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'Unpromising' Allergan drug projects headed for the chopping block--report

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Allergan CEO David Pyott

Allergan ($AGN) execs have made no secret of the fact that they've been planning to come up with a lean-and-mean game plan designed to prove to investors that they'd be much better off if they spurned Valeant's ($VRX) offer to buy the company and gut its R&D division. Citing sources close to the company, Bloomberg is reporting that the cutbacks should include work on its most "unpromising" programs in the pipeline.

In a report that is long on broad strokes and short on detail, the Bloomberg report also notes that management incentives are also in line for an overhaul at Allergan, where future compensation is likely to be tied to hitting some of the ambitious financial targets that are being laid out in the resistance effort.

Allergan has had a mixed record on the R&D front. Just days ago the company was forced to acknowledge that the FDA had handed out its third rejection for the migraine drug Semprana--including two that arrived after Allergan CEO David Pyott bought the program.

An approval would have helped Allergan argue against Valeant's proposed buyout with fresh evidence of its ability to develop new therapies--something Valeant has never been keen about. Instead the company had to trumpet the news about Ozurdex--approved for certain patients with DME--and downplay Semprana. Allergan also touted the FDA's support for its move to advance abicipar pegol to Phase III clinical trials for wet AMD.

R&D cutbacks were definitely not on Pyott's agenda when he began the year. In an interview with FierceBiotech at the J.P. Morgan conference in January, Pyott bullishly outlined plans to beef up its growing R&D wing, which at that time had a staff of about 2,500. Pyott outlined plans to add hundreds more investigators as it looked to boost its total research allocation from $1 billion to $1.5 billion over the next 5 years. And a confident Pyott added he was ready and willing to spend billions more to cover the cost of new acquisitions and pacts aimed at expanding the company's core research focuses--while pondering the addition of a new drug category to the list of 5 core focuses if the opportunity looks right.

Valeant CEO J. Michael Pearson

Whatever he's planning for R&D, it's likely to remain considerably more ambitious than anything Valeant CEO Michael Pearson has in mind. The Valeant chief has made no secret of his distaste for R&D risk and expenses, generally gutting any research facilities that come his way in the buyouts that have fed his company's growth.

Earlier this week Valeant's buyout partner Pershing Square proposed a slate of new directors for Allergan in the latest gambit to close a deal. Allergan is expected to outline its cost cutting moves in an earnings release due out later in the month.

- here's the story from Bloomberg

Related Articles:
Ackman puts forth his slate of new Allergan directors
Allergan trots out buybacks, deals and cuts in new offensive against Valeant buy
FDA hands out its third rejection for Allergan's migraine drug Semprana

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