Shares of cosmetic drug and device maker Allergan Inc. fell 12 percent Wednesday after company executives said they would delay late-stage testing of an experimental eye treatment by one to two years.
Allergan was previously expected to launch a study of DARP-in, an experimental drug for macular degeneration, by late 2013. But Allergan said early-stage findings did not support moving directly to late-stage testing.
Company shares fell $13.65 to $99.90 in afternoon trading.
News of the delay boosted shares of Regeneron Pharmaceuticals Inc., whose lead product is the macular degeneration drug Eylea. Macular degeneration is the leading cause of blindness among seniors in the U.S.
Shares of Tarrytown, N.Y.-based Regeneron Pharmaceuticals Inc. rose $27.13, or 13 percent, to $242.27
News of the drug development delay overshadowed the company's better-than-expected first-quarter profit from sales of Botox and other specialty drugs.
The company's net income fell to $12.5 million, or 4 cents per share, from $229.8 million, or 74 cents per share, in the prior-year period. The decline was due to a $259 million writedown of the company's Lap-Band business, which it plans to sell.
Excluding that and other one-time charges the company's earnings rose 15 percent in the first quarter on higher sales of Botox injections and eye care treatment, Latisse. On that basis, the company reported net income for the period of $296.2 million, or 98 cents per share, up from $257.6 million, or 83 cents per share, in the prior year period. Product revenue rose 8 percent to $1.43 billion.
Analysts polled by FactSet expected adjusted earnings per share of 96 cents.
The company's performance was driven by sales of Botox, which rose 15 percent to $458 million. Botox, which was introduced in 1989, is most famous for its ability to smooth frown lines on aging foreheads, but it also is approved to treat neck spasms, eye muscle disorders, migraines and other conditions. In January, U.S. regulators approved the drug for a new use in treating overactive bladder.
Sales of the company's medical devices, including breast implants, rose 10 percent to $201 million. That figure excludes Lap-Band implant which is used to treat obesity. The company plans to sell that business due to poor sales.
Allergan lowered its full-year earnings guidance to between $4.70 and $4.76 per share, from $4.75 to $4.83 per share. The company said the adjustment reflects the acquisition of MAP Pharmaceuticals, announced in January. Allergan said it would buy the migraine headache drug developer MAP Pharmaceuticals Inc. for about $882.5 million. MAP's Levadex is an oral drug for the potential treatment of migraine headaches in adults.