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Allergan Expects Earnings to Plunge Below Estimates

Health care: Irvine-based company cites a delay in the release of its psoriasis treatment.

March 06, 1997|BARBARA MARSH | TIMES STAFF WRITER

IRVINE — Allergan Inc. said Wednesday its earnings for the first six months of this year could fall as much as 20% below Wall Street estimates.

In a statement after the stock market closed, the Irvine-based health-care company cited delays in the release of a treatment for psoriasis that was expected to boost sales early this year. About a dozen analysts and investors called the company to register their disappointment.

"[The company is] going to have a terrible first half--worse than people expected," said Steve Lisi, an analyst at Mehta and Isaly in New York.

Analysts had expected earnings to be flat for the period, but Allergan said profits could be off 20 cents from the same period last year, when it posted earnings of 80 cents a share, excluding special charges.

Allergan stock closed at $33.375 a share Wednesday on the New York Stock Exchange, off 12.5 cents. Lisi predicted the stock will drop $2.50 to $3 a share today.

"This news is going to be a surprise, and we typically try not to release surprises during an open market," said Jeff D'Eliscu, the company's communications executive who fielded the calls from Wall Street.

Allergan is arguing with the U.S. Food and Drug Administration over how its psoriasis drug, Tazorac, is labeled.

Steven Gerber, an analyst at Oppenheimer & Co. in Los Angeles, said he believes the company wants the label to indicate that the drug lasts longer than competitors' products. The company also wants to mention that, unlike rival drugs, Tazorac has been approved for applications on the face and scalp, Gerber said.

The company wouldn't discuss specific details. D'Eliscu said regulators have until May to make a decision on the company's request for changes in the approved labeling.

The company also blamed its soured outlook on the costs of launching new products, competition in its eye-care business, and unfavorable effects of fluctuations in foreign currency.

In a separate move, the company took steps to strengthen its earnings per share by reactivating a stock repurchase program. Under the program, the company can buy up to 2.9 million shares--or stock worth about $97 million based on its closing price.

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