Allergan mulls sale of its anti-obesity device business

Allergan ($AGN) may unload its anti-obesity device business, the company disclosed. News of a possible sale follows various setbacks and obstacles concerning Lap-Band, the division's signature product.

The announcement, nearly buried in Allergan's 2012 third quarter financials release, is only two sentences long.

"Allergan is exploring strategic options for maximizing the value of its obesity intervention business, including among other things, a potential sale of that business," the statement reads. "To the extent that Allergan elects to pursue such a strategic option, the company intends to offset any potential earnings dilution related to the transaction."

Allergan's obsesity intervention products include the Lap-Band adjustable gastric banding system approved in the U.S. and internationally, and its Orbera intragastric balloon system, which has international regulatory approval. But Lap-Band represents the bulk of the division's revenue, according to the company's website.

It is unclear what is driving the possible sale. But Allergan's disclosure comes just a few weeks after it abandoned plans to pursue expanded Lap-Band use in the U.S. teen market in the face of increased safety concerns, complaints, congressional scrutiny and lawsuits. Allergan has defended Lap-Band's 18-year record of safety and effectiveness. But a major study in the Archives of Surgery concluded that nearly half of patients with a gastric band implant either didn't lose any weight or needed to have the device removed within six years, with many facing long-term health issues. As well, the inspector general of the Department of Health and Human Services issued a subpoena against Allergan regarding Lap-Band earlier this year but details remain sketchy. Allergan acquired Lap-Band's creator, Inamed Corp, in 2006.

And then there's this: For the 2012 third quarter, Allergan booked nearly $1.4 billion in total product sales, a more than 6% jump compared to Q3 2011. But out of that number, medical device net sales actually decreased 4% in the quarter, year-over-year. Among the pluses during the quarter: The company gained approval to market the Naturelle line of silicone breast implants and related products in Japan. Allergan also generated 82 cents diluted earnings per share attributable to stockholders for the third quarter, and announced a third quarter dividend of 5 cents per share.

- read the full earnings release