond to Aimovig and to be fair, the reverse is true. I like the way this market is setting up for BOTOX and for the CGRPs and I think the outlook for '19 and beyond is positive.

Operator

Seamus Fernandez, Guggenheim.

Seamus Fernandez -- Guggenheim Securities -- Analyst

So, I have one question on the CNS pipeline and a few sub parts. So the quick one is on Atogepant, can we just get a sense of how the Ubrogepant safety may have helped to inform the start of the Atogepant Phase III? Was that a gating factor at all to being able to start the Atogepant longer treatment trials the Phase IIIs or was it just the Phase II? And then the second question is just simply on Rapastinel and the oral Rapastinel follow-on product that you guys are developing. Can you just give us a sense of what you're hoping to see as kind of the headline type of results from the Phase III studies that are going to read-out in the first half of next year? Thanks so much.

Brent Saunders -- Chairman, President & CEO

And I'm going to try to reiterate one more time one question because you guys are pretty good at this, getting that second question as sub parts. David, you want to take that?

David Nicholson -- Chief R&D Officer

I can be I think relatively brief in the answer. With Atogepant, we started the Phase III programs were planned and started -- are starting independently of Ubrogepant. We have already started the Atogepant long-term safety study and anticipating starting the Phase III efficacy studies with Atogepant in the very near future. Yes. Regarding the Rapastinel Phase III studies, the adjunctive MDD studies report out in the first half of next year and we'll be concurrently running the Phase II studies with 241751. It's premature to have any discussions about the implications for the Rapastinel data on that 241751. Looking forward to the data.

Operator

Ken Cacciatore, Cowen and Company.

Ken Cacciatore -- Cowen and Company -- Analyst

Just a quick question on the divestiture process. Any update there for Women's Health and infectious disease and maybe some of the things you're thinking through as you continue to discuss the potential to go ahead and sell these assets.

Brent Saunders -- Chairman, President & CEO

So look, just to ground everybody in where we stand. As you know, we have initiated processes to sell both our anti-infective and Women's Health businesses. As we've told you before, the anti-infective process is internally driven and the Women's Health process is advisor-led. Both processes are going at full speed and progressing, they're stepping through the various processes for divestiture. I will tell you we have received now the preliminary expression of interest for some of these businesses and they are below what I believe the value of these businesses are. And we should just remind you and maybe I'll ask Matt to comment as well, these are good businesses, right.

We have always said that while we absolutely would like to sell these businesses, we need to make sure that we get the right price given the dilutive effect on a variety of our financial metrics and the growth profile of these business, look at Lo Lo up 18% in the quarter as an example. So, we're going to stay very disciplined. We've been a good disciplined asset seller in the past. I think we've got a good price for our Medical Dermatology assets and we'll continue to make sure that we create value through the sales process by getting the best price. Matt, you want to add some color at all?

Matt Walsh -- EVP & CFO

Just to add to the statement that getting the right price is important. These businesses have been on a year-to-date basis accretive to our growth rate, accretive to our margins. Just in case there is a misperception out there that because we've considered options for these businesses that they're somehow below the company's average. That is a misperception. These are good and contributing businesses to the overall portfolio.

Brent Saunders -- Chairman, President & CEO

So to kind of conclude, Ken, a long-winded answer, I apologize. We will continue forward with the process. We will do everything to try to negotiate the best price possible and we look forward to hopefully updating all of you perhaps before the end of the year or soon thereafter.

Operator

Chris Schott, JPMorgan.

Chris Schott -- JPMorgan Securities LLC -- Analyst

Just my question is on CoolSculpting. You talked about system discounting impacting revenues this quarter. Can you just elaborate a little bit more on the dynamics there? I know the high system placements are a long-term growth driver, but should we anticipate a near-term headwind similar to what we saw this quarter as that flows through the P&L? And if I just could follow up on the last answer on divestitures. If you don't get the price you're looking for in these assets, is there a formal end to review or are these asset sales you continue to revisit over time and potentially monetize at some point in the future? Is this kind of a yes-no decision that we should expect later this year? Thank you.

Brent Saunders -- Chairman, President & CEO

So, let me answer the second part and then Bill can take the CoolSculpting. So there will be a formal end to the process, but there's never a formal end to our evaluation of the opportunities to create value inside of Allergan. For example, we didn't announce a formal process for the Medical Dermatology assets, but it's I think a proof point that we're always looking to focus our portfolio and create value for shareholders. And so if it doesn't work this time, we may end the process for now and consider it again at some future date, but that will be up to the board. But just to be clear, this process is just stepping through its normal course. We've only received preliminary interest and anything can still happen. We're going to push very hard. We are disciplined sellers and we'll provide an update as we move through the process over the next several weeks.

Bill Meury -- Chief Commercial Officer

This is Bill. I wouldn't think about the price discounts on systems to be a long-term headwind. I would look for two things and I expect two things in this business. The first is we'll see an acceleration of consumables growth in quarter four and I think will sustain a high rate of growth in 2019. I would also look for a pickup in our international business. And so any discounts that we're providing on systems to drive placements and look, since we picked this business up, placements are up 50% year-over-year, which is exactly what we wanted to do when we merged or acquired with ZELTIQ. I think it'll all be covered by very solid consumable growth over the next several quarters.

Brent Saunders -- Chairman, President & CEO

I think we look at this as a very strategic part of the business and establishing a beachhead and body contouring. And the key to that as we said when we acquired the business two years ago or about, it's about getting system placements in the right accounts and Bill's team has done a really nice job getting to almost 6,000 of the accounts, up about 50%. So, that's our short-term goal. Our long-term goal is to drive consumables and I think we're going exactly where we need to be. Next question, Darla.

Operator

Jason Gerberry, Bank of America.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

A quick question for David just on Ubrogepant. The 500 person safety trial, the placebo-controlled trial, can you comment at all about what were the general rates of liver enzyme elevation between drug and placebo arm? Just trying to get a sense of ultimately what that data looks like or when it would be presented and how comfortable you are that this drug is now approvable without a liver function test requirement?

David Nicholson -- Chief R&D Officer

Look, really happy that we finished all the trials, the efficacy and the safety trials, that the FDA has requested for submission and we have not seen liver safety issues as concern and this was confirmed by our Independent Data Safety Monitoring Board. We are going to be presenting the data in the very near future at the best most appropriate medical conference, which we feel is by far the best forum for presenting these types of data and we are looking forward to filing Ubrogepant with the FDA in the first quarter of next year. Yes, so good.

Operator

Vamil Divan, Credit Suisse.

Vamil Divan -- Credit Suisse Securities LLC -- Analyst

I'll also just keep it to one topic here. Just around drug pricing, we obviously have seen a lot of discussion from Washington. Brent, you've obviously been a leader in this area. So just curious on your thoughts on what you think is the most likely output of some of the recent discussions and maybe you can just sort of provide for us how much of the growth this quarter was from net pricing benefit versus volume. I don't know if you said that.

Brent Saunders -- Chairman, President & CEO

As you know, as you mentioned, we've been thinking about the new pricing world or dynamic now for a few years and certainly a proof point would be the social contract we passed now almost two years ago or over two years ago at this point. And look, back then I said to all of you and I remain consistent in my thinking that the biopharma business of the future cannot be relying on price increases, it needs to be relying on innovation and new product flow and amazing execution in the marketplace. And so, those are the things that Allergan has been focused on. And so as a result, our growth came with zero price appreciation in this quarter. I'll say it again, zero price appreciation in this quarter.

We are focused on driving demand and volume with our new products. And so when you think about the underlying core growth of 8.4% ex-FX, FX ex-OZURDEX, that is why we believe in the future of our ability to execute and to drive growth. And I think on a go-forward basis, taking price is going to become more difficult. I think that's fair. I think we have to watch the counterbalance from the administration of stifling innovation and some of the proposals that are being put forth to reference price potentially to price controlled countries, I think could have destabilizing effect on how we think about investing for innovation in our industry. So I think everything has to be taken in context and be done thoughtfully, but this is a business in the future that's going to grow from demand and innovation not from price and we've thought that way for several years now.

Operator

David Risinger, Morgan Stanley.

David Risinger -- Morgan Stanley & Co. LLC -- Analyst

I was hoping that you might be able to provide some color for us so that we better understand your hopes for the optimized formulation of Abicipar. Could you give us a sense for what magnitude of reduction in inflammation risk you are targeting? Is it a quarter reduction, is it an 80% reduction? I mean what is your hope for this reduction in inflammation that you'll be reporting out next year?

Brent Saunders -- Chairman, President & CEO

So David, I'll give an answer and if David wants to add some commentary, feel free. Look, we don't design the study that way. That's not the way we go into thinking about it. Obviously our goal, as is our goal with every development program, is to create the best risk benefit profile we can possibly create. So, clearly here we've demonstrated what was even confirmed by KOLs at the AAO last week as the best efficacy in that it is the only true 12-week duration for all comers and so consistent 12 weeks is the best duration study out there. So, that's very solid efficacy. And on the safety side, the inflammation rates are higher than we'd like and so David's team has been working for a few years to improve the formulation as other VEGFs have done and our goal is ultimately to get it as low as possible. Whether MAPLE delivers that, we'll see when we get the data, but we don't come at it from saying is it like going get to 20% reduction or 50% reduction. This will be a continuous process improvement just like the others have gone through and so we hope to get a strong improvement from MAPLE and continue to work on improving it in a continuous improvement cycle. David, anything else you'd add.

David Nicholson -- Chief R&D Officer

I think that's a perfect answer, Brent. You covered it, yes.

Operator

David Maris, Wells Fargo.

David Maris -- Wells Fargo Securities LLC -- Analyst

On Brimonidine DDS, can you give us an update on it? What was the feedback at AAO? And is this a product that you think will be kind of a premium priced product for hard to control patients, sort of a niche expensive product or is this going to be a broader product for glaucoma patients in general?

Brent Saunders -- Chairman, President & CEO

Maybe I'll start and then Bill and David can chime in on Brimo DDS. Geographic atrophy and neuroprotection are right now the essence, the Holy Grail, in the retina community only in that there is no approved treatments. There are actually no treatments for these two diseases today and they're very large markets as you know. And so, it's hard to figure out exactly what the right positioning is for Brimo DDS in that it is still in development. But given the ease of the implant and the safety profile from what we see, I think it would be something that would be used in a majority of patients, but there's still a lot of work to be done and there's still a lot of product profile that has to be developed. But obviously it's exciting for us in that it's a huge opportunity to drive innovation into probably the greatest area of need in the retina community. David, anything you'd add?

David Nicholson -- Chief R&D Officer

Yes, perhaps just a couple of comments. So, the first indication that we're developing Brimonidine DDS for is a cytoprotective -- neuroprotective agent in geographic atrophy where there is no approved therapies at all. We are happy with the effect on lesion size because that is going to be the primary endpoint for the Phase III studies with as a secondary endpoint effect on visual function. In terms of glaucoma and the potential for neuroprotection in glaucoma which you mentioned, David, that is something that we need to take some decisions on and it's an earlier stage of development.

Brent Saunders -- Chairman, President & CEO

And just to make sure we're being clear because, David, maybe we have two programs. We have Brimo DDS for geographic atrophy or neuroprotection and we have Bim SR or Bimatoprost SR for glaucoma. Both programs are very exciting and both address huge unmet medical need. And if you go back to the glaucoma product Bim SR, there we're really very excited about the first three -- Phase III study in that we saw, what David mentioned in the script, patients going -- controlling IOP a full year after receiving their last implant. So now in the AAO, the excitement there among the glaucoma specialists is maybe we have a disease modifying drug, maybe this is the first glaucoma product to actually treat the biggest issue with the disease, which is compliance and persistence not necessarily efficacy of the current eyedrop therapies. And so I would say, I spent a few days over the weekend at AAO, I think among the glaucoma community that this was the most exciting thing and among the retina community, clearly a fixed dose 12-week drug for AMD was pretty exciting. But probably even more exciting was the potential to have a treatment with Brimonidine DDS for geographic atrophy. That really was the talk of the meeting.

Operator

Jami Rubin, Goldman Sachs.

Jami Rubin -- Goldman Sachs & Co. LLC -- Analyst

David, for you on Abicipar. Both Eylea and Novartis b-mab offer both eight and 12-week dosing with clean safety profiles and Roche is developing a 16-week drug, but obviously early. Recognizing that Abicipar has shown that a majority of patients achieve efficacy at 12-week intervals, is there -- I guess this is back to David's question, is there a level of inflammation from the upcoming MAPLE trial that's too high to take the products forward or is the feedback that you get from physicians that they will take the trade-off of the dosing advantage with higher inflammation rates? And also David, if you could address Abicipar, looks like it underperformed Lucentis in the CEDAR trial.

Brent Saunders -- Chairman, President & CEO

David?

David Nicholson -- Chief R&D Officer

As presented at AAO, the vast majority of the inflammation cases with Abicipar were mild to moderate that we've seen so far and were effectively treated with topical corticosteroids. And as you mentioned, we are very excited by the fact that we have a fixed-dose 12-week regimen with Abicipar, which is potentially the first agent that's going to have this fixed 12-week regimen. Regarding CEDAR and SEQUOIA, the most important point of both of those trials is that after the loading doses from week 16 to week 52, the efficacy was maintained which shows that it's a fixed 12-week regimen. And as we pointed out, the slight difference in effect between CEDAR and SEQUOIA on the Abicipar arm is entirely consistent with the variability effect that you see both with Lucentis and Eylea in the VIEW trials, which shows that you do get some variability effect with the same agent with all of these anti-VEGF agents between studies.

Operator

Ronny Gal, Bernstein.

Ronny Gal -- Sanford C. Bernstein & Co. -- Analyst

Congratulations on a nice quarter. Brent, for you on this IPI model, I appreciate the topline view. But I was wondering if you actually looked at the pricing difference of BOTOX between US and international and kind of estimated for yourself the exposure if indeed we go to this 1.26 times OUS prices in the US for BOTOX specifically. Essentially if this model is getting implemented, essentially what is Allergan exposure? And if I can sneak one for Nicholson following up with Brimo DDS, are going for breakthrough designation for geographic atrophy?

Brent Saunders -- Chairman, President & CEO

So, Bill can provide some color on the first part of your question. But I would just say in my opinion and obviously there's a bias to it, I think we are very well positioned to deal with these proposals even if as I mentioned earlier, they could ultimately impact our ability as an industry to innovate in the United States or invest for innovation in the United States, which I think is dangerous. But that being said, I think Allergan is well positioned as any other company. And Bill. you want to provide some color around that?

Bill Meury -- Chief Commercial Officer

Ronny, roughly today 6% of our sales are subject to Medicare Part B. So, I want to sort of put that in perspective. As it relates to the international pricing index not surprisingly with a biopharmaceutical like BOTOX, there's going to be a difference between the price in the United States relative to markets internationally. When you look at that overall proposal, I think the therapeutic areas that are really in focus are oncology, MS, RA, and other spaces. I don't consider BOTOX a big budget buster in any way, shape, or form. And we'll just have to see how the rule plays out. I know there's a phased-in approach there that's going to extend about five years, I think it's a little too early to estimate what the impact would be. That being said, it would be relatively modest given our business and our exposure to Part B.

David Nicholson -- Chief R&D Officer

And Ronny, regarding Brimo and breakthrough designation, we'll be going to talk to Wiley Chambers in the coming months to sort out exactly where we are in terms of finalizing the Phase III studies and other possible interactions with the FDA. Clearly, we are always interested in getting breakthrough designation for this. It's too early to say anything about that.

Brent Saunders -- Chairman, President & CEO

I think, Darla, we'll will take two more questions.

Operator

Elliot Wilbur, Raymond James.

Elliot Wilbur -- Raymond James -- Analyst

Just maybe a follow-up question on some of the earlier conversation around OZURDEX. Just specifically I would have thought that the supply chain was relatively similar ex-US and US and wondering if that in fact is the case and if anything that came out of issues ex-US might impact growth rates in the US market going forward?

Brent Saunders -- Chairman, President & CEO

So as I mentioned or David mentioned as well, this was an issue that was self-identified and corrective actions were put in place immediately. We've been meeting with regulators from around the world. Obviously each one has their own opinion on how this should be handled and under what conditions. That still is a bit of an ongoing process. But what I can tell you is our corrective actions were meaningful and the problem was, as we said, there's no real patient safety reported or issues reported yet. So, we think we have the issue in hand and under control and that doesn't mean a regulator can show up tomorrow with a different opinion, but we're working very hard to be transparent to be open and obviously to implement our corrective actions. And so, I think we're in pretty good shape. Last question.

Operator

Umer Raffat, Evercore.

Umer Raffat -- Evercore ISI -- Analyst

Brent, is there a possibility that you can do something transformational for your dry eye franchise beyond RESTASIS? And I'm referring to the possibility of perhaps a (inaudible) tuck in and also wondering if that would only make sense before you lose your gross to net structure prior to generic RESTASIS entry? Thank you.

Brent Saunders -- Chairman, President & CEO

Look, I'm never going to comment on a specific M&A transaction on a conference call. That being said, we should just recognize we have RESTASIS. We don't know exactly when RESTASIS. will go although we believe that that is the most likely scenario. We have an obligation to maximize our focus on RESTASIS. until the day it loses exclusivity and so that's our real focus. That being said, we're at AAO, we're always looking for innovations in dry eye, we're always looking for novel real improvements in the treatment and therapies for dry eye. And so we fully expect to remain very active in helping our customers, the physicians and optometrists, serve their patients that suffer from dry eyes. So we're absolutely focused on the category, the space, and driving innovation into eye care.

So, I'd like to just conclude our call and thank everyone for their participation. We are again very focused on execution at Allergan. We see good momentum in our business and we look forward to providing further updates over time and certainly into next year. Thank you for participating. Darla, that concludes our call.

Operator

Thank you. This concludes the Allergan Q3 earnings conference call. You may now disconnect.

Duration: ?? minutes

Call participants:

Daphne Karydas -- Senior Vice President of Global Investor Relations and Strategy

Brent Saunders -- Chairman, President & CEO

Bill Meury -- Chief Commercial Officer

David Nicholson -- Chief R&D Officer

Matt Walsh -- EVP & CFO

Liav Abraham -- Citigroup Global Markets -- Analyst

Seamus Fernandez -- Guggenheim Securities -- Analyst

Ken Cacciatore -- Cowen and Company -- Analyst

Chris Schott -- JPMorgan Securities LLC -- Analyst

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Vamil Divan -- Credit Suisse Securities LLC -- Analyst

David Risinger -- Morgan Stanley & Co. LLC -- Analyst

David Maris -- Wells Fargo Securities LLC -- Analyst

Jami Rubin -- Goldman Sachs & Co. LLC -- Analyst

Ronny Gal -- Sanford C. Bernstein & Co. -- Analyst

Elliot Wilbur -- Raymond James -- Analyst

Umer Raffat -- Evercore ISI -- Analyst

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Allergan PLC  (AGN)
Q3 2018 Earnings Conference Call
Oct. 30, 2018, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Darla and I will be your conference operator today. At this time, I would like to welcome everyone to the Allergan Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. I would now like to turn the call over to Daphne Karydas. Please go ahead, ma'am.

Daphne Karydas -- Senior Vice President of Global Investor Relations and Strategy

Thank you, Darla, and good morning, everyone. I'd like to welcome you to the Allergan third quarter 2018 earnings conference call. Earlier this morning we issued a press release reporting Allergan earnings for the quarter ended September 30, 2018. The press release and our slide deck, which we are presenting this morning, are available on our corporate website at www.allergan.com. We are conducting a live webcast of this call, a replay of which will be available on our website after its conclusion. Please note that today's call is copyrighted material of Allergan and cannot be rebroadcast without the company's expressed written consent. Turning to Slide 2. (Forward-Looking Cautionary Statements)

All figures discussed during the call refer to non-GAAP. Our GAAP financial metrics and reconciliation from GAAP to non-GAAP metrics can be found in our earnings release issued this morning and posted on our website. In addition, all global and international growth rates referenced this morning are on an ex-FX basis. Turning to Slide 3 and our agenda this morning. With us on today's call are Brent Saunders, our Chairman and CEO; Bill Meury, our Chief Commercial Officer; David Nicholson, our Chief R&D Officer; and Matt Walsh, our Chief Financial Officer. Also on the call and available during the Q&A is Bob Bailey, our Chief Legal Officer.

With that, I will turn the call over to Brent.

Brent Saunders -- Chairman, President & CEO

Thanks, Daphne. And thank you, everyone, for joining our third quarter earnings call this morning. Let's turn to Slide 5. As we approach year-end, our business continues to show strong momentum across the board. Our focus on execution is evident in our performance and we continued to deliver solid results in the third quarter. We remain on track to meet our commitments as we advance our strategy to strengthen our leadership position in our four key therapeutic areas. Our third quarter performance highlights our strategic focus and the durability of our business. Our Medical Aesthetics business delivered another quarter of double-digit growth. As a global leader in the fast-growing market that is expected to double in the next five to seven years, we see exceptional prospects to continue to grow this business. At our Medical Aesthetics day in September, we provided further insights into the trends and dynamics that are driving the Medical Aesthetics market and our business.

In CNS, VRAYLAR and BOTOX Therapeutic continue to be our anchors, each growing at double-digit digit rates again in the third quarter. And concerning the richness of our CNS pipeline, the long-term outlook for our CNS business is very good. We continue to demonstrate significant progress in our pipeline with a number of potential key launches over the next three years. This quarter we sold our Medical Dermatology assets and acquired Bonti to continue to sharpen our focus. Finally, we continued to generate robust cash flows and maintained a disciplined approach to capital allocation with a strong balance sheet, strategic growth investments, and capital return to our shareholders. We achieved all this in a quarter where we also experienced some near-term headwinds, some of which were unexpected. During the third quarter, we recalled OZURDEX in certain international markets.

David will go over the details, but importantly, the issue that drove the recall was self-identified and no related safety issues have been reported to-date. Patient safety is always our Number 1 priority and we have already implemented corrective actions. We expect to restart the supply of OZURDEX in the impacted markets before the end of this year. Unfavorable currency movements, LOEs, and ongoing pressure from payers have been felt industrywide and we are well positioned to effectively manage through them. Given our strong underlying business momentum in each of our core therapeutic areas and our confidence in driving solid sales and earnings growth, we are raising our outlook for full-year 2018. Turning to Slide 6, let me run through our performance this quarter across our four key metrics. First, in the third quarter, we continued to drive double-digit growth and strong performance from most of our key promoted brands.

Despite the 3% decline in net revenue driven primarily by our LOEs, we maintained strong operating margins, continued to generate strong cash flow from operations, and grew non-GAAP performance net income per share by 2.4%. Our R&D pipeline also achieved significant milestones during the quarter including the acceptance of the sNDA for cariprazine and bipolar depression; successful completion of two safety studies for ubrogepant, our oral CGRP antagonist for the treatment of acute migraine, which now positions us to file the NDA by the first quarter of 2019; and encouraging Phase III results for Abicipar and Phase IIb results for Brimonidine DDS in geographic atrophy, which were presented at the American Academy of Ophthalmology just last week. We have also been very disciplined in our capital deployment. We continue to reinvest in the growth of our business where we are seeing compelling opportunities as demonstrated by our recent Bonti acquisition, which closed last week.

Bonti is a clinical stage biotech company focused on novel fast-acting neurotoxin programs and is complementary to BOTOX. We plan to develop this novel toxin as an introductory treatment or for an on-demand use. The addition of Bonti expands the potential of our best-in-class R&D pipeline in Medical Aesthetics. We also continued our track record of actively managing our debt levels and buying back shares using the proceeds from the sale of our Medical Dermatology assets. With this strong momentum in the business and based on our revised expectations for RESTASIS, we are increasing our full-year 2018 guidance for revenue and non-GAAP performance net income per share. Turning to our performance drivers on Slide 7. This chart illustrates the strength of our core business, which grew 6% versus prior year or 7.4% excluding foreign exchange.

This core business represents nearly 90% of our total revenue and is comprised of our promoted brands with ongoing exclusivity and other established products. As mentioned earlier, OZURDEX had a negative impact in the performance of our core business this quarter. Excluding this impact, our core business grew an impressive 8% excluding FX. I am proud of what our team has accomplished so far this year and excited about our potential to create more value for patients, employees, and shareholders for many years to come.

Now let me turn the call over to Bill.

Bill Meury -- Chief Commercial Officer

Thanks, Brent, and good morning. Slide 9 is a product level sales analysis for the third quarter ranked in terms of growth versus prior year. We had another very solid quarter with double-digit sales growth for a number of our major products; BOTOX, VRAYLAR, JUVEDERM, ALLODERM, and Lo LOESTRIN are at the top of the list and were standouts in the quarter. Other key brands including OZURDEX and CoolSculpting experienced trend breaks, which I'll discuss shortly. The core business continues to be in a strong sustainable position as we approach the end of the year. As you can see at the bottom of the graph and as expected, total sales growth was impacted by products already facing loss of exclusivity as well as RESTASIS sales decline ahead of anticipated generic competition. Turning to Slide 10. Our Medical Aesthetics business delivered growth in the third quarter of 12.4% versus prior year. Let me start with Facial Aesthetics, which had an impressive 17% growth this quarter.

Globally sales for BOTOX cosmetic increased 22% versus prior year with strong growth in both the US and international markets of 14% and 33%, respectively. International experienced the highest growth in the past two years driven in part by continued sales growth in China and in the Middle East partly due to timing of shipments. JUVEDERM sales also increased at a double-digit rate with the US up 10% and international up 17%. In the US, share was at an all-time high with our premium Vycross line; Voluma, Vollure, Volbella; contributing to these gains. As we discussed during our Medical Aesthetics Day, both products have been on a solid and sustainable growth trajectory and the global outlook for the business in the next several years is excellent. CoolSculpting sales increased 2% in the US while declining 3% internationally. In the US, consumables grew 10% off of a strong base in the prior year. System placements also continued strong double double-digit growth of 13%.

However, system revenues declined by 11% due to price discounting, which we used to drive system placements. Our CoolSculpting systems base is up approximately 30% in the past year and is approaching 6,000. System placements is key to strong and sustainable consumables growth in the future. International growth was impacted by ongoing integration activities across many of our markets. We expect an acceleration of sales in the fourth quarter bolstered by a relaunch in China. Overall, the prospects for this business continue to be very positive. Plastics and Regenerative Medicine showed solid 8% growth in the quarter versus prior year. ALLODERM, our tissue matrix for breast reconstruction, continues to exceed expectations with sales up 24%. Turning to Slide 11. Our CNS business is being driven by two cornerstone therapies; VRAYLAR, our atypical antipsychotic and BOTOX Therapeutics for migraine and other neurological and movement disorders.

VRAYLAR continues to be the fastest growing atypical antipsychotic brand in the market. Physician and patient experience and satisfaction with this product is very high. We continue to support VRAYLAR with a market leading peer-to-peer promotional program and direct-to-consumer advertising. Quarter-over-quarter demand for VRAYLAR is robust and consistent. With the filing of the bipolar depression indication, we're one step closer toward an important growth catalyst in 2019. On the right, you can see BOTOX Therapeutics on a solid growth trajectory. In the third quarter, global BOTOX Therapeutic sales grew 12% versus prior year driven mainly by volume. Growth is coming from all indications; migraine, spasticity, and overactive bladder; across all channels, office and hospital; and all specialties including neurologists, physiatrists, and urologists.

I want to take a moment to address the impact of CGRPs on BOTOX migraine. Demand for BOTOX has remained strong despite an additional quarter of promotion for Aimovig and the recently approved Emgality and Ajovy. We continue to expect Botox and the CGRPs will co-exist in a larger chronic migraine market. While the growth rate of BOTOX Therapeutics is likely to moderate, we expect it will remain strong in the mid-to-high single digits. Over the long term, migraine has the potential to be one of the largest businesses at Allergan with BOTOX and our oral CGRPs, Ubrogepant and Atogepant. Turning to Slide 12, we have a robust franchise in GI. In the third quarter, LINZESS sales grew 7%. Demand growth was up 12%, but was partially offset by trade buying patterns. Almost seven years into launch, we expect LINZESS demand growth to remain at mid-to-high single-digit levels and we anticipate continued strong formulary access into 2019 as well.

However, we expect that industrywide pricing dynamics will negatively impact the net price for LINZESS in the future. As a result, we estimate LINZESS growth in the low-to-mid single-digit range going forward. Zenpep and Viberzi continued to contribute positively to the franchise growth in the quarter and are collectively heading toward $0.5 billion on an annual basis. On the right, Eye Care performance was significantly impacted this quarter by OZURDEX and a decline in RESTASIS. In dry eye, RESTASIS declined 18% versus prior year due to a lower net price, demand, and continued prudent management of trade inventory levels ahead of a potential US generic entry. Our glaucoma business remained stable with solid mid-single-digit growth internationally, partially offset by a moderate decline in the United States.

Turning to Slide 13. In international, sales were up 8% excluding the impact of foreign exchange fueled by strong medical aesthetics demand. BOTOX Cosmetic and JUVEDERM grew 33% and 17%, respectively. Also, BOTOX Therapeutic experienced significant growth at 17%. Sales for OZURDEX however declined 45%, which impacted overall international growth by almost 400 basis points in the quarter. Finally, Asia-Pacific, Middle East, Africa continues to be our fastest growing region led by China with growth of 64% this quarter compared to last year. China is on pace to be our largest market internationally. Latin America, Canada growth was stable versus the prior year due to the impact from the OZURDEX recall in Brazil and Canada and the Fibristal label change. Our performance in international this quarter was solid despite OZURDEX and foreign exchange and the outlook for this business remains excellent.

Now let me turn the call over to David.

David Nicholson -- Chief R&D Officer

Thanks, Bill. Good morning, everyone. Turning to Slide 15. In the third quarter, our R&D organization continued to deliver on our key pipeline projects building upon the success from the first half of the year. We advanced our pipeline across several key therapeutic areas including CNS, Eye Care, and Medical Aesthetics. The sNDA for cariprazine for bipolar depression was accepted by the FDA and we have a PDUFA date in May of 2019. This brings us one step closer to being able to offer new treatment option for patients suffering from bipolar depression. Turning to Ubrogepant, we successfully completed our two safety studies for the treatment of acute migraine. The results support the product's positive efficacy, safety, and tolerability profile positioning us to file an NDA in early 2019. As previously announced, Atogepant, our oral CGRP antagonist for the prophylactic treatment of migraine, demonstrated robust efficacy and safety in a Phase IIb/III study for the prevention of episodic migraine.

As such, we will be initiating Phase III studies for both episodic and chronic migraine prevention in the first half of 2019. We have already initiated the requisite long-term safety study. The potential of our oral CGRP antagonist to offer migraine patients a novel treatment option further strengthens our position in CNS. Before I move on to the development progress in Eye Care, I would first like to make a few remarks regarding the OZURDEX recall in some international markets. Nothing is more important than patient safety, it guides all that we do at Allergan. The issues that drove the OZURDEX recall was self-identified by our quality assurance group and corrective measures were immediately taken. Importantly, our review has not identified a related safety signal with nearly 10 years of post-marketing surveillance data.

We have met with European regulators to review the corrective actions and anticipate that we will start to resupply those markets affected during the fourth quarter of this year with full supply back during the first quarter 2019. We continue to make great strides in Eye Care innovation. Last week at the American Academy of Ophthalmology (AAO), we presented data from our Phase IIb BEACON study, which evaluated our cytoprotective, neuroprotective asset Brimonidine DDS in patients with geographic atrophy. We have identified the path forward based on our compelling Phase IIa and Phase IIb results moving us a step closer toward developing a potential therapy for this life-changing disease, which have no approved treatment options anywhere in the world. We remain excited about the potential of Abicipar as the only fixed 12-week therapy for neovascular AMD.

At AAO, we presented the secondary efficacy endpoints including changes in mean best corrected visual acuity and central retinal thickness from both Phase III studies, SEQUOIA and CEDAR. Those results corroborate the primary endpoint and we expect to file Abicipar with the FDA in the first half of 2019. We look forward to results from our MAPLE study examining the safety of a further optimized formulation of Abicipar, which are expected in the first half of 2019. Further in Eye Care, Bimatoprost SR represents our first-in-class sustained release biodegradable implant for the reduction of IOP in patients with open angle glaucoma. Earlier this year, we presented topline results from the first Phase III study in which we showed a reduction of IOP by approximately 30% over a 12-week period. These initial data also showed the potential for the majority of patients to remain treatment free for one-year after their last implant was inserted.

We expect topline results from the second Phase III trial in the first half of 2019 and we expect to file in the US in the second half of next year. With regards to our NMDA modulators, we expect data from our three acute adjunctive MDD studies with Rapastinel in the first half of 2019. As for our oral NMDA modulator 241751, we initiated a Phase II study in the second half of this year. Finally, at our Medical Aesthetics meeting in September, we provided investors with a deeper look into several of our pipeline assets. We highlighted Phase II data for BOTOX Masseter and we will be initiating a Phase IIb study for this indication next year. In addition, CoolSculpting received submandibular 510(k) clearance this quarter and we expect CoolSculpting 2.0 for muscle stimulation to obtain 510 clearance and CE Mark in the second half of 2019.

As you can see, we have had multiple successes this year. Our pipeline is strong and 2019 promises to continue to be a very busy and productive year within the R&D organization at Allergan. Turning to Slide 16, we have a table with an overview of the upcoming catalysts for our key programs through 2020. Year-to-date we have achieved multiple milestones, each of which brings us closer to several potential product launches in 2020 and beyond. We will hold a Type A meeting with the FDA concerning Esmya by the end of this year and we will keep you updated on our progress. The programs highlighted in this table remain on track and we are proud of our achievements year-to-date. We're working hard toward continuing our string of successes into 2019 and beyond. As always, I thank my colleagues in R&D for their hard work and I especially thank the patients who participate in our clinical trials.

And now, I will turn the call over to Matt.

Matt Walsh -- EVP & CFO

Thank you, David. Turning now to the key financial highlights. Our third quarter results exceeded the high end of guidance that we provided last quarter, both for revenue and non-GAAP performance net income per share. This was led by the continued delay in generic entrance for RESTASIS combined with solid performance of our core business. Besides the impact from LOEs, two smaller issues impacted results in the third quarter, none of which were significant individually; first is OZURDEX and second is foreign exchange translation. The strength of our reported results despite these issues speaks to the overall resiliency of our business today. As such, we're well positioned to achieve the goals we have set for the year as we'll see shortly when we discuss our improved guidance. Looking at Page 18 and starting with the upper left quadrant, you can see net revenues in the quarter were $3.9 billion, a 3% decline versus prior year. Shown at constant currency, the decline narrows to 1.8%.

The core business grew 5.9% year-on-year on a reported basis, 7.4% at constant currency. Normalizing for the impact of OZURDEX on the topline, underlying core business growth was 8.4% during the quarter, which more closely aligns with the good core business growth realized in the second quarter. LOE products declined 38% year-on-year during the quarter mainly attributed to NAMENDA XR and ESTRACE generic entrants as well as the significant decline in RESTASIS. To this group, we've now added the divested Medical Dermatology products and we'll continue to include divested products to this group as asset sales progress. Turning to the upper right quadrant, you can see non-GAAP gross margin for the quarter was 85.2%, a decline of 90 basis points versus prior year. This decline driven by product mix mirrors what we saw in the first half of the year with the addition this quarter of a 30 basis point impact from the OZURDEX recall.

Non-GAAP operating margins remained strong at 48.7% mainly due to lower operating expenses from successful execution of the restructuring program completed early in 2018. As a result and as a reminder, our operating margins throughout 2018 year-to-date and versus our expectations for the fiscal year have been running on the high side by approximately 200 basis points because we have had the exclusivity of RESTASIS while our P&L simultaneously reflects the lower costs achieved by the restructuring undertaken to help offset LOE products including RESTASIS. Moving to the lower left quadrant, third quarter non-GAAP performance net income declined 1% versus prior year due to the revenue and gross margin declines just mentioned, partially offset by lower operating expenses and lower net interest expense as we continue to reduce debt.

Trending in a positive direction, non-GAAP performance net income per share in the quarter of $4.25 grew 2% versus prior year as a result of lower share count due to buybacks executed over the last year. Included in revenue and non-GAAP performance net income per share for the quarter is the impact of OZURDEX, $32 million and $0.11 respectively; and foreign exchange translation of approximately $50 million and $0.05, respectively. In the lower right quadrant, we look at operating cash flow generation on a last 12-months basis for each ending period, which continues to be strong. I want to highlight, as I did last quarter, that these operating cash flows have no adjustments of any kind and represent the same operating cash flow figures you'll find in our GAAP reported results. In the third quarter, operating cash flow was $1.44 billion, which drives our last 12 months operating cash flow to $6.2 billion as of September 30th.

Nine month results continue to support our full-year guidance of $5.2 billion in operating cash flow, which remains unchanged despite the recent acquisition of Bonti for $195 million, which closed in the fourth quarter. As we do every quarter, we have provided more detail on the movements in cash and marketable securities in the appendix as well as our anticipated R&D milestone payments. On Slide 19, you can see a more complete look at our key P&L line items for the third quarter as compared to prior year. I've already covered most of the highlights, but a couple of items here I'd like to touch on. Net interest expense continues to improve largely due to lower average debt balances. Our gross debt balance at September 30th is 22% below the year-ago balance sheet. And our effective tax rate as anticipated was aligned with last quarter as we continue to see delay of RESTASIS generic entrance.

Turning now to our third quarter performance versus prior year by reporting segment on Slide 20. US Specialized Therapeutics revenue decline of 1.1% was mainly attributed to lower RESTASIS revenues as well as lower sales of the now divested Medical Dermatology business. However, this segment continues to be our highest contribution margin segment and in fact contribution margin increased 180 basis points as cost savings from our restructuring program more than offset downward pressure from lower volumes in gross margin. US General Medicine continues to be the segment most impacted by LOEs as reflected by the revenue decline of 7.8%. Contribution margin declined slightly 70 basis points as savings from restructuring initiatives partially offset the impact from lower volumes and product mix shift. International revenue growth of 1.7% was significantly impacted by foreign exchange translation and OZURDEX.

As you can see on the slide at constant currency, revenue growth was 7.8% versus prior year and 11.8% excluding the impact of the OZURDEX recall. Contribution margin moved in the right direction rising 40 basis points to 54.7% due to operating leverage. Turning to Slide 21, you can see on the left side of the slide our capitalization table and on the right hand side, the disciplined actions taken toward capital deployment and return of capital to stakeholders. Three points I'd like to address here. Point number one, we retired approximately $750 million of debt during the third quarter and the emphasis we're placing on reducing leverage is especially important given the pending generic entrance for RESTASIS. Point number two, total debt retired in the third quarter was actually a larger number at $1.8 billion. However, approximately $1 billion of the $1.8 billion is earmarked for a leverage neutral refinancing that we are in the process of executing as we speak as a normal part of debt portfolio management. As such, we expect to conduct one or more financing transactions in the fourth quarter subject to market conditions. These issuances together with any additional repurchases during the fourth quarter are expected to reduce our outstanding debt on a net basis by at least $750 million as I just mentioned. And please note, the leverage ratio as shown on the left side of the slide have been computed on a pro forma basis to exclude any temporary debt reduction that has happened as part of the leverage neutral refinancing. Point number three, last point; in conjunction with prior statements we made on asset sales, the $550 million in net proceeds from the sale of Medical Dermatology assets were immediately deployed through a combination of debt reduction and share buybacks, all of which were completed during the third quarter. The amount allocated to debt reduction is included in the $750 million of debt reduction that I discussed in point one.

As a reminder, our capital allocation priorities as stated previously remain unchanged and I'll reiterate them. First, reinvestment in our business for growth in our four key therapeutic areas. The acquisition of Bonti in Medical Aesthetics is a prime example of our commitment to deploying capital first and foremost to grow the business. Second, debt reduction to maintain our investment grade credit rating and to offset the otherwise leverage increasing impact of the anticipated RESTASIS loss of exclusivity. Third, funding the current dividend and prudently growing that dividend annually. And fourth, share buybacks to manage dilution created by long-term equity-based incentive plans as well as potential earnings dilution from asset divestitures we may complete. Moving now to Slide 22 on our updated guidance and let's start with net revenues. We are raising our full-year outlook and now expect 2018 net revenues to be between $15.55 billion to $15.70 billion, a $100 million increase at the bottom and top of the range compared to our prior guidance.

This increase reflects continued strong performance from our core business and additional three months of RESTASIS generic entry delay, which together more than offset a, impact in the fourth quarter from OZURDEX and foreign exchange translation, which combined are estimated at approximately $125 million in revenues and approximately $0.30 in non-GAAP performance net income per share; and b, the sale of the Medical Dermatology assets, which were expected to contribute about $35 million of revenue in the fourth quarter and approximately $0.08 in non-GAAP performance net income per share. Non-GAAP gross margin for the full year is expected at approximately 85.5%, slightly below our prior guidance of 85.5% to 86% to reflect the impact from product mix and OZURDEX.

Our SG&A and R&D expenses remain unchanged versus prior guidance and reflect approximately $150 million increase for the second half of the year for reinvestment of additional profits from the delay of RESTASIS generic competition. Non-GAAP net interest expense, tax rate, and share count also remain unchanged versus prior guidance. Moving to the last line of the slide reflecting the incremental revenue guidance, we are increasing our full-year 2018 non-GAAP performance net income per share to be in the range of $16.20 to $16.60. Our guidance for 2018 reported cash flow from operations remains at approximately $5.2 billion and now reflects one, generic RESTASIS entrance between November 1st and January 1st of 2019; restructuring and other M&A integration payments in the range of approximately $225 million as previously stated; and finally, success-based milestones from existing pipeline projects of approximately $735 million in 2018, which now includes the payment of $195 million for the acquisition of Bonti in Q4.

And with that, I'll turn the call back to Brent.

Brent Saunders -- Chairman, President & CEO

Thank you, Matt. Allergan's performance in the third quarter and so far this year highlights our business momentum and our keen focus on execution. We have accomplished a lot and we are gratified to see the strong momentum in our business, the continued growth of our key products, and the achievement of several key milestones within our R&D pipeline.

I'd like to open the call to questions and please remember to limit yourself to one question. Operator, we can open the line.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Liav Abraham, Citi.

Liav Abraham -- Citigroup Global Markets -- Analyst

Brent or Matt, I'm curious how we should be thinking about operating margins in 2019. I understand you're not giving guidance beyond 2018. But just given the expectations for RESTASIS generic competition and the relative profitability of the product, curious on how we should be thinking about operating margins beyond 2018? The Street's modeling roughly flat margins in 2019 versus 2018. And if I could sneak in a quick second. Bill, BOTOX in migraine; based on the data you have, to what extent is BOTOX being used in combination with the CGRP drugs at the moment and how are you thinking about the migraine opportunity beyond 2019 once the sampling and zero copay programs for the new class cease and end?

Brent Saunders -- Chairman, President & CEO

Matt, why don't you take the operating margin?

Matt Walsh -- EVP & CFO

So on operating margins, obviously we're not providing guidance today. There is a lot that will impact that in 2019. But one of the reasons why we decided to discuss the pro forma impact of RESTASIS on our 2018 results causing an uptick of about 200 basis points in operating margin is to at least provide some directional indication for what the business will do on an operating margin basis ex-RESTASIS.

Brent Saunders -- Chairman, President & CEO

Bill?

Bill Meury -- Chief Commercial Officer

And then, Liav, on BOTOX; look, we're above expectations for 2018 in terms of sales. We haven't seen any significant change in demand for BOTOX in migraine. To answer your question, we estimate only roughly 6% of patients on Aimovig are receiving BOTOX, which isn't surprising. I think if the market's going to move to adjunctive treatment, there's going to need to be data produced and then a fairly strong health economic argument made to health insurance companies and PBMs. I think a couple other data points that dimensionalize the dynamics around BOTOX here that are worth noting. First, 48% of patients on Aimovig were new patients, new to the market; 25% have been switched from Topamax; only 1.2% have been switched from BOTOX. And so I think the conclusion here is the market is large, it's growing, there is an unmet need, there's room for multiple treatment options. And I think to a certain extent, Aimovig will expand the market and could be a gateway for BOTOX. Only 50% of people are going to respond to Aimovig and to be fair, the reverse is true. I like the way this market is setting up for BOTOX and for the CGRPs and I think the outlook for '19 and beyond is positive.

Operator

Seamus Fernandez, Guggenheim.

Seamus Fernandez -- Guggenheim Securities -- Analyst

So, I have one question on the CNS pipeline and a few sub parts. So the quick one is on Atogepant, can we just get a sense of how the Ubrogepant safety may have helped to inform the start of the Atogepant Phase III? Was that a gating factor at all to being able to start the Atogepant longer treatment trials the Phase IIIs or was it just the Phase II? And then the second question is just simply on Rapastinel and the oral Rapastinel follow-on product that you guys are developing. Can you just give us a sense of what you're hoping to see as kind of the headline type of results from the Phase III studies that are going to read-out in the first half of next year? Thanks so much.

Brent Saunders -- Chairman, President & CEO

And I'm going to try to reiterate one more time one question because you guys are pretty good at this, getting that second question as sub parts. David, you want to take that?

David Nicholson -- Chief R&D Officer

I can be I think relatively brief in the answer. With Atogepant, we started the Phase III programs were planned and started -- are starting independently of Ubrogepant. We have already started the Atogepant long-term safety study and anticipating starting the Phase III efficacy studies with Atogepant in the very near future. Yes. Regarding the Rapastinel Phase III studies, the adjunctive MDD studies report out in the first half of next year and we'll be concurrently running the Phase II studies with 241751. It's premature to have any discussions about the implications for the Rapastinel data on that 241751. Looking forward to the data.

Operator

Ken Cacciatore, Cowen and Company.

Ken Cacciatore -- Cowen and Company -- Analyst

Just a quick question on the divestiture process. Any update there for Women's Health and infectious disease and maybe some of the things you're thinking through as you continue to discuss the potential to go ahead and sell these assets.

Brent Saunders -- Chairman, President & CEO

So look, just to ground everybody in where we stand. As you know, we have initiated processes to sell both our anti-infective and Women's Health businesses. As we've told you before, the anti-infective process is internally driven and the Women's Health process is advisor-led. Both processes are going at full speed and progressing, they're stepping through the various processes for divestiture. I will tell you we have received now the preliminary expression of interest for some of these businesses and they are below what I believe the value of these businesses are. And we should just remind you and maybe I'll ask Matt to comment as well, these are good businesses, right.

We have always said that while we absolutely would like to sell these businesses, we need to make sure that we get the right price given the dilutive effect on a variety of our financial metrics and the growth profile of these business, look at Lo Lo up 18% in the quarter as an example. So, we're going to stay very disciplined. We've been a good disciplined asset seller in the past. I think we've got a good price for our Medical Dermatology assets and we'll continue to make sure that we create value through the sales process by getting the best price. Matt, you want to add some color at all?

Matt Walsh -- EVP & CFO

Just to add to the statement that getting the right price is important. These businesses have been on a year-to-date basis accretive to our growth rate, accretive to our margins. Just in case there is a misperception out there that because we've considered options for these businesses that they're somehow below the company's average. That is a misperception. These are good and contributing businesses to the overall portfolio.

Brent Saunders -- Chairman, President & CEO

So to kind of conclude, Ken, a long-winded answer, I apologize. We will continue forward with the process. We will do everything to try to negotiate the best price possible and we look forward to hopefully updating all of you perhaps before the end of the year or soon thereafter.

Operator

Chris Schott, JPMorgan.

Chris Schott -- JPMorgan Securities LLC -- Analyst

Just my question is on CoolSculpting. You talked about system discounting impacting revenues this quarter. Can you just elaborate a little bit more on the dynamics there? I know the high system placements are a long-term growth driver, but should we anticipate a near-term headwind similar to what we saw this quarter as that flows through the P&L? And if I just could follow up on the last answer on divestitures. If you don't get the price you're looking for in these assets, is there a formal end to review or are these asset sales you continue to revisit over time and potentially monetize at some point in the future? Is this kind of a yes-no decision that we should expect later this year? Thank you.

Brent Saunders -- Chairman, President & CEO

So, let me answer the second part and then Bill can take the CoolSculpting. So there will be a formal end to the process, but there's never a formal end to our evaluation of the opportunities to create value inside of Allergan. For example, we didn't announce a formal process for the Medical Dermatology assets, but it's I think a proof point that we're always looking to focus our portfolio and create value for shareholders. And so if it doesn't work this time, we may end the process for now and consider it again at some future date, but that will be up to the board. But just to be clear, this process is just stepping through its normal course. We've only received preliminary interest and anything can still happen. We're going to push very hard. We are disciplined sellers and we'll provide an update as we move through the process over the next several weeks.

Bill Meury -- Chief Commercial Officer

This is Bill. I wouldn't think about the price discounts on systems to be a long-term headwind. I would look for two things and I expect two things in this business. The first is we'll see an acceleration of consumables growth in quarter four and I think will sustain a high rate of growth in 2019. I would also look for a pickup in our international business. And so any discounts that we're providing on systems to drive placements and look, since we picked this business up, placements are up 50% year-over-year, which is exactly what we wanted to do when we merged or acquired with ZELTIQ. I think it'll all be covered by very solid consumable growth over the next several quarters.

Brent Saunders -- Chairman, President & CEO

I think we look at this as a very strategic part of the business and establishing a beachhead and body contouring. And the key to that as we said when we acquired the business two years ago or about, it's about getting system placements in the right accounts and Bill's team has done a really nice job getting to almost 6,000 of the accounts, up about 50%. So, that's our short-term goal. Our long-term goal is to drive consumables and I think we're going exactly where we need to be. Next question, Darla.

Operator

Jason Gerberry, Bank of America.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

A quick question for David just on Ubrogepant. The 500 person safety trial, the placebo-controlled trial, can you comment at all about what were the general rates of liver enzyme elevation between drug and placebo arm? Just trying to get a sense of ultimately what that data looks like or when it would be presented and how comfortable you are that this drug is now approvable without a liver function test requirement?

David Nicholson -- Chief R&D Officer

Look, really happy that we finished all the trials, the efficacy and the safety trials, that the FDA has requested for submission and we have not seen liver safety issues as concern and this was confirmed by our Independent Data Safety Monitoring Board. We are going to be presenting the data in the very near future at the best most appropriate medical conference, which we feel is by far the best forum for presenting these types of data and we are looking forward to filing Ubrogepant with the FDA in the first quarter of next year. Yes, so good.

Operator

Vamil Divan, Credit Suisse.

Vamil Divan -- Credit Suisse Securities LLC -- Analyst

I'll also just keep it to one topic here. Just around drug pricing, we obviously have seen a lot of discussion from Washington. Brent, you've obviously been a leader in this area. So just curious on your thoughts on what you think is the most likely output of some of the recent discussions and maybe you can just sort of provide for us how much of the growth this quarter was from net pricing benefit versus volume. I don't know if you said that.

Brent Saunders -- Chairman, President & CEO

As you know, as you mentioned, we've been thinking about the new pricing world or dynamic now for a few years and certainly a proof point would be the social contract we passed now almost two years ago or over two years ago at this point. And look, back then I said to all of you and I remain consistent in my thinking that the biopharma business of the future cannot be relying on price increases, it needs to be relying on innovation and new product flow and amazing execution in the marketplace. And so, those are the things that Allergan has been focused on. And so as a result, our growth came with zero price appreciation in this quarter. I'll say it again, zero price appreciation in this quarter.

We are focused on driving demand and volume with our new products. And so when you think about the underlying core growth of 8.4% ex-FX, FX ex-OZURDEX, that is why we believe in the future of our ability to execute and to drive growth. And I think on a go-forward basis, taking price is going to become more difficult. I think that's fair. I think we have to watch the counterbalance from the administration of stifling innovation and some of the proposals that are being put forth to reference price potentially to price controlled countries, I think could have destabilizing effect on how we think about investing for innovation in our industry. So I think everything has to be taken in context and be done thoughtfully, but this is a business in the future that's going to grow from demand and innovation not from price and we've thought that way for several years now.

Operator

David Risinger, Morgan Stanley.

David Risinger -- Morgan Stanley & Co. LLC -- Analyst

I was hoping that you might be able to provide some color for us so that we better understand your hopes for the optimized formulation of Abicipar. Could you give us a sense for what magnitude of reduction in inflammation risk you are targeting? Is it a quarter reduction, is it an 80% reduction? I mean what is your hope for this reduction in inflammation that you'll be reporting out next year?

Brent Saunders -- Chairman, President & CEO

So David, I'll give an answer and if David wants to add some commentary, feel free. Look, we don't design the study that way. That's not the way we go into thinking about it. Obviously our goal, as is our goal with every development program, is to create the best risk benefit profile we can possibly create. So, clearly here we've demonstrated what was even confirmed by KOLs at the AAO last week as the best efficacy in that it is the only true 12-week duration for all comers and so consistent 12 weeks is the best duration study out there. So, that's very solid efficacy. And on the safety side, the inflammation rates are higher than we'd like and so David's team has been working for a few years to improve the formulation as other VEGFs have done and our goal is ultimately to get it as low as possible. Whether MAPLE delivers that, we'll see when we get the data, but we don't come at it from saying is it like going get to 20% reduction or 50% reduction. This will be a continuous process improvement just like the others have gone through and so we hope to get a strong improvement from MAPLE and continue to work on improving it in a continuous improvement cycle. David, anything else you'd add.

David Nicholson -- Chief R&D Officer

I think that's a perfect answer, Brent. You covered it, yes.

Operator

David Maris, Wells Fargo.

David Maris -- Wells Fargo Securities LLC -- Analyst

On Brimonidine DDS, can you give us an update on it? What was the feedback at AAO? And is this a product that you think will be kind of a premium priced product for hard to control patients, sort of a niche expensive product or is this going to be a broader product for glaucoma patients in general?

Brent Saunders -- Chairman, President & CEO

Maybe I'll start and then Bill and David can chime in on Brimo DDS. Geographic atrophy and neuroprotection are right now the essence, the Holy Grail, in the retina community only in that there is no approved treatments. There are actually no treatments for these two diseases today and they're very large markets as you know. And so, it's hard to figure out exactly what the right positioning is for Brimo DDS in that it is still in development. But given the ease of the implant and the safety profile from what we see, I think it would be something that would be used in a majority of patients, but there's still a lot of work to be done and there's still a lot of product profile that has to be developed. But obviously it's exciting for us in that it's a huge opportunity to drive innovation into probably the greatest area of need in the retina community. David, anything you'd add?

David Nicholson -- Chief R&D Officer

Yes, perhaps just a couple of comments. So, the first indication that we're developing Brimonidine DDS for is a cytoprotective -- neuroprotective agent in geographic atrophy where there is no approved therapies at all. We are happy with the effect on lesion size because that is going to be the primary endpoint for the Phase III studies with as a secondary endpoint effect on visual function. In terms of glaucoma and the potential for neuroprotection in glaucoma which you mentioned, David, that is something that we need to take some decisions on and it's an earlier stage of development.

Brent Saunders -- Chairman, President & CEO

And just to make sure we're being clear because, David, maybe we have two programs. We have Brimo DDS for geographic atrophy or neuroprotection and we have Bim SR or Bimatoprost SR for glaucoma. Both programs are very exciting and both address huge unmet medical need. And if you go back to the glaucoma product Bim SR, there we're really very excited about the first three -- Phase III study in that we saw, what David mentioned in the script, patients going -- controlling IOP a full year after receiving their last implant. So now in the AAO, the excitement there among the glaucoma specialists is maybe we have a disease modifying drug, maybe this is the first glaucoma product to actually treat the biggest issue with the disease, which is compliance and persistence not necessarily efficacy of the current eyedrop therapies. And so I would say, I spent a few days over the weekend at AAO, I think among the glaucoma community that this was the most exciting thing and among the retina community, clearly a fixed dose 12-week drug for AMD was pretty exciting. But probably even more exciting was the potential to have a treatment with Brimonidine DDS for geographic atrophy. That really was the talk of the meeting.

Operator

Jami Rubin, Goldman Sachs.

Jami Rubin -- Goldman Sachs & Co. LLC -- Analyst

David, for you on Abicipar. Both Eylea and Novartis b-mab offer both eight and 12-week dosing with clean safety profiles and Roche is developing a 16-week drug, but obviously early. Recognizing that Abicipar has shown that a majority of patients achieve efficacy at 12-week intervals, is there -- I guess this is back to David's question, is there a level of inflammation from the upcoming MAPLE trial that's too high to take the products forward or is the feedback that you get from physicians that they will take the trade-off of the dosing advantage with higher inflammation rates? And also David, if you could address Abicipar, looks like it underperformed Lucentis in the CEDAR trial.

Brent Saunders -- Chairman, President & CEO

David?

David Nicholson -- Chief R&D Officer

As presented at AAO, the vast majority of the inflammation cases with Abicipar were mild to moderate that we've seen so far and were effectively treated with topical corticosteroids. And as you mentioned, we are very excited by the fact that we have a fixed-dose 12-week regimen with Abicipar, which is potentially the first agent that's going to have this fixed 12-week regimen. Regarding CEDAR and SEQUOIA, the most important point of both of those trials is that after the loading doses from week 16 to week 52, the efficacy was maintained which shows that it's a fixed 12-week regimen. And as we pointed out, the slight difference in effect between CEDAR and SEQUOIA on the Abicipar arm is entirely consistent with the variability effect that you see both with Lucentis and Eylea in the VIEW trials, which shows that you do get some variability effect with the same agent with all of these anti-VEGF agents between studies.

Operator

Ronny Gal, Bernstein.

Ronny Gal -- Sanford C. Bernstein & Co. -- Analyst

Congratulations on a nice quarter. Brent, for you on this IPI model, I appreciate the topline view. But I was wondering if you actually looked at the pricing difference of BOTOX between US and international and kind of estimated for yourself the exposure if indeed we go to this 1.26 times OUS prices in the US for BOTOX specifically. Essentially if this model is getting implemented, essentially what is Allergan exposure? And if I can sneak one for Nicholson following up with Brimo DDS, are going for breakthrough designation for geographic atrophy?

Brent Saunders -- Chairman, President & CEO

So, Bill can provide some color on the first part of your question. But I would just say in my opinion and obviously there's a bias to it, I think we are very well positioned to deal with these proposals even if as I mentioned earlier, they could ultimately impact our ability as an industry to innovate in the United States or invest for innovation in the United States, which I think is dangerous. But that being said, I think Allergan is well positioned as any other company. And Bill. you want to provide some color around that?

Bill Meury -- Chief Commercial Officer

Ronny, roughly today 6% of our sales are subject to Medicare Part B. So, I want to sort of put that in perspective. As it relates to the international pricing index not surprisingly with a biopharmaceutical like BOTOX, there's going to be a difference between the price in the United States relative to markets internationally. When you look at that overall proposal, I think the therapeutic areas that are really in focus are oncology, MS, RA, and other spaces. I don't consider BOTOX a big budget buster in any way, shape, or form. And we'll just have to see how the rule plays out. I know there's a phased-in approach there that's going to extend about five years, I think it's a little too early to estimate what the impact would be. That being said, it would be relatively modest given our business and our exposure to Part B.

David Nicholson -- Chief R&D Officer

And Ronny, regarding Brimo and breakthrough designation, we'll be going to talk to Wiley Chambers in the coming months to sort out exactly where we are in terms of finalizing the Phase III studies and other possible interactions with the FDA. Clearly, we are always interested in getting breakthrough designation for this. It's too early to say anything about that.

Brent Saunders -- Chairman, President & CEO

I think, Darla, we'll will take two more questions.

Operator

Elliot Wilbur, Raymond James.

Elliot Wilbur -- Raymond James -- Analyst

Just maybe a follow-up question on some of the earlier conversation around OZURDEX. Just specifically I would have thought that the supply chain was relatively similar ex-US and US and wondering if that in fact is the case and if anything that came out of issues ex-US might impact growth rates in the US market going forward?

Brent Saunders -- Chairman, President & CEO

So as I mentioned or David mentioned as well, this was an issue that was self-identified and corrective actions were put in place immediately. We've been meeting with regulators from around the world. Obviously each one has their own opinion on how this should be handled and under what conditions. That still is a bit of an ongoing process. But what I can tell you is our corrective actions were meaningful and the problem was, as we said, there's no real patient safety reported or issues reported yet. So, we think we have the issue in hand and under control and that doesn't mean a regulator can show up tomorrow with a different opinion, but we're working very hard to be transparent to be open and obviously to implement our corrective actions. And so, I think we're in pretty good shape. Last question.

Operator

Umer Raffat, Evercore.

Umer Raffat -- Evercore ISI -- Analyst

Brent, is there a possibility that you can do something transformational for your dry eye franchise beyond RESTASIS? And I'm referring to the possibility of perhaps a (inaudible) tuck in and also wondering if that would only make sense before you lose your gross to net structure prior to generic RESTASIS entry? Thank you.

Brent Saunders -- Chairman, President & CEO

Look, I'm never going to comment on a specific M&A transaction on a conference call. That being said, we should just recognize we have RESTASIS. We don't know exactly when RESTASIS. will go although we believe that that is the most likely scenario. We have an obligation to maximize our focus on RESTASIS. until the day it loses exclusivity and so that's our real focus. That being said, we're at AAO, we're always looking for innovations in dry eye, we're always looking for novel real improvements in the treatment and therapies for dry eye. And so we fully expect to remain very active in helping our customers, the physicians and optometrists, serve their patients that suffer from dry eyes. So we're absolutely focused on the category, the space, and driving innovation into eye care.

So, I'd like to just conclude our call and thank everyone for their participation. We are again very focused on execution at Allergan. We see good momentum in our business and we look forward to providing further updates over time and certainly into next year. Thank you for participating. Darla, that concludes our call.

Operator

Thank you. This concludes the Allergan Q3 earnings conference call. You may now disconnect.

Duration: 64 minutes

Call participants:

Daphne Karydas -- Senior Vice President of Global Investor Relations and Strategy

Brent Saunders -- Chairman, President & CEO

Bill Meury -- Chief Commercial Officer

David Nicholson -- Chief R&D Officer

Matt Walsh -- EVP & CFO

Liav Abraham -- Citigroup Global Markets -- Analyst

Seamus Fernandez -- Guggenheim Securities -- Analyst

Ken Cacciatore -- Cowen and Company -- Analyst

Chris Schott -- JPMorgan Securities LLC -- Analyst

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Vamil Divan -- Credit Suisse Securities LLC -- Analyst

David Risinger -- Morgan Stanley & Co. LLC -- Analyst

David Maris -- Wells Fargo Securities LLC -- Analyst

Jami Rubin -- Goldman Sachs & Co. LLC -- Analyst

Ronny Gal -- Sanford C. Bernstein & Co. -- Analyst

Elliot Wilbur -- Raymond James -- Analyst

Umer Raffat -- Evercore ISI -- Analyst

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