UPDATE: Allergan 1Q Net Down 64% On Charges, Stronger Dollar

Allergan Inc. (AGN), which reported a 64% slump in first-quarter profit on Friday, said it will work with the U.S. Food and Drug Administration to appropriately update labeling for its Botox and Botox cosmetic products.

"We are pleased that the FDA has emphasized that the dosing units are different between the products," Chairman and Chief Executive David Pyott said on the earnings call, adding he was happy with Botox's first-quarter sales, which declined 5.8%.

On Thursday, the FDA said it was strengthening warnings on Allergan's Botox and similar products about the possibility of life-threatening breathing and swallowing problems.

The FDA safety review was done based on some reports of breathing problems and a small number of deaths of some patients when the products were used for an unapproved, off-label use.

Most deaths and serious problems were seen in children treated for cerebral palsy-associated limb spasticity, the FDA said. The agency has not seen any serious issues with approved cosmetic uses of Botox, where lower doses are used.

William Blair analyst Ben Andrew said in a note that he doesn't expect the FDA's decision to significantly affect Botox sales.

"These requirements will have more of a headline effect ... given Botox's long-term safety record and the broad uses of this product in over 20 different applications around the world," Andrew said.

The Botox relabeling comes as companies like Allergan, the nation's largest seller of medical products for appearance-enhancement treatments, are already feeling pressure from the slumping economy as some customers trim cosmetic procedures from their budgets and it becomes more difficult to attract new ones.

Allergan shares, which fell 1.3% on the FDA news on Thursday, dropped another 3.4% Friday to $45.08. The stock, up nearly 16% in 2009 before today, is still recovering from its 2008 stock decline of 37%.

Allergan's first-quarter profits fell because of charges as earnings were also hurt by the stronger dollar.

The maker of eye and skin care products reported first-quarter earnings of $44.7 million, or 15 cents a share, compared with $123.7 million, or 35 cents a share, a year earlier. Excluding items, including charges from changing stock options, profit rose to 55 cents a share from 53 cents.

Revenue fell 6.4%, with product sales falling 6.3% to $994.6 million on the stronger dollar.

In February, Allergan forecast per-share earnings, excluding items, of 50 cents to 52 cents on product sales of $960 million to $1 billion.

Pharmaceutical sales were down 3.6%, but rose 2.3% excluding currency changes.

Allergan, which reiterated its 2009 forecast, sees second-quarter earnings, excluding items, of 66 cents to 68 cents a share, on product net sales of $1.05 billion to $1.1 billion. Analysts, surveyed by Thomson Reuters, projected earnings of 68 cents and total revenue of $1.08 billion for that quarter.

In February, the company also said it would cut 5% of its work force, targeting mainly its U.S. urology sales force and marketing staff in the U.S. and Europe.

-By Kelly Nolan; Dow Jones Newswires; 201-938-4049; [e-mail]

(Mike Barris contributed to this report.)