Allergan's CEO Hosts 2012 R&D Technology Review Conference Call (Transcript)

| About: Allergan plc (AGN)

Allergan Inc. (NYSE:AGN)

March 28, 2012 1:00 pm ET


Unknown Executive -

Scott M. Whitcup - Chief Scientific Officer and Executive Vice President of Research & Development

David E.I. Pyott - Chairman, Chief Executive officer and President

Cornelia Haag-Molkenteller -

Mitchell Brin -

Frederick Beddingfield -

Gregory H. Altman - Founder, Chief Executive Officer, President and Director


David Risinger - Morgan Stanley, Research Division

David Amsellem - Piper Jaffray Companies, Research Division

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

Shibani Malhotra - RBC Capital Markets, LLC, Research Division

Douglas D. Tsao - Barclays Capital, Research Division

John T. Boris - Citigroup Inc, Research Division

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Catherine J. Arnold - Crédit Suisse AG, Research Division

Unknown Analyst

Seamus Fernandez - Leerink Swann LLC, Research Division

David G. Buck - The Buckingham Research Group Incorporated

Christopher Schott - JP Morgan Chase & Co, Research Division

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

Larry Biegelsen - Wells Fargo Securities, LLC, Research Division

Gregory Waterman - Goldman Sachs Group Inc., Research Division

Unknown Executive

So I wanted to welcome everyone to the 2012 R&D Technology Review. Just find your seats. And with that, I'd like to introduce Dr. Scott Whitcup.

Scott M. Whitcup

Well, thank you, Jim, and I want to thank everyone for coming out to our R&D Technology Review. As you know, what we try to do in these is give you insight into some of the pipeline that some of you haven't seen before and some balance. We'll have some updates on late-stage programs, but importantly give you some look at early-stage science as well.

I want to start by introducing myself. I'm Scott Whitcup, I'm the Executive Vice President of R&D and Chief Scientific Officer and lead the group on Pharma and Medical Device side and want to start off by thanking the vast number of scientists and clinical developers who really did all the work on the science and clinical trials that we present today, and also a thanks to the IR staff, especially Joann Bradley and David Nakasone who really helped organize this.

I'll give you a brief, just look at the agenda today. So after David gives off some introductory remarks, I'm going to give you an overview of what you'll see today including what our R&D strategy is, our priorities and then an overview of the pipeline that you'll see later today. We'll kick it off with BOTOX. Dr. Haag will talk not only about the Phase III OAB results that you saw today, but a little bit of an update on our prostate program, and then Dr. Brin will talk about a new indication for BOTOX. We always try to reveal what's next for BOTOX. And you'll see that that's going to be osteoarthritis pain, as well as what we now call targeted exocytosis modulators, that's the platform the artist previously known as targeted toxin.

We'll then move to ophthalmology. Dr. Carter [ph], who's our Chief Medical Officer, will update you on the glaucoma programs. I'll update on retina, and then we'll finish off on dermatology medical aesthetics and plastic surgery with Dr. Beddingfield, giving you an update and medical aesthetics and derm. And then Greg Altman from Allergan Medical will talk about a unique new late-stage opportunity SeriScaffold biodegradable mesh that we plan to launch in the near future.

So with that, I'd like to introduce David Pyott, Chairman and CEO, to echo some of the introductory remarks.

David E.I. Pyott

Thank you. So you can certainly see what happens when the IR guys spend too much time poking around the labs. You know I told Simon [ph] not to do it, right? Results were quite remarkable, Jim. Now the reason I'm wearing this is not because I find it a particularly cold day in New York, but a lot of people were trying to egg me on to wear my kilt. Now from a practical point of view, those of you won't know kilt, they weigh about 18 pounds, and I'm going to Europe straight after this, including Scotland so this is my kilt for the day, I'm sorry. You're not going to see any more legs.

So on with the real program. So a very exciting time for the company. As we've explained many, many times, Scott and his team did a fantastic job getting many, many programs approved not only in the United States, 7 in total, both between pharma and device, but also an enormous number of approvals around the world in 2010 and '11. So it's now all about reloading the pipeline using our specialized knowledge of our areas, continuing to enter the diversity of our portfolio. And I hope yet again we have examples on this chart of where we've been able to create markets where really markets didn't exist in the past. And I hope when you are looking at the scientific side of some of these new programs today you know very little about, you can imagine that once again, we'll be able to deliver new therapies, new alternatives to patients that will, in fact, create brand new market segments.

Of course, to fuel all of this requires a lot of money, and I remember maybe a year and a bit ago talking to both sell-side as well as buy-side investors that I think a lot of you were surprised that we were signaling further increases to R&D, which initially didn't seem totally logical because you'd say, "Well, you just got all these programs finishing off, now since approved." Normally, expensive Phase III's completed, the budget should go sideways or down. And we were saying "No, it will continue to go up." And today, you will see why is that. Well, because we put a lot of new programs into the clinic.

So this year, about $920 million taking the midpoint of our outlook that we gave you at the end of January. About 16% this year, although we've also made comments that if you look into the future, we would like to move that up even further to 17%. And of course, this is the offset to the famous leverage story of SG&A where over time, we plan to bring it down from these very high levels around the 40% mark down gradually into the mid-30s.

So that completes my opening remarks. I hope you will find there's some many new things that you didn't really know about or you might have been aware of the existence of the program, but no further details.

And so I'll now hand over to the R&D team because it's their day.

Scott M. Whitcup

Thank you, David. My goal now is to make sure that you feel that the investment in R&D was money well spent. As you know, with my boss David, although it's $920 million, I have to account for every penny.

So what I'm going to do is really start with the strategies and then go into the pipeline. So the R&D goal one, which is probably what every pharmaceutical company says is to develop differentiated commercially successful products that address unmet medical need, and that's clearly what our R&D goal is. But I think what's unique about Allergan is that we employ a model where our probability of success, once we get things in the clinic, is higher than the rest of the industry. We clearly want to be either first in class or best-in-class, but because we're specialty focused and know our areas better than anyone and because today, if you look at our pipeline, everything is locally administered, no systemic drugs, we have a success rate far beyond what you see in the rest of the industry.

I want to start with some late-stage updates. A lot's been written about R&D day, and people are always looking for either some late-stage pipeline opportunities that we've not yet heard about. So this morning, there was a press release. We announced that we had positive idiopathic OAB data in both of our Phase III studies that allowed us to get files both for the U.S. and for Europe, and those have been filed with an incremental global peak year sales of about $350 million-plus.

At the end of today, you'll hear about SeriScaffold for plastic surgery. This is the biodegradable mesh, and we expect to launch this next year in 2013 with $100 million to $250 million of global peak year sales. Two products that I'm not going to talk a lot about today but they're in our glaucoma pipeline, our unit dose is our preservative-free unit dose formulations of both LUMIGAN and GANFORT, but predominantly for the Europe market, we expect those to be launched next year. The LUMIGAN has already been filed. The GANFORT we expect to file this year with $50 million to $100 million of incremental peak year sales.

And then a program as well for competitive reasons that we had not disclosed that Dr. Beddingfield will talk about, BOTOX for crow's feet lines, we expect to file that end of this year with the approval 2013 and '14, and again with incremental global peak year sales here of $100 million-plus. So here a number of late-stage opportunities that as of to date, we have not really talked a lot about.

Our strategy, which really is focus is power is to keep our R&D focused on the specialties that we're in, ophthalmology, neurotoxins, neuroscience, urology, dermatology, medical aesthetics, plastic surgery, obesity surgery. We're fortunate that we treat diseases of an aging population, and so the demographics, the aging population will help drive growth in our markets. We spend a lot of time making sure the therapies that we develop are cost-effective, gathering health outcomes data so that once we're approved, we can go to payers both in the U.S. countries globally and make sure that our products are well reimbursed, make sure we have an efficient R&D model so that every penny that we spend in R&D goes to programs as best as we can. And then again, what's unique about Allergan, our programs are really focused on local delivery wherever possible. Doesn't mean we'll never do a systemic drug but today, everything are examples of local therapy.

And to give you examples, this would be eye drops or implants within the eye, cream, dermatology products where you apply them directly to the skin, BOTOX, and our next-generation chem program. Again, you're injecting those products exactly where you need them. Even medical devices are an example of locally administered treatment. And this allows us to have a risk-benefit ratio much greater than systemic drugs.

Because what regulatory agencies are worried about not only does the drug or device work, but what are the side effects that I have to worry about years down the line. With local therapy, you can get a much better safety profile, and it also allows us in our pipeline to have innovation not only from new chemical entities, but also novel ways to administer known drugs.

And if you look, this graph shows that if you look at Phase I to market, we're about 1.6-fold better than the overall industry success rate. And based on CMR [ph] data, as you can see in a study of 17 companies, Allergan was ranked second in terms of overall probability of success of getting drugs to market, and I think a lot of this is dependent on not focusing on specialties we know well and local therapy.

Our first priority is getting drugs approved to drive sales growth. And since we were here last time at our R&D day, we've had a number of major approvals including BOTOX for chronic migraine, upper limb spasticity, neurogenic overactivity, LUMIGAN 0.01%, JUVÉDERM, just a large number of approvals so the focus today is not only what else do we have in the late-stage pipeline, but how are we reloading the pipeline.

Second priority, global expansion. So you've heard on a number of meetings with us that we want to maximize the sales of all of our products, especially into emerging markets. And over the last several years, we've expanded our R&D infrastructure around the world, especially in Asia Pacific and in Eastern Europe, and we're developing a number of products like glaucoma combinations specifically for some of these emerging markets. And over the last couple of years, we've been very successful of getting a large number of our products approved in these emerging markets. No single product, large amount of sales. But when you expand and look at the emerging markets, together it's really a sizable amount of sales and will continue to drive our growth over time.

What we're going to focus on today clearly is how we fill and optimize the R&D pipeline to support long-term growth. And we have a very rigorous portfolio process. It's a process that initially was developed with the London School of Economics. We put all of our programs into the model. It's predominantly based on a risk-adjusted NPV, but it also incorporates business needs, unmet medical needs, timing, you can adjust the portfolio for risk. And at the end of the day, it helps us not only make the best bets on internal programs, but when we look at in-licensing opportunities, we also put those into this model to decide whether they buy into the portfolio and whether they're a good spend the for Allergan's R&D money.

There are a couple of programs that we have in the pipeline that for competitive reasons you're not going to hear anything about. One is BOTOX X. So you're going to hear about the 10 program, the old targeted toxin program. This is different. This is taking the existing BOTOX, optimizing it to make a better Allergan. R&D has a long history of optimizing our products to make them better. BOTOX X is one example, RESTASIS X, which you've heard about, is another. So we have a number of things in the pipeline related to these 2, we won't talk about them today.

We will talk about BOTOX, though. When you talk to people about BOTOX, they assume it's all about cosmetics. As you know, in 2011, therapeutic eclipsed cosmetics as the majority of sales, and as we continue to get new therapeutic indications, that divide will continue to grow. As you know, chronic migraine is a big indication for us and so as these indications like chronic migraine, like overactive bladder are rolled out globally, then I think you'll continue to see that our therapeutic business will continue to be larger than the cosmetic business, although we continue to support that as you'll hear from Dr. Beddingfield with crow's feet lines later today.

So our strategy around neuromodulators, new indications with existing BOTOX, make BOTOX better with BOTOX X and then really disruptive technology, get something innovative and new, and you'll hear from Dr. Brin as well on our targeted exocytosis modulators, the targeted toxin program.

So this graph just shows the number of indications. These are U.S. approvals, 8 approved, 4 in development, 2 brand new ones that you'll hear about today; crow's feet lines and osteoarthritis pain. But again, you'll also see the idiopathic overactive bladder data and an update on BPH.

Today, we announced that we filed idiopathic overactive bladder. These were data and I've been doing clinical trials for 25 years, some of the most striking Phase III data that I've seen. Dr. Haag will go over it. And why it's exciting? It's a huge unmet medical need. Just in the United States, the 3.2 million Americans on medications, and we know from talking to urologists and patients that the medications fail in a large number of patients. Well over 50% discontinue their medication either because they don't work or they don't tolerate them. And the Phase III data clearly showed that in the first clinical study, we got highly statistically significant decreases in urinary incontinence episodes that were not only statistically significant but also very clinically relevant, and data that were well replicated in the second Phase III studies. So Dr. Haag will go over these data, some of the other efficacy endpoints.

But also important was the safety. So as you know, with our neurogenic program, the question was what would the urinary retention rate be. And most of the people looking at this said, "We really want rates as low as possible, potentially under 10%." And so we're very excited to see that the urinary retention rates in the 2 Phase III studies were 5.4% and 5.8%.

BPH also a big market, big unmet medical need. 4.2 million men on oral BPH medications. Over 400,000 requiring surgery for the condition. Our Phase IIb trial is in progress, and the people ask how does BOTOX work? Does it shrink the prostate? And I've always said you show the man the needle, the prostate shrinks 50%. And then BOTOX then takes its effect. So Dr. Haag will talk a little bit about the little bit of program and update you, but if the Phase II program in progress is positive, we'd like to advance that into Phase III next year.

So really, the strategy is that indications tend to follow the mechanism of action. So how does BOTOX work? So this slide shows that BOTOX blocks the communication of various nerves with the target tissue. So blocks release of neurotransmitters from skeletal muscle nerves and blocks muscle contraction, blocks release of pain mediators from pain nerves so that you don't get pain or block some of the muscle nerve communication to smooth muscle in the bladder or in the gland, blocking bladder contraction and gland function.

In osteoarthritis pain, we focus on this mechanism in the center. Why does it make sense? Well, we've seen that it's effective in chronic migraine, in pain -- neck pain associated with cervical dystonia, and now we're moving to osteoarthritis pain. Clearly osteoarthritis, a huge unmet medical need. It makes sense for us because this therapy will be specialty focused; you're injecting it into the joint. Orthopedists, rheumatologists, pain specialists will administer this. And like a number of our other indications, there's positive safety and efficacy data already in some small trials in the literature, and so we've already started a Phase II trial. You can find it on, and Dr. Brin will talk to you a little bit more about this indication.

We know that BOTOX binds to all 3 nerves: muscle, pain and gland nerves. The goal of our novel 10 program was could we target botulinum toxin to specific initially nerves and down the line specific cell types? The problem is BOTOX is complicated. This is just the core neurotoxin, and what our scientists have to figure out is where in this molecule does BOTOX bind? And then could we reengineer the toxin to bind to specific receptors on cells?

So for an example, this is LUMIGAN. This is the size of bimatoprost, so you can see a huge challenge. And I'm happy to tell you today that successfully we're able to reengineer, we're able to figure out how to change out the binding site, put in a new binding site and in our initial program, target the botulinum toxin to pain nerves. And so the first Allergan compound into the clinic in this platform of targeted exocytosis modulators is called tendrobotase [ph], that's our proposed international non-proprietary name. It will target only the pain nerves. It's patent-protected because it's going exactly where you want it and because since it has no muscle effects, we can give substantially more than you could ever give with BOTOX, probably 1,000-fold more. We think it has the opportunity to be more effective in pain and potentially to last longer.

And Dr. Brin will take you through some of the data. These are the animal data that we presented at our last R&D day, showing that we got similar pain relief to Gabapentin. But importantly, no muscle weakness and the sustained duration that we've expected. So the neuropathic pain market is a multibillion-dollar market, systemic side effects with a number of the medications.

And so the question was, how about in patients? And so Dr. Brin will talk about the postherpetic neuralgia program. We have 2 programs, postherpetic neuralgia, the pain associated with shingles and overactive bladder. This study's in progress. We're starting 4 doses of tendrobotase [ph] in the PHN program. We only have data from the first 2 doses. And so the goal was in the clinic in patients where we're seeing separation from placebo.

So what you can see is in the intent-to-treat population a little bit of separation, although not statistically significant. But we pre-specify that as in all of our trials in pain trials, look at the patients who aren't on other pain medication and there you can start seeing in a dose-dependent fashion a decrease in pain from tendrobotase [ph].

We also looked at how many percent of the patients had a 50% reduction in pain, and again, both in the ITT and importantly in the patients not on concomitant meds, we saw separation from placebo. These are not big Phase III-powered studies, we're looking for separation and these are, as I stated, just the 2 [indiscernible] doses. So where do we go from here? We've got 2 higher doses that we're going to take into the clinic. If those doses mirror what we see to date, then the plan is to take this either into Phase III down the line in postherpetic neuralgia or look at other chronic neuropathic pain indications.

We await the data from the bladder but importantly, this is a proof of concept for the platform. So we can target pain where we have like the tendrobotase [ph] the in the clinic for overactive bladder, but now we know that we can potentially target other cell types. We can target inflammatory cells to treat inflammation. We have data in the lab that we can target cancer cells and potentially treat certain malignancies. So this program is uniquely important to Allergan because, A, it gives us a big opportunity in chronic pain, sitting with our local therapy but opens the door to new indications that BOTOX wouldn't take us to.

Ophthalmology remains a big part of our focus; dry eye, acute care, glaucoma and retina. Today, we'll focus on the pipelines in glaucoma and retina. Dr. Carter will talk to you about glaucoma. In that segment, there's first-line therapy to date dominated by the prostaglandin analogs. We have LUMIGAN, does extremely well in the portfolio but there's still, as you can see, a big market for second-line adjunctive therapy. There, we have ALPHAGAN, also one of the key drugs, key medications used as adjunctive therapy.

Now LUMIGAN is already viewed by ophthalmologists as the most efficacious IOP-lowering medication. We introduced LUMIGAN 0.01%, it's well tolerated. So the question was, how do you make LUMIGAN better? And so there, we spent a lot of time thinking and needed to go to disruptive technology to come out with another drop might give you some increment, but wouldn't it be a better idea to have a paradigm shift in how glaucoma is treated?

And so this involved thinking outside of the bottle. We know that compliance is a big issue for patients. They have trouble getting the drops in, especially elderly patients and depending on the study, 40% of the patients don't even take their drops. So clearly sustained release where you treat the patient that lasts for months, compliance at 100% was a big opportunity.

And so over the last decade, we've been focusing on sustained release in glaucoma. And so here is both the old and the new glaucoma. So the typical bottle, but as you can see on the bottle cap, is what we believe will be a paradigm shift in how we treat glaucoma. This is our sustained-release implants, and the first one into the clinic will actually contain LUMIGAN. And the fact in this implant is approximately 4 months, 4 bottles worth of drugs. And we really advanced the technology.

This is OZURDEX, which is already viewed as a small implant. And you can see the LUMIGAN sustained-release implant substantially smaller. Now as David Pyott will tell you, our head of manufacturing is spending a lot of time figuring out how can we manufacture implants reduceability -- reproducibly. And we're working on that, that's going well. But this is really disruptive technology. And Dr. Carter will show you that already, at the lowest dose, we're getting interactive pressure decrease similar to LUMIGAN. We have a little bit of data at our middle dose where it's equal to LUMIGAN and we have a higher dose, which we hope will actually be better than a LUMIGAN drop but importantly, give the physician an ability to locally treat lap somewhere between 3 and 6 months and give patients better care less vision loss. So really an exciting technology.

Now ALPHAGAN, the adjunctive market is still important. ALPHAGAN is 3x a day. So how do we approve ALPHAGAN? The old-fashioned way. We screened 0.5 million compounds and Dr. Carter will tell you that we've selected our lead compound, it's going to go into the clinic later this year and has the ability to be substantially improved over the existing ALPHAGAN.

Big opportunity in ophthalmology, of course, is retina. We expect between 2011 and 2016, the retina market will grow from just under $4 billion to over $7 billion. If you're going to be big in ophthalmology, you have to invest in retina. And later on this afternoon, I'll tell you about our retina pipeline. You know about OZURDEX. To date, it's approved for 2 very small indications, retinal vein occlusion and uveitis. We have data coming out later this year on diabetic macular edema, a much bigger opportunity, 1.4 million patients.

But really, other big opportunities include wet or neurovascular macular degeneration and the dry, the big opportunity, big unmet need, nothing approved by FDA to date, so we have a number of things in the pipeline. Our DARPin, which is a new biologic against VEGF has the ability to last for 3 to 4 months and be best in class for anti-VEGF therapy, already a huge market.

We had a novel corticosteroid, AGN208397 that we think we might be able to use to prevent the progression of dry to wet AMD and we'll show you a little bit of data on our [indiscernible] for progression of dry AMD to more severe AMD.

In addition, our novel corticosteroid, beyond preventing dry to wet progression in AMD, can also be an interesting follow-on to OZURDEX for diabetic macular edema.

And then we'll wrap up this afternoon with our medical aesthetics portfolio. A lot of additions to the facial portfolio that Dr. Beddingfield will take you through and some updates. So BOTOX Cosmetic crow's feet, as I said, expected to file end of this year, approval in '13 and '14. This will allow us to train physicians on how to inject for crow's feet and give us an opportunity to expand the market. We'll teach in Europe an important opportunity, we expect approval later this year.

VOLUMA, which is in the Allergan medical side, is under review with the FDA. We expect approval next year. A little bit earlier on in the portfolio, oxymetazoline, which we acquired, is in Phase II trials, we're optimizing the formulation. And LATISSE for brow, a new indication beyond LATISSE for eyelash growth.

Of course, the big opportunity for the bimatoprost franchise is hair growth, clearly a $1 billion opportunity. Since Allergan is from Southern California, what we thought we'd do is have Julia Roberts and Clive Owen talk a little bit about the opportunity.


So we actually had some other clips but for compliance reasons, they were felt to be too exuberant and they got taken out. But you can imagine we know this is a big opportunity, and so Dr. Beddingfield will update you on where we are with the program. It's a $1 billion global market. We have a novel formulation of bimatoprost, which is different from LATISSE, and it's in 2 Phase II trials, one for men with male pattern baldness but as you'll hear, it's also a big problem with women with hair thinning. And we expect data on the program next year, but you'll get an update.

And then finally, our SeriScaffold is another quite novel opportunity on the Allergan medical side. $100 million to $250 million peak year sales. It's already 510(k) cleared and CE-marked. What we're doing now is gearing up the manufacturing and getting the data ready for launch. Again, we have a proprietary manufacturing process and as you'll hear from Greg Altman, we can modify the material to be used in different parts of the body, really an exciting opportunity.

So I think you'll enjoy the afternoon. We've really updated our pipeline slide, so you can see in addition to updating you on some of the programs that you know about on the ophthalmology side, a lot of new programs that we've added to the charts this afternoon. On the neurology side, you'll hear about osteoarthritis pain, updates on the urology program and on the aesthetics side, crow's feet lines and SeriScaffold for plastic surgery.

In addition to our internal programs, we have a lot of partnerships. Those are ongoing, and I think the R&D philosophy is good ideas, good science need to come from any laboratory, any university and any company out there. And again, because we're specialty focused, we see a lot of these.

And in conclusion, I think what you'll see is that the late-stage pipeline remains robust. We've got a number of Phase III programs that we're just talking about today. Global expansion of R&D will allow us to get those products approved in emerging markets. We've got a lot going on in the early-stage pipeline with some positive proof-of-concept signals, and we've got money on the balance sheet, and David is very aggressive with our team to get out there and look for opportunities, and if we see good science and good product opportunities, we bring them in and add those to the pipeline.

So again, thank you for coming, and with that, I'll turn it over to Dr. Haag, who'll talk to you about urology.

Cornelia Haag-Molkenteller

Thank you, Scott. Well first of all, I'd like to introduce myself. My name is Cornelia Haag-Molkenteller. I am responsible for the global development program for neurology at Allergan. It is my pleasure to present to you today the OAB program and some snapshots from our BPH program.

Okay, trying to advance the slide, there we go. First of all, we'll start with the overactive bladder program. We are showing you the Phase III results with the BOTOX. As you know, the U.S. adopted name is onabotulinumtoxinA.

There are 37 million Americans who have OAB symptoms. Of these, 13 million are incontinent. Incontinent means that you actually cannot control the loss of urine. You leak. You leak maybe publicly. A lot of people have to wear pads to protect themselves. And of these patients affected, 3.2 million are on OAB drugs. However, studies have shown that over 50% of these patients in the end will discontinue these OAB drugs or they will just switch one drug after the other and in the end they give up, because the drugs either do not work or they have internal side effects and cannot continue taking them.

The annual direct and indirect cost of OAB range in the U.S. from $13.4 billion to $20 billion. It does result, if you 1.7x the cost of employee, more of an employee in the U.S. than those without OAB. They also have a generally lower quality of life because if you can imagine that you constantly have to be afraid to leak, you will take a lot of preventive measures and you will not be able to enjoy your life. And those patients who have lower quality of life, of course, will be more likely to seek treatment.

BOTOX and idiopathic OAB will be a new treatment paradigm. Currently, as I stated, there are oral drugs. Upon approval, BOTOX is expected to be used for OAB patients with urinary incontinence who have not been adequately managed by anticholinergics, either due to an inadequate response or lack of efficacy and limiting side effects. The majority of patients who go to the urologist, and that's what Allergan is focused on, Allergan is focused on the specialty, our patients who are not either refractory or incontinent, and they are not adequately managed by just oral drugs. BOTOX will fit exactly into the treatment paradigm between oral therapy and the surgery because as of now, if oral drugs don't work for you, your only alternative is surgery. So BOTOX will hopefully offer, upon approval, a minimally invasive alternative for those patients who have not been adequately managed under oral drugs and who actually don't have to go to surgery. BOTOX will fit right in the middle, as you can see on the slide. So this is where we expect BOTOX to fit in.

BOTOX is administered directly into the bladder. It's a targeted therapy. For urologists, it is administered by cystoscopy, which is a routine procedure for the urologist. Like in gastroscopy you look into the stomach, in cystoscopy you look into the bladder. It's a routine procedure, every urologist is trained on it, and the injections are delivered directly as you can see via a needle, which goes to the channel of the cystoscopy to the bladder. So the drug is delivered exactly where it's supposed to be.

We first started with a dose-finding study for OAB. The study has been published in the Journal of Urology in December 2010. You can see it there. It was a classic dose-finding study, studying 50, 100, 150, 200 and 300 units of BOTOX versus placebo. And this study clearly identified giving efficacy and safety, given that balance, the 100 units of being the optimal dose based on benefit and risk. So we took the 100 units into Phase III.

We did conduct 2 independent placebo-controlled Phase III studies. There were international studies. First study, 534 patients were enrolled. Patient population where incontinent OAB patients who were not adequately managed with their oral drugs either due to lack of efficacy or internal side effects. We had -- the key primary variable for the FDA was a reduction in the number of urinary incontinence episodes. In Europe, we have a co-primary variable. We have also again a reduction in incontinence episodes but also for the Europeans, they wanted to know how does the patient feel about their treatment. Do they feel the benefit of the treatment? So we tested the therapy also via the treatment benefit scale.

So I'm first going to show you the patient demographics from our Phase III program, and these are the 12-week data I will also show you, which are the placebo-controlled data. 12 weeks is the endpoint in OAB studies. So we're going to go over the baseline demographics. So you can see, the age is very typical for an OAB population around 60 years; majority of patients are female. Many, many years of OAB, you'll get their baseline number of incontinence episodes. Imagine that you leak around 5x per day; this is uncontrollable leakage. This is a heavy burden of disease for those patients. They have tried on average 2.5 anticholinergics before they actually entered the study. So this is a patient population that's really suffering from disease and especially their uncontrolled leakage.

We'll first show you the results in the primary variable, and again, this was for the U.S. FDA and also for the Europeans. This is the co-primary valuable of Study I, reduction number of incontinence episodes. This is reduction from baseline. You see the very clear and marked difference from placebo already starting at week 2. It's a very pronounced effect already at week 2 after start of treatment, clear efficacy, clear difference from placebo, and these are remarkable results for an OAB drug where basically, you have a very, very clear and unambiguous distinction from placebo.

As Dr. Whitcup already said, the second study also showed basically similar results, which is one of the intensive drug developments. That's why you do 2 independent placebo-controlled studies to actually show that the drug really works in 2 independent studies and we were able to demonstrate that. Again here, difference from placebo already visible at week 2, and then of course, up to week 12, which is the primary endpoint.

Now as you know, how did the patients actually feel? What goes beyond the numbers? How do the patients rate their treatment? Therefore, we employed the treatment benefit scale. And there you can see that the majority of patients on BOTOX had a clear distinction from placebo statistics significant. Over 60% felt that the treatment really benefited them, and that was reproducible in the second study. So this is again the link of symptom-controlled by reducing the number of incontinence episodes and also the benefits the patients feel from their treatment.

We also employed a quality-of-life score because how, again, how does it improve the quality of life of the patients? So on IQOL, the international incontinence quality of life score, it's a clear difference from placebo and again, the patients felt their quality of life has been improved by treatment.

Now of course, we have to look also at the safety in these patients. We are showing you here the safety in the first 12 weeks is the placebo-controlled phase. You can see the urinary tract infection rates which were 15.5% for the first study, 5.9% of placebo, 20.4% for BOTOX in the second study, 5.2%, again very consistent results. Urinary retention rate, as already Dr. Whitcup said, are below 10%. They're 5.4% for BOTOX in the first study. They are 0.4% for placebo in the first study, 5.8% in the second study and 0.4% for placebo in the second study.

The start of clean intermittent catheterization, which is a measure which when the patients cannot void properly, the doctor start, these are small catheters, they have to use with extremely low -- was 2.9% in the first study and 5.2% in the second study. Discontinuations due to adverse events were also extremely low, and we had a comparable number of serious adverse events in both placebo and the active treatment group.

So in conclusion, the primary and secondary endpoints were made in both pivotal studies. We had significant improvements in all OAB symptoms. There was a significant perception of treatment benefit by the patient, and this is really important. It's not only by the numbers, it's also about the treatment benefit and how the patients feel about the treatment. The adverse event profile was predictable. It was in the expected range as we had already known that there would be predominantly urological adverse events, and urinary retention rates starting of catheterization was very low.

The U.S. filing and the European filing has just occurred, and we are proud really to announce that this has just happened and we have parallel filings really to show again that we do global drug development.

I will now continue after OAB to BPH, another very important disease, also specially of the aging population. 29 million adult men over 50 have used the logic [ph] BPH. Then 15 million do develop symptoms. They go to the doctor because their symptoms bother them so much that they seek treatment. 4.3 million are on oral BPH medications and then we have 4.9 -- 409,000 surgical procedures.

The BPH patients do go to see to the urologist. 64% will in the end go to see a urologist. It is a very large growing market in the U.S. It grew 8% and achieved $5.2 billion in 2011. The overall market includes the currently used drugs, which are alpha blockers and 5-alpha-reductase inhibitors. And also here, the discontinuation rate is high for BPH medications because they stop working, they don't -- and then again, the only alternative patients have today is actually a surgical procedure.

We have conducted adult ranging study with BOTOX. 380 patient doses were 100, 200 and 300 units versus placebo. The primary variable, which is the very standard variable, the normal variable in BPH studies is the International Prostate Symptom score. The efficacy is measured again at week 12. The data were already presented last year at the European Congress of Urology in Vienna in March 2011. They do show efficacy with 200 units of BOTOX.

Here again, you will see the results. In the overall ITT population, we had a marked reduction in the IPSS score, this is the IPSS. It goes down because we have a reduction in this score. However, we did have also quite a placebo effect. However, when you look at the patients who had been on previous BPH medications who knew how BPH medication works, they were clearly able to differentiate from placebo, and 200 units emerged as the dose of choice. So this is placebo here and those people had been on previous BPH meds, and you can see that 200 units clearly stands out as an efficacious dose and different from placebo.

So we decided to conduct a Phase IIb proof-of-concept study in patients who had been on previous BPH medications who knew how these medications are supposed to work. The sample size is 274 patients, the doses are 200 units versus placebo. If the data are positive, we expect to begin Phase III in 2013.

Thank you very much for your attention. And I think we're now open for questions and answers, if there are any.

Scott M. Whitcup

If there are any questions on the urology program, either BOTOX or idiopathic overactive bladder or on the BPH program, we're happy to answer them. Go ahead.

Unknown Executive

So there's microphones coming now.

Question-and-Answer Session

David Risinger - Morgan Stanley, Research Division

Dave Risinger from Morgan Stanley. Just a question on idiopathic overactive bladder. With migraine, what the experts are saying is that in patients in which BOTOX for migraine works, there is a carryover effect that over time, they actually need less frequent dosing. Is that something that you've seen or you can comment on in idiopathic overactive bladder? The reason why I ask is it might be a more compelling treatment option if patients can envision that as a longer-term benefit.

Scott M. Whitcup

I think I'll start the comment by saying that our overactive bladder data to date are uniquely different from the chronic migraine data in that many of you remember that our programs took a long time because BOTOX lasts much longer in overactive bladder. Its effect on smooth muscle appears to be longer than for chronic migraine, and maybe Cornelia can comment on the length, the duration of effect that we saw in some of the previous trials that was months and months longer than in chronic migraine.

Unknown Executive

Yes. It is months longer than in chronic migraine, there is a different effect on smooth muscle. There is still a long-term study ongoing, so which will continue for 3 years. We will see if we see any difference, any shortening, I don't know at this moment, I can tell you. There is a long-term study, however, ongoing. And we will then have data once this long-term study is completed because we do think it is important to also look at the long-term.

Scott M. Whitcup

I think for the neurogenic population, the median response was 9 months. So there's already, just in the bladder treatment paradigm, a compelling argument even if you don't need lots over time, it's already lasting a long time.

David Amsellem - Piper Jaffray Companies, Research Division

David Amsellem from Piper Jaffray. So in the neurogenic study, you had data on patients who are actually episode-free. Do you have any kind of data available in that study? And I didn't see them in the slide, so maybe you could talk qualitatively about the portion of patients who are episode-free and the relative importance of that in the context of idiopathic overactive bladder.

Scott M. Whitcup

We have some of those analyses coming. We just heard today that the first -- one of the first studies will be presented at the AUA in Atlanta, so those analyses will be available there but we haven't disclosed all the data yet. These are sort of the top line data, and we want to, as is our usual approach, to present the majority of the data at the medical meeting. So the AUA presentation is...

Unknown Executive

Is on May 22 in Atlanta.

Scott M. Whitcup

May 22. So those data will be available then.

Aaron Gal - Sanford C. Bernstein & Co., LLC., Research Division

Ronny Gal from Sanford Bernstein. A question on the BPH program -- can you hear me? Okay, so first, can you tell us a little bit about the punitive mechanism of action? I think I've read something about a paradigm [indiscernible] can tell us a little bit about that. Also about the administration, how was both administered locally? And last, this sounds like a classical given the location of injections, sounds like a classical target for more of a long-acting version of BOTOX. Is it thought for the complex toxin, or are we going to existing product?

Scott M. Whitcup

So I'll let Cornelia answer to first 2, and then I'll talk about the last one.

Unknown Executive

Okay. So the first one, I didn't quite understand, the first one was -- the second one was about [ph] administration, is that correct? So it is done via trans-rectal procedure, urologists are very familiar. It's a standard to do trans-rectal prostate biopsies if you have suspicion for prostate cancer, you will get both a biopsy. Again, a procedure where urologists are very well trained in. It's one of the routine procedures done either without local or with local. Depends a little bit of the patient, but it's a routine procedure and again, your first question?

Scott M. Whitcup

My first question was on mechanism of action.

Unknown Executive

Mechanism of action, that we're still investigating. I really have to say we're still looking at it. Could be relaxation of the smooth muscle, but it probably is more than that. We think BOTOX is more effective than just relaxation of muscle in BPH. But we're still studying that, we have to say. We're still in Phase II.

Scott M. Whitcup

The hypothesis is the one smooth muscle, which is within and around the gland, is one. And then there are certain factors that are released from nerves that could have a growth factor in the prostate, but still under investigation. And you're right, the longer, the better, given that these are a little bit tougher injection than per se something in the skin. And we're looking that something like the 10 program could be a follow-on down the line, you're absolutely right.

Shibani Malhotra - RBC Capital Markets, LLC, Research Division

Shibani Malhotra from RBC. Just on the UTIs, the retention rates were low. But the UTIs were somewhat high given that you're using a much smaller dose than you did in the neurogenic population, so can you comment on how that came out? What were your expectations? And then second, based on your experience of training physicians for neurogenic indication, do you expect that the training of physicians and the adoption of the product in idiopathic OAB would be more rapid?

Scott M. Whitcup

So I'll let Cornelia expand a little bit, because she's a urologist. But as we look at in the trials, there's a fair bit of instrumentation as part of the clinical trial, which explains a little bit of why in practice the urinary tract infection rate may be slightly lower, once it's out in practice. The feedback has been that these are easily treated with short courses of antibiotics. The main focus on the side effect profile has been on retention and need for instituting catheterization, and maybe Cornelia can comment a little bit more on the UTI rates and how these are managed.

Unknown Executive

Yes. Again, as Scott already said, these are very short-term UTIs. They're not complicated UTIs. They're treated with oral antibiotics. Again, these also predominantly women. Don't forget women tend to have more UTIs than men. It's an anatomical topic why women have more UTIs than men. So we again, the urologist, the patient does not see this as any problem. Again, these are treated with normal courses of short-term oral antibiotics. And to your training question, again, as I said, this is a standard cystoscopy. It's a standard procedure. If you're a urologist, you learn how to do that and you should know how to do this. So we think that this is not complicated to learn at all. It's a standard procedure. The injections are done through the cystoscope. There's a working channel in the cystoscope where you put your instruments through, so that should not be an issue for you.

Scott M. Whitcup

Shibani, you're right. These are surgeons, so unlike chronic migraine where you're taking neurologists who may not be using injecting, the urologists are very used to doing the procedures. And for those urologists who are already learning to use BOTOX for neurogenic that choose [ph] overactivity, the injection paradigm is pretty much the same.

Shibani Malhotra - RBC Capital Markets, LLC, Research Division


Scott M. Whitcup

I think the training component will be a bit easier. That said, I think the urologists are still going to need to get used to which patients are best treated, how to explain to the patients what to expect. And so there would still be, I think, a gradual uptake although I think the training piece, you're right, will be a bit easier. So it might be slightly faster than some of the indications but with all of these, it's still a matter of it's a treatment paradigm change, it's getting those patients to the urologist, it's managing expectations and getting the urologists comfortable with who to treat and who not to treat.

Douglas D. Tsao - Barclays Capital, Research Division

Doug Tsao with Barclays. The catheterization rate came in much lower than what I think you can see previously. I'm just curious if you had any sense of what drove that significant improvement from what you'd seen previously in other studies.

Scott M. Whitcup

So yes, we -- there was a lot of debate going into the Phase III program, what's the right dose. And we probably spent days debating this internally because -- should it be 200? Would we see striking efficacy at 100? In the end, I think we got it perfectly right. That we saw really amazing efficacy at 100 units, but it really was the optimal dose. And so the less retention and the less clean cath rates are due to the 100-unit being the effective dose.

John T. Boris - Citigroup Inc, Research Division

John Boris with Citi Investment Research. Just on the question of neurogenic versus idiopathic, are the number of injections that are given the same? And then the length of time that it actually takes to do the procedure, how long does it actually take? And then the last question just has to do with the number of urologists that you've trained so far on the neurogenic side and how many do you plan on having trained by the end of the year?

Unknown Executive

Okay. Well first of all, the number of injections in neurogenic is 30, these are 20 injections. And it is a very short procedure, 10 injections don't take maybe a minute longer. That is not a big difference. I mean in cystoscopy, this just takes -- of course, you have to get the patients on the chair, et cetera. It will take probably 10 to 15 minutes at most. Again, this is a standard procedure as a urologist. These are board-certified urologists. They're trained to doing these procedures. So again, the number is 30 for neurogenic, 20 for idiopathic.

Scott M. Whitcup

In general, it's about a 15- to 20-minute procedure. It's quicker in the idiopathic population, the neurogenic because these are patients with spinal cord injury, multiple sclerosis. This was tough -- tougher to get them on the table and positioned properly. So if anything, it will be easier on the idiopathic side. In terms of how many we've trained, we don't disclose that.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Gary Nachman, Susquehanna. Since the data was so positive on the 100 units, would you expect that maybe some neurogenic patients are actually going to -- physicians are going to try the lower dose because the retention rates were so low?

Scott M. Whitcup

Yes, I think for the neurogenic population, we did see more of a dose response. We did see added efficacy at 200. So my take will be that to get maximum efficacy and the duration, that 200 probably is the best dose. Like everything, I think there is a chance that they see that there's reasonable efficacy at the 100 that in some patients like with the number of medications. Some physicians may start lower and increase based on safety and efficacy, but the neurogenic data were quite different than the idiopathic where we did see some -- the greater benefits with 200.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

And just quickly on the filing strategy, could you just elaborate a supplemental BLA so you're really looking to just expand the existing label? It's not going to be a separate label?

Scott M. Whitcup

Like all of the BOTOX indications, they're all supplements to the original file. So the safety database is decades safety database that we just add to the label becomes one added indication to the label, which is already having trouble fitting...

Unknown Executive

It's a long label. If you ever buy it, you'll see how long.

Scott M. Whitcup

But we like that.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

It's a normal 10 months to do that.

Scott M. Whitcup

Yes, it should be -- we haven't gotten the timing, but it should be 10 months of PDUFA date.

Scott M. Whitcup

So the next speaker to continue on the BOTOX theme and also talk about our 10 program is Dr. Brin.

Mitchell Brin

I'm Mitchell Brin, I'm the Chief Scientific Officer for BOTOX. And as many of you know, I've had nearly 30-years experience in working with neurotoxin. I'm going to give you a further update on BOTOX and our novel neuromodulator development program.

What do we do? We grow and our goal here is to grow the neurotoxin portfolio and for our indications, we are first in class. With the recent approvals in upper limb spasticity, chronic migraine, and the [indiscernible] activity, our package insert is, they just recently said, has grown so big that we've actually had to redesign the carton for the package insert to fit into it.

You've heard about our development filings in idiopathic overactive bladder. And Frederick will talk with you about crow's feet lines. Cornelia just talked with you about the non-prosthetic [ph] hypertrophy. And I'll update you on the new opportunity in osteoarthritis for knee pain. And then I'll go on to talk with you about our innovation in disruptive technology with the targeted exocytosis modulator program.

Osteoarthritis is an interesting area for Allergan. As we're getting older, our joints are getting creakier and aging. There are about 63 million people in Europe and the U.S. for this $4.4 billion market with osteoarthritis. For symptomatic knee osteoarthritis, we're talking about 25 million. For moderate to severe osteoarthritis, we're talking about 13 million. And about 3 million of them fail oral therapies.

Typically when a patient goes for treatment, they're first treated with physical therapy, then they go on to oral therapy, which includes non-steroidals and anti-inflammatory drugs. Then there are intra-articular therapies, such as steroids, hyaluronic acid and lidocaine and then there's knee surgery. But so many patients are intolerant of these therapies and for many of them, they fail.

Why BOTOX? Well first of all, we know BOTOX is effective in pain with chronic migraine indication. We've also been approved for over 10 years for neck pain associated with cervical dystonia. Why Allergan? Well, it's a local therapy, it's specialist-focused. And for physicians, this is an office procedure and it's ultrasound guided.

Now as you know, since BOTOX has been on the market for over 20 years, physicians have an opportunity to evaluate it out there and to test its potential. And there are a number of articles and literature, small, some open label, some double blind, which have shown us some signals of efficacy. And I'm showing you one here by Dr. Sing [ph] and these are patients who have had total knee replacement and have continued to have pain. They had their knee replacement at least 6 months before therapy. It's a double-blind placebo-controlled study where patients received either 100 units of BOTOX or saline into the knee.

And what they demonstrated was a significant on the visual analogue scale, which is a standard scale in pain research. And what you can see is that 2 months, there's a statistical improvement and marked separation from placebo. This persists at month 3 and then begins to wear off as you'd anticipate. In addition, they use the WOMAC scale, which is a standard scale for studying osteoarthritis. And they showed improvement in function and the global assessment of change, fitness and the overall total scores. So this is very, very encouraging to us and it's consistent with the mechanism of action.

So we went ahead and designed a Phase I, Phase II double-blind placebo-controlled study that is ongoing and we're already enrolling. We've planned for 120 patients with moderate to severe osteoarthritis pain, and we're injecting either 200 units or placebo into one knee joint. We're planning 12-week follow-up and we're doing pain and functional assessments throughout the course of the study, and we anticipate data in 2013. We see this as an important opportunity for us for Allergan and for patients who are suffering from chronic knee pain.

Now I'm going to turn our attention now to our innovation platform, which is, as mentioned, a disruptive technology, the targeted exocytosis modulator previously known as targeted toxin. And to let you know that this is a new therapeutic platform which is a recombinant protein technology that capitalizes on the highly specific and efficient properties of BOTOX, which you know so well. And it's patented. Tendrobotase [ph] is the first compound in this class, and we have designed it to be specifically targeted for pain fibers. And the intracellular component of BOTOX is the identical intra-solar enzyme, but because we pointed it at pain fibers, it would block the release of important chemicals for pain such as substance P and calcitonin gene-related peptide. Because of its targeting, we don't anticipate any muscle effects. That would permit one to go higher doses, which should lead one to greater efficacy and a longer duration of effect. And we're currently in clinical development.

But first, let's take a look at how BOTOX works to set the landscape for you on how this platform works. As you know with BOTOX, there are 3 domains here. There's a binding domain, a translocation domain and the light chain, which is the enzymatic active portion or business portion of the toxin. Now I'm going to show you a video, and I want you to pay particular attention towards the end of how BOTOX works and what that light chain does. And the reason for that, it's the same light chain that will do what it needs to do in pain cells when we've retargeted the pain neurons. If we could start the movie?

Now here you see an axon with a nerve terminal, and in this example with BOTOX, it's connected to a muscle. Now we're going to go down and take a look inside that nerve terminal and you're going to see vesicles which are containing acetylcholine. And here they are, so here’s the muscle and the receptors. And with every stimulation, the acetylcholine comes down and it binds to the terminal membrane here. And you're going to see the proteins here and here interact and act like Velcro to bring that vesicle in contact with the nerve terminal membrane. And this is called the snare complex. And as a consequence of that interaction, there's fusion here between the vesicle and the terminal membrane and a release of acetylcholine to interact with the receptor. That process goes on in every single nerve that you have. It's a universal process. As a consequence to that release, you get muscle contraction. That's what you see in skeletal muscle nerves, and you see a similar process going on in sensory nerves too.

Now as you know, BOTOX is a complex. It's protected by its accessory proteins, and it's nestled here in the middle of the complexing proteins. And here in the middle, you've got your 150 [indiscernible] neurotoxin, which then after it's injected is released from that complex and interacts with a nerve terminal.

You've got your receptors here and it binds by that heavy chain, it's very specific, and that binding facilitates the rest of the toxin going into the nerve terminal, which you see here. And it goes into what we call an endosome. Now remember I told you the translocation domain facilitates the release of the light chain, which you see here, and this is the same process that goes on in pain sensory nerves in relevance to the new platform.

What that light chain does is it cleaves [indiscernible], so it cleaves to one specific protein. And as a consequence of that, in a very simplistic way, those vesicles inside containing the neurotransmitters cannot fuse with the membrane and you block the release of the neurochemical. And that's what we do with BOTOX. And that's what we do with tendrobotase [ph] and our targeted exocytosis modulator platform. Slide again, please.

So to orient you, we've got skeletal muscle or just muscle here, gland and skin with pain sensory fibers, so we have a motor nerve, we have a gland nerve, and we have pain sensory nerves. Now, when you inject BOTOX, it binds to the motor nerves and that's relevant to our indication that our skeletal muscles or smooth muscles such as [indiscernible] spasticity, the cosmetic indication, cervical dystonia and overactive bladder.

For the gland nerves, when it binds, that's relevant for axillary hyperhidrosis. And for the pain nerve binding, that's relevant to our indication of chronic migraine. Now what we've been successful in doing is reengineering the toxin. What we've done in our laboratories is develop a protein now which instead of having all of these features here, we've developed a protein that has -- is missing the original BOTOX-binding domain and we put a new binding peptide on here.

Now it's stylized for the purposes of this talk because the exact peptide and the exact location is considered proprietary. But because we've changed now that binding domain, when you inject it, it does not bind to motor nerves, it does not bind to gland nerves but it is target specifically for the pain fibers. And since it's targeted for those pain fibers, you don't get any motor effects that enables you to go to higher doses, which should give you greater efficacy and longer duration of action.

Now as I said to you, our initial indication here is neuropathic pain, we've targeted for the pain nerves. And in general, there are 2 types of pain. There's nociceptive pain and there's neuropathic pain. Nociceptive pain is a typical stimulation of a sensory nerve that gives you that quick withdrawal, such as the ouch response. And you see that with thermal stimulation such as hot or if you get a pinprick.

With neuropathic pain, there's a primary change, a fundamental change in the sensory nerve. And as a consequence of that, you get a burning or stabbing sensation. And that can occur with either a metabolic or a physical injury. So examples of that are diabetic neuropathy where the metabolic abnormality is hypoglycemia, elevated glucose. You can see it in postherpetic neuralgia where someone has had a herpes zoster infection, drug-induced neuropathy, cancer-related neuropathy, trigeminal neuralgia, where indeed there's an injury at the base of the skull where the trigeminal nerve comes out and also postoperative neuropathy, and those are few examples of things that you may have heard of.

This market is very attractive to Allergan. If you look at U.S. and Europe, it's about, in 2010 estimate, it's about $2.5 billion to $4 billion. The neuropathic pain population is about 16 million people, about 9 million seek treatment, about 5 million are diagnosed, about 2.4 million are ultimately treated but because of the inadequate response to therapy or intolerable side effects, many of these patients, about 1.2 million, ultimately fail therapy.

The therapies available to these individuals are typically starting with orals such as opiate narcotics, which can be addictive, and then there's the re-purposing of the anticonvulsants and antidepressants. Because of these are all therapies, they can have central nervous system side effects such as drowsiness, dizziness, somnolence and depression. Topical therapies you're familiar with are things like lidocaine and capsaicin. And in general, because of either intolerable side effects or lack of efficacy, the treatment compliance is quite poor.

So when we look at the tendrobotase [ph] attributes, they're very appealing. What we would anticipate is, as we know, we've designed it to be a locally administered drug for pain. And because of its exclusive targeting, you would not have any muscle affect. We'd expect this to be well tolerated and it should have a long duration of action. Remember, it's a light chain of BOTOX, which you know in all of our indication has a 3 or greater month duration of action and it should have no addiction potential. That should translate into improved pain relief and better compliance.

Why is it a good fit for Allergan? It's locally administered, it's an office-based, specially administered procedure and it's a novel patented technology.

So based upon our knowledge of the mechanism of action and our knowledge about how BOTOX works, we've gone into a Phase I program. Now first of all, we've done all the work and all the manufacturing is done in our biologic facilities. In Phase I we've exposed 398 patients, and we've been able to go up to over 1,000x dose of BOTOX on a mass basis, so it's very well tolerated. And even at those higher doses, we've had no muscle effects, and that's what we expected from the profile and how we engineered the product; well tolerated, no dose-limiting toxicities.

And then we begin to look in the Phase I program to see if there's any signal of efficacy. And we look for that in what's called the capsaicin model. Now the capsaicin model is a typical model that's used in drug development when you're evaluating pain compound. And what it is, is that when you inject into a part of the body, typically a forearm, you get a burning sensation afterwards and that's called alloydinia. Now most of you know what alloydinia is without knowing the name because it's like a sunburn. If you normally stroke a body part or your skin, there's no pain. But after a day of a sunburn, when you stroke it, it can be very painful and if it's on your legs and you lay in bed and the sheets go over your legs, that could be very painful, that's alloydinia. It's pain to what normally would not be a noxious stimulus.

Now when we conduct a study, it's double blind, placebo-controlled. You inject tendrobotase [ph] in one forearm and placebo in the other. And then 9 days later, we come back with 10 micrograms of capsaicin in both arms. And then you evaluate the pain response in the area of alloydinia. And what you see here is a dose-dependent decrease in pain, as we increase the dose, we had a decrease in the pain response. Now that was very encouraging to us, so with the Phase I program, the ability to go to higher doses without muscle effects and a very good tolerability profile, we on to Phase II.

And in this program, we are treating patients with postherpetic neuralgia. It's a double blind, placebo-controlled study where we stratified patients by they are either taking concomitant meds or not concomitant pain meds and by the area of pain. It's a dose escalation program with 4 doses planned. We inject locally into the area of pain, and we're evaluating the patients by the visual analogue scale, which most of you know is a typical rating scale that we use in clinical studies and in private practice.

And we've done 2 -- in the program, which is 2 treatment cycles, we have data today for the first treatment cycle. At the 2 lower doses, we've exposed 292 patients, of which 158 have no concomitant pain. I'm sorry, no concomitant pain medication. Now first of all, it's been shown to be safe and well tolerated, so that's very encouraging.

Now I'm going to show you 2 sets of slides. On the left panel is the intent-to-treat population, and on the right panel are those patients who care not taking concomitant pain medication. And what you see in the weekly average pain intensity score, you see a slight separation from placebo in the overall population. But when you look at the population that's not taking concomitant medication, you see a larger separation from placebo and some statistical significance on the peer-wise comparison.

Now we also look at the population of patients that have at least a 50% response. So these are patients who have at least a 50% reduction from baseline in pain, and we looked at the percent of responders. And so you can see in this population again some separation from placebo, and in the population that's taking no concomitant pain medication, a greater separation from placebo. Now we've seen this at the 2 lowest doses and we found this very encouraging.

Based upon this data, the safety data in Phase I, safety and early Phase II signals of efficacy and our early Phase II program in the dose escalation program, we are now moving on to 2 higher doses and hopefully, we'll continue to see in the same findings with a greater effect. If we do, we're going to move this into advanced development, either into postherpetic neuralgia or another neuropathic pain indication.

So what we've shown you today is tendrobotase [ph], which is the first-in-class customized recombinant protein. We have, at our will, targeted it to sensory fibers and it disrupts pain signaling. If you look at the whole platform, what you see is that it has the potential to target specific cell types that we choose to do in the laboratory. And therefore it disrupts cellular function and treat new diseases. We've shown you some of our work in pain. As Scott mentioned, we have worked in urology also with idiopathic overactive bladder. We can target it to cells that produce inflammation or even cancer cells to disrupt cancer cell function and see what happens with those patients, too.

Our goal here is to deliver to patients drugs that are effective, to provide them to the physicians and to provide value to Allergan. With working with BOTOX for over 20 years, we took on that responsibility. And with those ideas and that focus, we'll move forward with the tendrobotase [ph] and the targeted exocytosis modulator platform.

So I think we now have question and answer?

Catherine J. Arnold - Crédit Suisse AG, Research Division

Catherine Arnold from Credit Suisse. Wonder if can you talk a bit just to clarify on the tendrobotase [ph] work with PHN [ph], when you talk about concomitant medication, just to be clear, that's both once daily and the rest few medications in terms of pain, and could you just give us a little bit more color on that definition? And then secondly, on manufacturing of the targeted toxin, could you talk about what the differences are in terms of capabilities that you might have today, what you might need to build, what type of investment it might require in the good situation that it's all successful?

Scott M. Whitcup

I'll have Mitchell to talk a little bit about what the concomitant pain meds are and then I'll talk about the second question.

Mitchell Brin

So the concomitant pain medications are the usual chronic medications that patients would take and those were not permitted in the study.

Scott M. Whitcup

So there were both people coming in on medications. Clearly, if someone needs an escape medication, ethically you have to allow it. But the definition here were people who came in on other pain medications. And typical in our early-stage program, we allow everyone in. If you just want to see how it reacts in both populations, but clearly, in the patients without concomitant pain medications, you get a clear signal. On the manufacturing, yes, it's clearly different from the manufacturing for BOTOX but for propriety reasons, we haven't really disclosed exactly what we need to do or investment at this time.

Unknown Analyst

Two questions about the TM [ph] program. First, when you look at the duration effect, can you correlate it to the duration of the [indiscernible] snare disabling within the system? And so I think if you have a correlation of the molecular biology corresponds to the effect you're seeing in patients? And second, the issue of area diffusion, my assumption is you don't have the full complex protein here. Do we see more diffusion for those molecules and how targeted can you make these at?

Scott M. Whitcup

So maybe I'll start and then ask Mitchell to amplify. In terms of the area of diffusion, it's early days in trying to assess that clinically in patients. Since this is specifically targeted to the pain nerves, it's potentially less of an issue to worry about diffusion, but it's something that we're looking into. And maybe I'll have Mitchell comment a little bit on the biology of effect on the snare complex and duration.

Mitchell Brin

Right. So the biology is the same. We’ve studied then preclinical models and in the laboratory, the biology is the same from the standpoint that's once it's in the cell, it's the same light chain that cleaves, the snare complex is now 25, and it has the same duration of effect in those cells.

Scott M. Whitcup

The one potential is that we know from studies if you give more BOTOX, you can prolong duration. We're limited based on safety to how much you want to give for the various indications here. We can go much longer. So the question will be how much different in efficacy can you get by pushing the dose and we'll see that in the trial.

Unknown Analyst


Scott M. Whitcup

We probably won't have data until end of, probably end of next year.

Seamus Fernandez - Leerink Swann LLC, Research Division

Seamus Fernandez at Leerink Swann. Can you just help us understand with the OA treatment opportunity with BOTOX as it stands right now, was there any evidence of muscle laxity in some of those other studies, because I could see that as a particular risk. You're injecting an elderly patient or an older patient as a potential side effect.

Scott M. Whitcup

So the studies that have been done to date are fairly small. Maybe Mitchell can comment, I don't recall seeing dose-limiting muscle side effects that were shown. It's clearly something that we'll look at.

Mitchell Brin

Sure. The very interesting thing about treating smooth muscle disorders is that when you treat them, you do not get at least histologically atrophy, you don't see that. And that's why biopsies in humans, both treatment and neurogenic and in the laboratory.

Scott M. Whitcup

But it does raise an interesting possibility. I mean, one of the reasons why we're excited about tendrobotase [ph] is as we get into some of these pain indications, and osteoarthritis is pain, we may in fact, if the BOTOX data are positive and our osteoarthritis pain, one possibility would be to actually go into Phase III with tendrobotase [ph] and not with BOTOX. So these are all permutations that we're working with.

John T. Boris - Citigroup Inc, Research Division

John Boris with Citi. You certainly indicated that you give up to 1,000x, when you tested this extended-release version in animal models. Can you just give some commentary around the effective dose, therapeutic dose and lethal dose that you found and how that correlates into humans in terms of the types of adverse events that you might see? How did you select the doses for the next phase because it seems as though with a wide therapeutic window, how do you know you've got the right doses? And the third question is just on IP, can you just give some could commentary on...

Scott M. Whitcup

So maybe I'll just -- because this is targeted to the pain nerves, we were challenged to find any dose-limiting toxicity in our preclinical trials. And since animal models, especially in pain tend to give you an overall prediction of what to see until you get into patients that are I've said many times that humans are my favorite animal model to predict what you're going to see in patients, so our goal was to get this into the clinic as soon as possible. And so the plan is get it in, do dose escalation and monitor safety and efficacy carefully and we'll pick the dose based on where we think we're seeing ideal efficacy.

Mitchell Brin

The 1,000x dosing was in our Phase I study, okay, so we've already shown that on a mass basis, we can get higher levels.

Scott M. Whitcup

In terms of the IP, clearly this is recombinant technology. These are what we consider new biologics. We don't comment specifically on individual patents, but as a brand new technology, there'll be multiple patents filed around that.

David Risinger - Morgan Stanley, Research Division

Dave Risinger from Morgan Stanley. So 2 questions, first for postherpetic neuralgia, could you just talk about where the injection sites are and how you define them in a clinical trial, just given that patients are probably experiencing a variety of different types of pain? And then second, could you just provide a little bit more clarity on the development time line? I guess I just want to understand, are you basically saying that you'll have clarity in 2013 on moving into Phase III for both indications for pain?

Scott M. Whitcup

So in terms of the time lines, it all depends on the data. We'll be very data-driven so depending on what the 2 next doses look like, we might decide if we go into Phase III and PHN [ph] and those 2 high doses give us clear efficacy, that could occur quite rapidly. If we decide to go into a pain -- another pain indication, we might want one other Phase IIb study. So we can't really give you specific commentary on exact timing until we get the rest of the data and then I forgot what the other question was.

David Risinger - Morgan Stanley, Research Division

Yes. So just to follow-up on that, so you're going to be getting the data on the 2 higher doses when?

Scott M. Whitcup

Probably end of next year.

David Risinger - Morgan Stanley, Research Division

Why is that? Why does it take so long? And I would think that pain studies are relatively short.

Scott M. Whitcup

They're not that short to recruit and analyze the data and again, since the drug lasts a long time, you have to inject, you have to follow-on through the full cycle. FDA tends to want 2 cycles worth of injections, so these trials take a fair bit of time.

David Risinger - Morgan Stanley, Research Division

Yes. The other question I should probably get off-line. I'm just curious about the injection sites. With BOTOX for migraine, there's a map. It's 31 injections, but I would imagine that for postherpetic neuralgia, it could be in a variety of locations or a variety of injections. So how do you standardize that in the trial?

Scott M. Whitcup

So I think that's part of the learning, that's part of the assessment in Phase II is where you inject what area of pain relief are you getting. That will help us tailor the injection paradigm and you really want to clarify that in Phase II to take into Phase III. And we interact with the clinicians and do the assessment to see exactly how many injections we want to give.

With that, I think Jim is telling me it's time for break. So we have one more question. Oh, Eric. Ophthalmology, how can I forget ophthalmology? So Eric is going to talk to you about the glaucoma franchise and talk to you about a couple of great opportunities for treating intraocular pressure.

Unknown Executive

Thank you very much, Scott, and good afternoon, ladies and gentlemen. So my name is Eric Carter [ph]. I'm the Chief Medical Officer at Allergan and I also head the Global Drug Development and this afternoon in my presentation, I'm going to build on Dr. Whitcup's remarks and describe to you our research and development strategy in glaucoma. This remains an area of great interest for Allergan and of significant investments.

So in a nutshell, despite the availability of efficacious therapies, we recognize that significant unmet medical needs continue to exist around a desire to further reduce intraocular pressure, to encourage better treatment compliance and to ensure that these treatments are well tolerated. And to this end, I will describe our novel, sustained-release technology, which we believe, and we use this term now a lot, but we really do believe that this represents a disruptive technology in the true sense of the term. I'll also provide you with some insights on our development efforts towards more efficacious, second line, adjunctive agents when a first-line therapy is no longer adequate. And I'll mention our preservative-free line extensions that are directed at patients that require better tolerability.

I think it's appropriate at this point to remind ourselves that glaucoma is truly a global epidemic. And this is borne out by statistics that are, quite frankly, staggering. More than 60 million people are impacted around the world, and of these, 2.2 million are in the U.S. And worldwide, glaucoma is the leading cause of irreversible blindness.

Obvious to all is the fact that loss of vision has a profound impact on the ability to carry out mundane daily activities and therefore significantly decreases a person's quality of life. And naturally, this comes at a great cost, not just to the individual person, but also to society as a whole.

This is a growing epidemic. It's been estimated that by 2020, 80 million people worldwide will be afflicted with glaucoma as the population ages and as better therapeutic modalities become available.

It's now world recognized that efficacious control of IOP preserves a future of visual function. And this has been eloquently argued by Dr. Anders Hale [ph] in a recent editorial based on the review of a large amount of clinical data. And this fundamental principle is represented on this visual function age diagram.

The bottom line is that over time, reducing IOP -- oops, I beg your pardon, let me go back here. Let me go back -- go forward here. Got it. The bottom line is that reducing IOP by even a relatively modest 2 millimeters of pressure over time equates to approximately a 30% slower progression in the loss of visual function. So effective therapy can protect patients from becoming blind and there really is no more compelling evidence for ensuring that efficacious treatments are both utilized and reimbursed.

So we recognize that the glaucoma market is substantial, it's growing and it remains strong. As you've seen, 2 clear segments exist today. Prostaglandin agonists primarily used as first-line treatment and include LUMIGAN as well as Xalatan and Travatan. But often, second line treatments are needed to achieve IOP targets. And today, this represents a little more than half of the market opportunity. Allergan offers 2 agonists: ALPHAGAN P is safe, effective and frequently prescribed. Other treatment options include topical beta-blockers and carbonic anhydrase inhibitors.

So at Allergan, our defined and deliberate strategy is to focus on providing greater IOP reduction, driving better patient compliance or adherence to therapy, and through preservative-free options providing better patient tolerability and we're investing a substantial amount of our R&D resources here. We remain committed to this high-priority area.

Our sustained-release platform is truly innovative, and I'll describe the status of the bimatoprost sustained-release opportunity, which is our development leader and a first-in-class opportunity. We also have novel alpha-2 agonists that have the potential to be best in class as adjunctive therapies.

So we're convinced that novel drug delivery options represent an important new horizon or new frontier in IOP lowering drug therapies, and this is why we refer to it as disruptive technology.

Delivering efficacious drugs in sustained-release forms directly at their sight of action provides many benefits. From the perspective of efficacy, our ocular delivery approach takes the limitation of patient's adherence to recommended therapy after the equation. And it allows a predictable and favorable pharmacologic profile. Localized therapy decreases overall systemic drug exposure and off-target effects and that technology obviates the need for preservatives.

A major advantage is that this ocular treatment has the potential to be administered 2 to 3 times a year rather than 1 to 3 times a day. Because the drug delivery system is biodegradable, there's no need for removal. And importantly, administration can take place in the physician's office.

Dr. Whitcup showed you a version of this photograph. Being able to deliver appropriate levels of bimatoprost in a consistent and predictable manner for 3 to 4 months via this tiny implant is certainly innovative and carries great promise. We're particularly excited with the potential that this adaptable technology may have with other treatment options, while we're using bimatoprost as our lead compound. Prostaglandin analogues are the most efficacious class of topical IOP lowering medications.

And shown in this diagram is a result of a meta-analysis of 5 recently concluded clinical trials that compared the IOP lowering of LUMIGAN versus Xalatan. This is a summary statistic and shows that overall, LUMIGAN was associated with better IOP lowering than Xalatan. So bimatoprost sustained-release was an obvious choice for lead compound.

So bimatoprost sustained-release has the potential of being first-in-class therapy for glaucoma. And as I mentioned, the drug delivery system has been engineered to provide sustained medicines over 3 to 6 months. So I'll now show you some preclinical and some early clinical data which are very encouraging. Advancing the development of this asset as quickly as possible to a regulatory submission is a high-priority objective for us in Allergan clinical development.

So let me show you some data. This slide shows data from 2 studies in normotensive dogs. Study 1 on the left was a dose-ranging study where 3 doses of bimatoprost sustained-release implant lowered IOP over a 3-month period in a dose-dependent manner. This compared favorably with historical control seen here on the right, showing a similar drop in IOP when LUMIGAN drops were applied to the eye every day for 3 months.

Preliminary results from an ongoing Phase I and Phase II dose escalation clinical trial in subjects with glaucoma and ocular hypertension as shown here. Patients received the bimatoprost sustained-release implant in 1 eye and this was compared to LUMIGAN daily drops in the fellow or the other eye. The graph that you see here are for the low-dose bimatoprost sustained-release implant, shown here in blue, and the corresponding LUMIGAN drops data shown here in purple. And the numbers in parentheses represent the number of subjects at each particular time point over a 6-month period.

So these preliminary results in a small number of subjects demonstrate that both treatments decrease IOP appreciably from baseline and for about 4 months before we see the curve starting to separate.

Here, I've added the corresponding late-breaking data we have from the first 2 patients treated with the middle dose bimatoprost sustained-release implant, again compared to the LUMIGAN daily drops. And so far, we have data for 12 weeks. These are very preliminary, but are also moving in the right direction. And importantly, there have been no notable adverse events.

In these early data, we're seeing evidence of sustained efficacy coupled with good tolerability. And we continue to enroll the middle dose cohort. And assuming all goes well, this study will complete once we've investigated the highest dose. And our goal is to show greater IOP lowering than LUMIGAN 0.03, and sustained effect of 3 to 4 months with acceptable safety and tolerability.

This approach to drug delivery is adaptable and scalable. In glaucoma, we can readily test new molecules within essentially all relevant drug classes as topical formulations that show safety and efficacy before adopting the successful compounds of the sustained-release technology implants and then confirming their safety and efficacy in patients in clinical trials.

Indeed, once the bimatoprost sustained-release trial completes, we intend to bring the P agonists into our sustained-release platform to evaluate their safety and efficacy. And this approach will be followed by other compounds as appropriate.

The second component of our R&D strategy in glaucoma addresses the second major market segment, that of adjunctive therapy. And as I've mentioned, IOP control often requires a second agent from a different class with a complementary mechanism of action.

As you know, our ALPHAGAN P and COMBIGAN medicines use the alpha-2 agonist brimonidine as the key active ingredient. And ALPHAGAN has shown itself in clinical practice to be efficacious and safe and is widely prescribed. However, we do recognize some limitations, namely ocular hyperemia and pruritus reported by some patients and the need for 3 times a day dosing. We can improve on this by leveraging our know-how in this area.

Increasingly, it's becoming recognized that brimonidine may have beneficial effects on the eye beyond simply lowering IOP. And indeed data are being published, as shown in this example, that demonstrates the potential of brimonidine to decrease the loss of visual fields over time when compared to the beta-blocker atenolol, shown here on this graph. And this occurred in a setting where IOP lowering was equivalent between the 2 compounds.

These data are very intriguing, and so it very much behooves us to continue to pursue additional research on alpha-2 agonists. And indeed our scientists have screened more than half a million molecules and put these through a comprehensive candidate selection process, as depicted on this cartoon. We've targeted compounds with better IOP lowering properties, less frequent administration and better tolerability. Through this process, we've identified 5 lead compounds and selected 1 lead clinical candidate and a backup.

This graph shows promising data from a rabbit model of glaucoma comparing the lead candidate, as shown here in blue on the lower graph, compared to ALPHAGAN P. These data demonstrate that the novel candidates can potentially achieve longer IOP lowering than ALPHAGAN, and we anticipate initiating a Phase I -- Phase II clinical trial with our lead candidate later this year and with a backup molecule in 2013.

So in summary, ladies and gentlemen, we have a robust pipeline in glaucoma, which is well aligned with our strategy. In our bimatoprost sustained-release drug delivery system, we have a first in class candidate with the potential to drive lower IOP, better adherence to treatments and since it's preservative-free, better overall tolerability. The promise is evident, and we're in the process of collecting the proof.

In adjunctive therapy, our novel alpha-2 agonists have the potential to be best in class in lowering IOP, requiring less frequent administration and having better tolerability. We expect to initiate our first clinical trial this year. And as discussed in my presentation are our development efforts that we anticipate will lead to perseverative-free options to LUMIGAN 0.03 and GANFORT in Europe. And Dr. Whitcup showed this earlier in this pipeline chart with anticipated approvals in 2013. Thank you.

Unknown Executive

We have 10 minutes for some questions, starting off the top.

David G. Buck - The Buckingham Research Group Incorporated

It's David Buck from Buckingham Research. Can you talk a little bit about your thoughts on, I guess, the time line for sustained-release bimatoprost in a world where you may be seeing post exclusivity loss for the LUMIGAN 0.03 and talk a little bit about maybe thoughts on reimbursement of the procedure itself and pricing options, et cetera, versus what's going to be a generic first-line prostaglandin?

Unknown Executive

I'll let Eric talk a second on the timing of the sustained-release. The first piece of the LUMIGAN puzzle is getting 0.01 approved. And I think people see the benefit of equivalent IOP lowering but much better tolerability, the hyperemia in 0.01 is about half of what you see with 0.03 and so we've seen very good acceptance of 0.01. So the key is really to get that message out, get those data to the ophthalmologists, and that's really our main protection of LUMIGAN franchise. People see that this is a much better candidate, just like ALPHAGAN P, which uses a much better treatment candidate than the original ALPHAGAN. On the timing, I'll let Eric comment.

Unknown Executive

On the bimatoprost sustained-release, so we anticipate to complete collection of the data that underpins the primary efficacy measure, IOP lowering in 2013 and then complete the study probably in early 2014.

Christopher Schott - JP Morgan Chase & Co, Research Division

Chris Schott of JPMorgan. On the sustained-release product, can you just elaborate a little bit more in the manufacturing challenges and how are your capabilities there? And then a second question, on that product you mentioned the ability, the dosing issue here and you were hoping for superiority, if you had a product that was just non-inferior. Is that a commercially successful product in your view, or do you really need to see superiority for that profile door?

Unknown Executive

From the manufacturing side, I think we are well underway to get there. David Pyott and I view this as actually a benefit because we will have, in addition to proprietary IP around a sustained-release, the manufacturing piece is just as important down the line. And so clearly, we've been able to manufacture these for our clinical trials and we're in the process of gearing them up for commercial launch. And you're absolutely right to your second part of that, if you had something that was not inferior to what's viewed as the most effective medication out there already, I think that will be extremely commercially viable. If we're better than, it's icing on the cake. That's our goal. But to be honest, if we're not inferior to LUMIGAN but had 100% compliance in an office-based procedure, or physicians are reimbursed, I think it will be a very commercially successful product. I think we have Greg and then Johnny.

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Greg Gilbert from BofA Merrill. I was hoping you could describe the practical aspects of sustained-release mode of delivery, how cumbersome, how painful, et cetera? And than maybe a blast from the past on the iris discoloration inherent in this molecule and I think the class -- have you looked at trying to decouple those effects?

Unknown Executive

So in terms of the procedure, our goal is to have this office-based, take under 5 minutes, being a very tolerable, no noticeable side effect procedure. In terms of the iris discoloration, again, if anything, we're delivering lower amounts in a more sustained fashion. You could even think the side effects will be less than the drop. But again, the iris discoloration with LUMIGAN was extremely rare in our clinical trials. So that really hasn't been a rave limiting side effect. Johnny?

Unknown Analyst

Two questions. First, you have not mentioned the topical formulation of 669 and 961. Are we to understand that those programs which you took to the end of Phase II are not going to proceed forward? And second, about the localized delivery, my understanding is that at least with the ultra [ph] drops platform so far, the injector or primary retinal specialists and given that the triggers of glaucoma primarily the general ophthalmologists, are you expecting a much broader use of localized office-based injection into the eyeball for this particular procedure?

Unknown Executive

So 2 great questions. On the EP story, when we started that program, the goal is to see how those drops did in comparison to LUMIGAN. As we looked at the data, knowing that this is becoming a generic market, we had a very high bar for what a drop would need to be to take it into the clinic. Given the advances we've made in the sustained-release technology, rather than try to develop another drop that competes with the PG analogue, we've shifted our efforts to sustained release. So the EP's are still there. Those studies were valuable because the goal now will be to see what are the best follow-on candidates to bimatoprost in that platform. So the next sustained-release into the clinic might be an alpha agonist, might be an EP, we're working on that. But you can assume that the delta wasn't big enough for us to put our R&D dollars there; it just made more sense to put them in here. The difference is night and day between the injector for OZURDEX and for bimatoprost SR [ph]. It's so small that we're going to be able to deliver this through a very small needle. So it will open up, just to be delivered by glaucoma specialists, general ophthalmologists. This will be a dramatically easier procedure than the retinal injection. A couple of questions from the middle?

Douglas D. Tsao - Barclays Capital, Research Division

Doug Tsao with Barclays. Just on the sustained-release products, what's the frequency of treatment that a patient will need to have an implant done?

Unknown Executive

So as Dr. Carter said, our initial data already show that we're getting efficacy in the 3- to 4-month range. We think depending on the dose, it'll probably -- if I had to estimate, somewhere between 4 to 6 months with the first-generation technology.

Are there questions in the middle? Coming in from the other side?

Unknown Analyst

Just one quick question. Is the sustained-release device going to be injected intracamerally in the anterior chamber, or is that going to be an intravitreal injection?

Unknown Executive

So we're actually looking at a number of locations, front of the eye, back of the eye, around the eye as part of the program and by Phase III, we'll decide exactly where it goes. Going back in the middle.

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

Annabel Samimy with Stifel, Nicolaus. In terms of targeting the ideal patient population, is this something that you think will go out broadly to most glaucoma patients? Are you seeing an ideal patient population first and then potentially broadening out further?

Unknown Executive

I think your second scenario is probably what will happen as glaucoma specialists and some of the general ophthalmologists get experience with the technology. They'll start it probably at the more severe end of patients, patients who may be already potentially losing visual field. But given that compliance is such a big issue and especially if the higher dose, as Dr. Carter said, actually lowers pressure greater than you can get with a drop, then we think that the patient population will expand.

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

And in terms of reimbursement to that more expanded population, is there going to be any pushback if these patients are well served?

Unknown Executive

I think reimbursements all depend on us gathering the right clinical outcomes data to show that you're saving vision. And we've got a great group that understands glaucoma well. And so we will make the argument that by treating these patients, you're going to save money in the long run. And we're already working on starting together those data. I think we have time for one more question before break.

David Amsellem - Piper Jaffray Companies, Research Division

David Amsellem at Piper Jaffray. Question on the alpha agonist programs, the next-gen program, what do you need to see for it to be commercially viable? Is it superiority to the current products? Is it some tolerability improvement? Is it a mix of both? Just trying to understand what your end game is on those.

Unknown Executive

So I think -- we have a couple of opportunities to make it commercially viable. If the IOP lowering is any better and if it's the b.i.d. or less, that's clearly an advantage to existing ALPHAGAN line of products. Tolerability would be a second. With ALPHAGAN P, we're already much more -- we have a lot of improvement with tolerability compared to beta ALPHAGAN but there's still room, as Eric said, in terms of redness and itching. Our goal really is to improve on the tolerability. But in addition, we're really shooting in the preclinical data that Eric presented suggest that we can get better efficacy and prolonged duration. That's really what we're looking for.

So with that now, I guess we do have the break. And then -- 15 minutes, according to Mr. Hindman minus his hair. And we'll come back and we'll do retina, the Aesthetic Derm portfolio and SeriScaffold.


Unknown Executive

That's great. If everyone can sit down and start back up. Part 2, I'd like to re-introduce Dr. Scott Whitcup.

Scott M. Whitcup

So to kick off the second part of this session, I'm going to take you through our retina pipeline. As this slide shows you, this is the global ophthalmology market that we predict between 2011 and 2016. And the one area that we predict will grow the most within ophthalmology is in retina. And so over the last decade, we've really ramped up the focus and the spend of R&D specifically to retina therapy.

Now, if you look at the global retina market today, it's already approaching $4 billion and most of this is anti-VEGF therapy for wet AMD. So you can see that the potential given that there are other major disease categories with no therapy is huge.

Now as I told you before, Allergan has OZURDEX approved, but only for 2 fairly small indications, macular edema associated with retinal vein occlusion and uveitis, which is inflammation in the eye. The big opportunity for OZURDEX is clearly diabetic macular edema, that's in Phase III trial, and we expect data late this year.

What's exciting is that we've added into our pipeline a number of candidates to address the 2 other big disease areas, wet age-related macular degeneration, where there are about 1.2 million U.S. patients affected, and the big unmet need, which is dry age-related macular degeneration. And we have our novel steroid and Novodur brimonidine to address the dry and our DARPin VEGF to hit both DME and wet AMD. And again our novel steroids, in addition to being tested down the line potentially and preventing dry progressing to wet, we also may look at that at diabetic macular edema as well.

So let's start by talking a little bit about diabetic macular edema. Clearly, there's a global diabetes epidemic. 75% of patients with diabetes will develop diabetic retinopathy or retinal disease due to their diabetes and 10% of these will develop pretty severe diabetic macular edema with visual impairment requiring treatment. So that's about half a million in the U.S. And although there are treatments currently available, for example, some of the anti-VEGF are already being used, 50% of patients have suboptimal results over time. So clearly, there's room for improvement in this big diabetic problem of diabetic macular edema.

Now OZURDEX is dexamethasone in our drug delivery system in our Novodur system. It provides sustained medication up to 6 months, administered through a 22-gauge needle. And again we're in Phase III for diabetic macular edema.

In our Phase II program, we have a subset of the patients with diabetic macular edema and did show improvement in visual acuity, 10 letters or 15 or more letters in that subset of patients. And so the DME program is fully enrolled. We expect data this year. We filed an approval in 2014-plus.

The big opportunity beyond diabetic macular edema is age-related macular degeneration. Now there are 2 forms of AMD, the dry or atrophic form, that's the majority of the patients, 85% of macular degeneration patients. It's characterized by these tiny deposits called drusen in the retina and over time, this can progress to large areas of atrophy, where the retina dies and patient loses vision.

In addition to progressing from less severe to more severe dry, these patients can also develop new vessel growth, new vascularization of the retina, known as wet AMD. And these new vessels, the problem is that they are fragile and they can bleed. And you can imagine that the retina, which is like the film in the back of the eye is full of blood, you're not going to see very well. And these patients get a catastrophic, rapid decrease in their visual acuity. Several of the anti-VEGF drugs are approved for this condition. It's really revolutionized the treatment of the wet form of age-related macular degeneration. And although it's been a major advancement, still limitations with this therapy.

And this next slide shows that it's a big problem. Again, 8 million have AMD in the U.S., 200,000 people a year have this diagnosed wet form. And the problem is that 50% of the patients with the wet form, if you don't treat them, will go blind within 2 years. And again, this shows the bleeding in the center of the retina where you have your most acute vision. And this is an ultrasound. This retina should be uniformly thin. And you can see with this blood, it becomes thickened and decreases your vision.

Now although as I said the anti-VEGF therapies like Lucentis, the recently approved Eylea, Macugen or off-label Avastin, the problem is they still require frequent injections. So these are intravitreal needle in the back of the eye injections. And the data shows that if you don't give these drugs regularly, you lose vision. So this needs to be administered regularly to get the vision preservation that you want. And Lucentis, Macugen and Avastin, all monthly injections. Eylea was monthly for the first 3 and then up to every 2 thereafter. But all of these require frequent injections.

So clearly in an elderly population where it's tough to get them to see the retina specialists, there's room for improvement. And that's why although in our wet AMD program we won't be first in class with a wet AMD drug, we wanted to be best in class. And so we in licensed from a company called Molecular Partners what's known as a DARPin. It's a designed, anchor-in repeat protein. It's a biologic that blocks the [indiscernible], isoforms that cause the wet form of age-related macular degeneration. And we're excited about it because it has a small size, it's highly potent, a long half life, high stability and solubility, which makes it amenable to be a drug and a good safety profile and what this translates is if you do pharmacokinetic modeling compared to the drugs that seem to map out to monthly injections, we think with a high-dose of our DARPin anti-VEGF that we can get somewhere between every 3 and 4 months dosing, which would be a major benefit to patients, to physicians and to payers. And again, given that you need to give these injections regularly, what we know is it's very hard for elderly patients to get their monthly injections, so many of them aren't getting the ideal vision preservation that they might if they're getting regular injections. So we see this as a potential big benefit of our anti-VEGF DARPin.

So where are we in the development? We're already in Phase II. These are data from the Phase IIa study that was completed. And again, although these were usual in an early study highly refractory severe patients, we're already seeing these early studies a clinical benefit. So decrease -- and it's measured by decrease in macular sickness. So at our highest dose that we've tested to date, at least 12 weeks of efficacy, so very encouraging. Seems to corroborate what we saw in our pharmacokinetic modeling. We haven't seen dose limiting side effects. And so based on these data, we've gone into a Phase IIb study. This is just the ultrasound picture, again, for one of our patients in the low dose. Here you can see this highly swollen retina and with treatment, you can see by week 1, thinning, decreasing of the swelling in the retina, again lasting out at least to week 12.

We've progressed this into a Phase IIb study. This is randomized. We don't like to call these double-blind studies. In ophthalmology, you tell the patient you're in a double-blind study, they get nervous. So in ophthalmology, you'll figure out, we always call them double masked. We're looking at 2 doses of the anti-VEGF DARPin versus LUCENTIS. We're going to look at safety, efficacy and duration, and this will give us good data to design and plan our Phase III program. And given the big potential market for a best-in-class anti-VEGF, you can imagine this is a key priority for the retina group at Allergan.

Now the atrophic or dry form of AMD is even a bigger problem. Again, 8 million in the U.S. total with AMD. Here, 5 to 6 million affected with dry or atrophic form of AMD. Vision impairment tends to be more gradual but over time, you still lose your central vision. And there are no FDA drugs approved or any consistently used treatment for this form of the disease. And the goals here are really twofold. One, you prevent progression from less severe to more severe form of dry, and also what's known as preventing dry-to-wet. You don't want to develop the new vessel growth into the retina where those vessels can bleed and cause a more acute, sudden loss of vision.

Now in this dry-to-wet paradigm, there are about 200,000 patients a year that go from dry to wet. So we've been thinking what drugs are there that we could develop for this specific, big indication. And science has shown that inflammation is integrally involved in the progression of AMD from the dry form to the wet form. And there are a number of inflammatory mediators. The press has focused a lot on complement, because genetic studies have shown an association with complement biology and age-related macular degeneration but clearly, there are number of other inflammatory mediators involved in the progression of age-related macular degeneration. So obviously, an ideal therapy could block multiple of these inflammatory targets. Because it's preventative therapy, it has to be minimally invasive and locally administered. These are old patients, you don't want to, if you can, submit them to systemic medications, and you wanted to have a long-duration with a good safety profile.

We have taken already into the clinic a novel corticosteroid, AGN208397. It's a highly potent glucocorticoid receptor agonist. It's 200x more potent than dexamethasone, the steroid in OZURDEX. We know that it blocks multiple inflammatory mediators and in our novel formulation has slowed the solution, which means potential for prolonged, sustained efficacy. And because in the blood it's rapidly metabolized, really improves its safety. And unlike OZURDEX, this formulation will be administered through a much smaller needle. We think that we will, by the time we get into late-stage development, have this at least as small as 27, maybe even a 29-or-smaller gauge needle.

It's already been in the clinic. We've examined it in a Phase IIa study in macular edema associated with vein occlusion. All doses that we've tested to date have been well tolerated. No significant ocular or drug-related adverse events. And the data in these refractory macular edema patients again showed at the highest dose that we've seen efficacy out to 6 months, maybe even a bit longer than 6 months. And once we saw these data, it suggests okay, here is a novel corticosteroid, multiple anti-inflammatory targets that we could consider taking in to the macular degeneration indication.

So it's now sitting in a Phase IIb study. This is a randomized, double masked, dose-response study versus our own OZURDEX. Again, as a signal of efficacy, we're going to look at macular edema and retinal vein occlusion. The endpoints here are retinal thickness measured by ultrasound and visual acuity. Based on these data: we'll have a good sense of how safe it is in terms of cataract and pressure increase in the eye; how effective it is in terms of decreasing that edema; and importantly, what its duration is. And again since it's a small needle, if again, it lasts for as long as we think it might, and it is as effective and safe, then this is one that we could dual track in late-stage development both for something like diabetic macular edema, big market, to be our next follow-on for OZURDEX, let go into a brand-new, untapped, totally unmet need which is treating people with advanced dry AMD to prevent them from progressing to wet AMD. Prevention, clearly the best treatment for inhibiting the vision loss that people can get with the new vascular form of the disease.

Now again, it's also important to slow the progression of dry age-related macular degeneration. Many patients have early dry AMD, 5 million to 6 million just in the U.S., and this is a global problem. And you really want to prevent them from progressing where they get large areas where the retina has died and vision won't come back, and so one of the things that we've looked at as remonidine, the same active ingredient as in ALPHAGAN, but in our sustained-release specifically for retinal disease. We talked a little bit about this at the last R&D day, there are number of studies in animal models that showed that remonidine is neuroprotective against retinal injury. In our sustained-release, our initial sustained-release implants that we took into the clinic, the drug release is over 3 months. And so here, we really wanted to release more like 6 months, but we wanted to get it into the clinic early on to see: a, was it safe; and in our early Phase IIa program were there some signs, proof of concept that it might be effective.

These are some data from the animal model. So here's a normal retina. You can see multiple layers of the retina, including photoreceptors and retinal ganglion cells and normal thickness. You then expose these animals to light and the light causes loss of some of the cellular layers in the retina. You can see loss of retinal cells compared to the normal retina. And in a dose-dependent fashion, remonidine protects against this light-induced retinal injury. So we had animal models that suggest that remonidine might be a good candidate to prevent retinal cell death in something like dry, age-related macular degeneration.

So we took this into an early Phase I/II program. This program was predominantly focused on is the remonidine implant safe in these patients with severe retinal diseases? And we did some small studies, again, mostly safety in retinitis pigmentosa; retinal detachment, where the retina comes off at the back of the eye; and optic neuropathy, mostly patients with glaucoma. In these studies, we demonstrated a good safety profile. Given that dry AMD is a big opportunity, we made that study a little bit bigger to see could we see some early signs of efficacy?

So how did we assess the patients with dry, age-related macular degeneration? Well with a number of techniques, you can actually map out the areas of atrophic or dead retina, and you can measure them. And the disease is slowly progressive, but over the period of 6 months to 1 year, you can assess how fast those areas of atrophy are growing. And that's what we did in our study, in our initial study of remonidine in the NOVADUR implant in dry AMD. We also looked at visual acuity, but our focus was did it prevent the progression of the dry macular degeneration? And although this was an exploratory study and small numbers, patients were injected with 2 doses of the brimonidine or sham, you can see its baseline, we measured the areas of atrophy and we know that the implant releases drugs for approximately 3 months, and you can see at the 3 months time point, you did see slower growth in the 2 doses of brimonidine than in sham. At 6 months, now the drug has worn off, the curves come back together. They received a second implant or sham. Again, maybe in the higher dose a little bit more separation than at month 12, but really only the 3-month data do we see a statistically significant separation. But again, a small study.

Our goal now is to reformulate the implant. It doesn't last long enough to make this a commercially viable long-term therapy. We'd like it to last closer to 6 months, so that reformulation is in place. Again, this is a small sign of efficacy. We don't know that it'll be replicated in our Phase IIb study. But given -- the animal data suggests efficacy, and given that this is a huge, unmet medical need, we've moved ahead, finishing up the reformulation and the goal. Once that's done, we should take into the clinic to see if we can replicate the slowing of the progression of dry AMD. If so, this clearly will become a priority for the retina team.

So as you can see, going from just OZURDEX, we've really expanded our opportunities on the retina disease side to the 3 major potential unmet needs in retina: diabetic macular edema with OZURDEX and our anti-VEGF DARPin; wet AMD with our anti-VEGF; and dry with both our novel corticosteroid and potentially with brimonidine and the NOVADUR drug delivery system.

What I'm not talking to you about today is that we have a very active basic science group and currently, 5 novel compounds that we're screening and getting ready for what we call predevelopment animal testing, PK formulation work, and we hope to have a number of these into the clinic over the next 4 years. Again, retina is the biggest opportunity in ophthalmology. And so not only in the clinical side but also on the basic science side, we have a large effort going into both reformulated known compounds and totally novel new chemical entities and biologics for these 3 retinal diseases.

So with that, I'm happy to answer any questions. Greg, the microphone is coming.

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

Gregg Gilbert from BofA Merrill. Can you give us some more color on DARPin? When we will -- could see Phase IIb data? And how soon you could be in Phase III, if all goes well there?

Scott M. Whitcup

So we -- it's clearly our priority within the retina portfolio, because the market's already close to $4 billion, and we know less frequent injections are just a key piece. The IIb program, we'll probably have data early next year. We're actually already initially planning the Phase III program, we'll modify it but we have, I'd say, a very aggressive clinical retina group, and realizing that this is a one of the key priorities in the entire R&D portfolio, I would expect all goes well, we try to get this into Phase III end of next year, if possible.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

Gary Nachman, Susquehanna. Is the steroid for dry AMD, is that the same implant technology as OZURDEX, or is it just an injection?

Scott M. Whitcup

A totally different drug delivery formulation.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

You're not telling...

Scott M. Whitcup

And I'm not telling.

Gary Nachman - Susquehanna Financial Group, LLLP, Research Division

And also are physicians, retina specialists currently using steroids in any form for dry AMD or is it just too difficult because it only works on the surface of the eye or does it get to the back of the eye?

Scott M. Whitcup

Yes. I don't know that none of them are, but it's clearly not a therapy that's being used. A, mostly because steroids don't last long enough and potentially aren't potent enough. So this would be a paradigm shift, but I think we have to show the data first.

Larry Biegelsen - Wells Fargo Securities, LLC, Research Division

Larry Biegelsen, now in Wells Fargo. Scott, similar question to the last one, 397 steroid, anacortate acetate with the steroids, I don't think it works for AMD. What gives you confidence you might have something here? What is the difference?

Scott M. Whitcup

Sure. So anacortate acetate is a very weak corticosteroid, this is a very potent corticosteroid. Anacortate was given on the outside of the eye, so you have a weak steroid on the outside of the eye, but chance of that having an effect, to be honest with you, is near 0. So we're putting it in the eye, and it's probably much greater than 200x more potent than dexamethasone, which was greatly more potent than anacortate. They just had the wrong drug, putting it in the wrong place. The right idea, a big market, but just the wrong drug and the wrong delivery approach, in my view.

Larry Biegelsen - Wells Fargo Securities, LLC, Research Division

Scott, for the steroid, can you talk about the potential for IOP elevation, glaucoma as well as cataract formation?

Scott M. Whitcup

Too early for me to make a lot of comments. Clearly, the early data have been encouraging in the early studies, but the IOP effect and that cataract effect take years to really get a handle on. So early data suggests that we may have something that's better, but that's why we're doing the Phase IIb program so we'll have a much better idea once that's complete, as this is substantially better than something like even OZURDEX. Ronnie?

Unknown Attendee

So I guess part of the logic in the NOVADUR programs are doing several other trials other than dry AMD, did you see if there is some sort of corollary effect about protection in the other model, especially retinitis pigmentosa when you have more of a known progression of the disease, are you seeing delay of progression of the disease in these other models?

Scott M. Whitcup

Well in the animal models that we've looked at and we've done a number of models of retinal injury, remonidine does give you both prevention and delayed progression in those models. The caution is in something like dry AMD, there is no good animal model. And so you're limited by taking preclinical data and hypothesizing what you might see in patients, which is one of the reasons why, although we think we're at the borderline of the right dose, the right duration to get into the clinic, we sort of jumped into the clinic to see, a, was it safe and were we seeing any hints of efficacy? So if we had better models, we probably would've optimized the formulation before we went into the clinic, but there aren't good models. Again, I don't know that these data will be replicated in Phase IIb, but it's such a big unmet need and we did see some separation and there are some support of the animal data. So it makes sense to reformulate and try it and what we might do is throw in our novel steroids and the brimonidine into the same trial compared to sham and get 2 shots on goal with the same trial. One more question. In the back.

Unknown Attendee

Scott, obviously the DARPin molecule here in the Phase IIb, but can you talk about whether commercially you'd need to show the comparator as far as Phase III studies?

Scott M. Whitcup

That's a great question. I think because the standard-of-care is to treat our Phase III as well, we'll probably go against one of the approved anti-VEGF. Most likely LUCENTIS since it's just been out in the market longer, but we haven't made that decision. So that -- actually, you probably couldn't hear the question, would it be a non-inferiority to LUCENTIS. We haven't talked to FDA yet. My prediction would be that it would be a non-maturity study to LUCENTIS with us just being able to dose every 4 months where they would need to be dosed monthly.

All right. With that, we'll move on to our aesthetics and dermatology portfolio and have Dr. Frederick Beddingfield present those data.

Frederick Beddingfield

All right. So we're -- I hope you enjoyed your seventh inning stretch. We're at the home stretch here and they saved the fun stuff for last. I'm Frederick Beddingfield, I'm the global therapeutic area head for dermatology and aesthetics at Allergan, and I'm going to talk to you about our exciting dermatology and aesthetic pipeline.

And basically, David Pyott's really got me busy these days and we have greatly increased the number of projects in dermatology and aesthetics. We're going to talk to you today about some of the late-stage projects that you -- some you may have heard of and some you may not have.

So first off, here are some of the topics for discussion today. BOTOX Cosmetic for crow's feet lines, or smile lines. This will be the first new indication since Allergan brought you the glabellar lines indication, and I'm happy to say that we've been successful in Phase III on prespecified and predetermined endpoints for both the U.S. and EU. We expect submission simultaneously in the U.S. and EU in the second half of 2012, with approvals in either late 2013 or 2014. And of course, such an approval would allow physician training, that's always important, and on-label dosing and certain promotional activities like direct-to-consumer. And we estimate that incremental global peak sales would be in the $100 million-plus range.

Next, we'll talk a little bit about LATISSE and the bimatoprost franchise, and we continue the march towards stamping out global hypotrichosis and the epidemic there. And the eyelash indication is now approved in the U.S. and 14 other countries. Asia-Pacific is particularly important. It seems to be a particularly important potential treatment for Asian patients. And so we're very active there. In addition, we have completed the Phase III program for the European registration. We map all the endpoints, and we submitted that file in 3Q of last year. We've been answering questions from regulators, and we're expecting approval later this year.

We have other things in mind for the bimatoprost molecule, and one of the things that we're starting to understand is that eyelash loss as well as brow loss and hair loss are all part of the aging process. And people do not like that part of the aging process. So we're going to look into brow hair growth with the bimatoprost molecule, and I'll present some data later in the talk on that. That's some new and exciting opportunity. And then of course, the big opportunity is bimatoprost for scalp hair growth. And in this realm, we know that we have a hurdle in that the scalp skin is much thicker than the eyelid skin, and you need to get the active product ingredient down into the hair follicle where it can have an effect. So to that end, we have developed a novel proprietary formulation to drive bimatoprost where it needs to go and I'll tell you more about that.

So for those of you who are here at the last R&D Day, this is a typical Allergan 65-year-old patient. He's using our products. He's using BOTOX for the glabellar lines currently, hopefully crow's feet line in the near future. He's using LATISSE for the eyelashes and hopefully soon for the brow and scalp.

And then JUVÉDERM. I'm sure most of you know about JUVÉDERM. This is the market leader, dermal filler. It's a hyaluronic acid-base filler. The big and new exciting thing in the JUVÉDERM line is VOLUMA. And this currently approved in the EU and Canada, where it's been receiving great success and the doctors are really liking it, and it's under review by the U.S. FDA. It's also a hyaluronic acid-base filler but it's really a game-changer, because the earlier paradigm for wrinkles was really filling lines, and no, it's about volumization, mid-facial volumization. Because the aging process isn't really just about lines forming, but the loss of volume in the face and the chronic effects of gravity, and VOLUMA treats that by enhancing the midface, so we're very excited about that and again, it's under review by the FDA. The Phase III study was successful, it's a hyaluronic acid-base filler, so the safety record should be quite consistent with what we've seen from JUVÉDERM, and that's, in fact, what we've seen with our trials.

And then, you may be aware that last summer we acquired a startup, Vicept, and this was a startup who was developing Oxymetazoline for the treatment of the redness or erythema of rosacea. Now rosacea, as I'm sure you're aware, is a very big market and the biggest unmet medical need within rosacea is really the redness. So there are many products out there right now for the treatment of rosacea, but they primarily treat the papules, the bumps, the pustules that patients get. They really don't treat the redness effectively. If you want the redness treated right now, you go to your dermatologist and you get a pulsed dye laser or an intense pulsed light treatment, your insurance doesn't reimburse that, and it costs you between $800 and $2,000. So there's a big unmet medical need in the treatment of redness.

So what is Oxymetazoline? Well, you're all actually familiar with it. This is the active ingredient in Afrin and Visine. "Visine gets the red out", right? So that's what we're trying to do here with the skin. We have positive Phase II data that was successful from an efficacy and safety standpoint. And we're now -- having met with the FDA, had a successful meeting on endpoints and the pathway forward, we're now optimizing that formulation and moving into late-stage clinical development. Here, you see a patient in our Phase II program that was -- had this erythematous rosacea, and you can see there's really -- this patient isn't bothered by bumps and papules and pustules, it's really the redness that bothers this patient. And after 4 hours after treatment, you can see significant improvement in the redness. So very exciting indeed, and we will be moving into late-stage clinical development.

All right. Let's turn our attention to BOTOX Cosmetic and the exciting crow's feet line indication. So crow's feet line. Crow's feet lines are also called smile lines, these are the lines just on the outside of the eyes. You can see them in this patient right here. And these lines make people feel older and unattractive and unlike the glabellar lines, which are more of a negative emotion, the crow's feet lines are actually associated with smiling, and patients don't like when they look in the mirror, they're smiling and when they smile they look older because of these lines, so they're important to patients. And in regions where we have the indication, such as Canada, they represent about 1/4 of all injections.

So this patient is actually from our clinical trial, and you can see these baseline crow's feet lines when she's smiling, and then with treatment at day 30, you can see they magically have disappeared. She's still smiling. She looks happy, but she doesn't look old. And that results in high patient satisfaction.

So the crow's feet indication number one, would allow differentiation from the other emerging toxins coming on the market. No other toxin has the crow's feet line indication. Physician training, which is obviously important. And on-label treatment, which is important for physicians. And then, promotional activity, such as direct-to-consumer, which would drive patients asking for crow's feet line treatments into the doctors' offices.

So we've completed the Phase III program. It is a large Phase III program, a little over 1,300 patients, and this is on top of several studies in Phase II. The treatment is very simple and effective. Three injections per side, right at the orbital rim here, 4 units per injection or 12 units per side, that means 24 units per patient. So if you think about the current glabellar lines indications, that's 20 units from the glabellar. So if we're talking about on-label injection, if a person was getting the glabellar line treated to 20 units and now they're getting the crow's feet lines added with 24 more units, you have more than doubled the dose for that patient. Again, physicians like on-label dosing. It gives them a level of comfort, and it also allows us to train them. And the data from the trial, so far, has showed wonderful safety, efficacy and satisfaction, very consistent with all the BOTOX Cosmetic trials that we've done so far.

I'd like to show you some of the data. We met all the primary and secondary endpoints. Statistically, significant differences were seen through day 150 on most endpoints, and it was well tolerated with no discontinuations due to adverse events. Now here is data from one of the 3 studies, study 098, and we had actually different endpoints for the FDA and the European Union, and that's not uncommon. The FDA endpoint was the more stringent of the 2. What they required was a responder analysis, BOTOX versus placebo, and let me orient you to this graph.

This is the proportion of responders, in purple is the BOTOX effect and the red is the placebo effect. To be a responder, 2 things had to happen. The doctor had to say you improved 2 grades on a 4-point scale, which is not easy, and the patients had to say that they moved 2 grades on a 4-point scale. If both of those occurred, you're a responder. What does a stringent endpoint does, is it really moves the placebo rate, as you can see, down to effectively almost 0. But you can see dramatic difference in the BOTOX responder rate, with statistically significant differences out today, 120 on this very stringent endpoint and highly statistically significant p values. Peak effect seen at day 14 to 30, but notice even by day 7, you're seeing a statistically significant effect.

Very nice results. Two of the patients from the trial, a grade 2 at baseline and this is at maximum contraction. This is also at maximum contraction at day 30 at grade 0, a very nice effect, very pleasing to the patient.

Now I mentioned the FDA endpoint, but what about a more typically, clinically relevant endpoint that clinicians would see as important? And that would be at least a 1-grade change on the investigators' assessment. And we've shown in our other indications, such as glabellar lines, that if you get a 1-grade change on this 4-point scale, that results in high patient satisfaction. It's the more clinically relevant endpoint. So if you look at this endpoint, what you see is typical responder rates, and this is at maximum smile, in the 85%, 90% range by day 30. Statistically significant differences versus placebo all the way out to day 150 not only at maximum smile, but also at rest. So very impressive results and consistent with what you've come to expect from BOTOX Cosmetic trials.

Safety, basically no surprises here. Almost identical rates of overall adverse events, 39% BOTOX, 33% vehicle. And I've listed all the adverse events that were seen in greater than 1.5% of the subjects and you can see, first off, there aren't that many. Many of these are not treatment related and the rates, generally speaking, are very comparable between the 2 groups. And again, no patient withdrew from the trial due to an adverse event, which I think says a lot.

So again, expected submission in EU and U.S. simultaneously second half of the year; approval late 2013, early 2014; and we talked about all the benefits of getting such a label.

Okay. Moving on to LATISSE and the bimatoprost franchise. So we're continuing to expand LATISSE into new markets, in particular Europe and Asia-Pacific are very important. We have an indication now in the U.S. and 14 countries. The European Phase III data was successful, and that was on a predefined primary endpoint, and we have filed that file in Europe in Q3 2011. Again, we've been responding to questions from the agencies. We expect approval in the latter half of 2012.

Here's a patient from the trial. You can see at baseline, modest eyelashes and after 4 months on LATISSE, and these are exactly the kind of results you've come to expect from LATISSE.

What about regional expansion in Asia? We have approvals now in South Korea, Hong Kong, Taiwan, Singapore and New Zealand. We'll be submitting the file in Australia later this year. In Japan, we have 2 active ongoing trials for this indication. We've met several times with the regulatory agencies, and we are very hopeful about an approval there.

Here is the patient from the Japan trial, again, modest eyelashes to begin with, a nice effect at week 16.

But what about LATISSE brow? Again, this is one of the effects of aging, just like loss of eyelashes. And as you lose the brow and you lose, in particular, the lateral or outer aspect of the brow, and it's not very pleasing to patients and particularly women. So 9 out of 10 women are using some type of eyebrow-grooming product. And when we surveyed our physicians who are prescribing or dispensing LATISSE, they tell us that they believe half or more of their subjects would be more interested in using LATISSE or a product such as LATISSE for the brow if it has good efficacy and safety.

So do we have reason to believe it works? Well, we do. Certainly, there's anecdotal evidence that it works, but there's also an ongoing trial. This is an investigator-initiated trial by Dr. Kenneth Beer in West Palm Beach, Florida, and he's done a study of 20 subjects using LATISSE or vehicle. At month 5, half the patients are switched over to LATISSE, and then the total treatment duration was 9 months. And here's one photo from that trial. And you can see, brow growth at the baseline, and then 2 different time points during the trial. And at the end of the study period, 9 months, you can see significant eyebrow growth. Now again the data are not out. We expect them to come out in the first half of this year. They may not be publicly available in that time frame, but that trial will be complete by that time frame, and shortly thereafter, we should be able to see those results.

In the meantime, we are actually planning our own Phase II trial to begin in the second half of the year. And we plan to use the same formulation, same concentration as LATISSE for this indication where penetration is not going to be a difficult problem for the LATISSE formulation, and we believe it will penetrate adequately into the brow skin and into the brow hair.

Okay, what about the big opportunity, Bimatoprost for scalp hair growth? A big opportunity for men and very importantly for women. So in the U.S., approximately 56 million people suffer from hair loss and they spend a lot of money on hair loss, $3.5 billion and if much of this money is spent on products that really do not work very well, most of these are non-pharmaceutical products with little, if any, scientific merit. By the age of 50, 85% of men have significantly thinning hair. I probably don't need to tell the men in the audience that this is true. Less recognized, however, is the fact that women also suffer from alopecia. And when they do have alopecia, it is particularly psychologically traumatizing to them, because alopecia in women and even just thinning hair is not as well accepted in women as it is in men. And I can tell you as a dermatologist, when you see a patient coming into the clinic with this chief complaint, and it's a female with hair loss, you can just tell the nursing staff you're going to be in there 2x to 3x as long as usual, because you're going to have to do a lot of handholding, and you have to explain to them that there are limitations of what we can do right now.

So what about the pharmaceutical market for hair loss? So the current products are clearly not meeting the needs of patients and yet the sales are quite high, which tells you the level of unmet need and the desire of patients for an adequate treatment. About $1 billion in currently marketed pharmaceutical hair products, about 1/2 of that or more is from the U.S., Japan is another large market. And the currently products have either limitations on the efficacy or safety side or both. So the only approved topical is minoxidil, true for both men and women, but in women a lower concentration. And that lower concentration in women is widely seen as not that effective. There are also other problems with minoxidil in terms of compliance and patients not necessarily liking the formulation. However, in well-done studies, minoxidil does grow hair. Finasteride, only available for men because of the problem with pregnancy. And actually in postmenopausal women studies, they're not shown that it worked. And it has some unpleasant side effects for men that when men hear about them at the doctor's office, the men choose not to use the product. So those are the 2 options and they're still not meeting the unmet need and yet $1 billion in sales.

So is there good reason to think that bimatoprost might work for scalp hair growth? And there is. So what happens in androgenic alopecia in men and women is that the hairs begin to have a progressively shortened growth phase. The growth phase of hair cycle is called the anagen phase. As that anagen phase shortens, the hair becomes miniaturized and smaller; they become less full of color and pigmentation and wispy and less noticeable.

So what does bimatoprost do mechanistically to the hair growth cycle? Well, it increases the anagen or growth phase. Not only does it increase the duration of the anagen phase but it increases the percentage of hairs that are in the anagen phase. So hairs that are currently not in antigen will be stimulated to go into anagen. So more hairs in anagen, longer anagen means longer thicker hairs. In addition, there is a mechanism of action for bimatoprost not present in minoxidil or Finasteride, which is increased pigmentation of the hair shaft. And what that does is not only makes the hairs when they get longer and thicker better, but they get more noticeable because they're darker, so another benefit. So there is reason to believe it could work.

We have some animal data here, and these mice have an anomaly, if you will, where they lose the hair on the back at a certain time in a synchronized fashion. So they suddenly lose all the hair on their back. At about day 42, they just start to regrow their hair. So we did a study with vehicle-treated, low-dose, medium and high-dose bimatoprost.

Here's a patient on vehicle, 42 days after this animal lost its hair, you can see not much growth. Then low, medium and high-dose bimatoprost, you see a dose-dependent increase in the hair on the back of these animals. Encouraging. Well as Scott said, his favorite animal to study is humans, and there was an investigator-initiated trial looking at the current LATISSE formulation, which granted is not by any means the appropriate formulation if you really want to grow scalp hair. But they used once-a-day and twice-a-day dosing versus placebo and at the end of the year which was very well tolerated, they showed both of the bimatoprost arms had an increase in hair density, they actually counted the hairs, versus the placebo response. So small study using an inadequate formulation but nonetheless, proof-of-concept positive.

So what have we done? We have developed a novel proprietary formulation that will actually drive the bimatoprost where it needs to go. Through the thick scalp hair and skin and down into the hair follicle, because that's where bimatoprost actually works is at the level of the follicle, that's where the receptors are. So we are also, in addition to using this new formulation and vehicle, using higher concentration, significantly higher concentrations than you see with LUMIGAN or LATISSE. We found that this topical preparation is very well accepted by consumers and patients. In fact, more accepted than some of the other hair products, topical hair products that are out there. And the goal then is to get the drug into the skin and the hair follicle, but to limit the systemic absorption because if you imagine using 1 drop of LUMIGAN or LATISSE versus maybe 1 cc of a hair product on the skin or the scalp, one of the things you want to make sure is that your systemic absorption is not high.

Well, I've got some pharmacokinetic data I can show you from this novel formulation and you can see, the low, medium and high dose, high concentration groups. And what you find -- and we were very impressed by these results, these are very, very low levels of bimatoprost in the plasma in all 3 doses. If you compare this to a historical control, this is 1 drop of LUMIGAN to the eye, you can see the systemic blood levels are five- to tenfold higher with 1 drop of LUMIGAN. And LUMIGAN, of course, has been on the market for over 15 years, 12 million patient-years of exposure. So what this allows us to do is know that we can safely apply this formulation with a higher concentration in a skin-penetrating formulation and still get good systemic levels. In addition on the study, we have excellent dermal safety and tolerability and patient acceptance.

So where are we now? We have 2 ongoing Phase II clinical trials, 1 in men and 1 in women. These are randomized double blind placebo-controlled, and we actually added a minoxidil control into these studies. They're multi-center and international and the reason we added the minoxidil active arms is obvious, we'd like to know how we stand up against the leading topical product out there. So we'll get those results towards the end of the year, and we're using endpoints that we know will be required for registration. So on the basis of these trials, we'll have very good sense of whether this works.

And I'll tell you, this is the program I'm asked most about. Like David Pyott, Jim Hindman is always asking me about it, I don't know why. And all I say when they ask me is, "Look, I don't know if it works, but I was completely bald 6 months ago," just kidding, of course. We're cautiously optimistic. So bimatoprost for scalp hair growth is a well-recognized unmet medical need, I don't even really need to tell you this, particularly women, novel mechanism of action, it's a well-established molecule with a great safety record, it has some potential advantages, we're in Phase II.

So just to summarize today, what we talked about BOTOX Cosmetic for crow's feet lines, U.S. and EU submitting later this year. Oxymetazoline for the erythema or redness of rosacea, big unmet medical need, going into late-stage development. VOLUMA U.S. under review, game-changer for volumizing of the midface. LATISSE global expansion in Asia, ongoing, a European file under review, hopefully, approval later this year. LATISSE brow, moving into Phase II now and then bimatoprost scalp II underway in Phase II.

Thank you very much. And at this time, I believe we have time for some question and answers.

Scott M. Whitcup

I think Frederick's been pretty busy over the last several years. Question up the top first.

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

Annabel Samimy at Stifel, Nicolaus. Just a couple of questions on LATISSE or bimatoprost for the hair loss. Do people have to have live follicles for this, or do balding men, for example, have live follicles or they're just dormant?

Frederick Beddingfield

That's a very good question. In general, the follicles are not actually dying. That's a commonly -- a common misperception. Sometimes the follicle do scar down and they cannot be brought back to life. In general, the feeling is with a hair growth product, if you're completely bald, you're not going to get hair growth back. And then I think that's generally true. But there are many hairs in areas that currently may appear bald or right on the trailing edge of the baldness that are still there, they're just not in the anagen phase. And what we would hope to do is stimulate them into that growth or anagen phase. So the answer is if you're completely bald and you've been that way a long time, probably only a modest benefit that you're going to see. But if you're treating people in the stages when they're losing hair, you will probably be able to, if the product is successful, to have an effect because those follicles are not dead.

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

Okay. And one follow-up question on crow's feet. How much use right now, BOTOX use, do you suspect there is in crow's feet? And if there is, hopefully will you -- have there been any kind of problematic effects within appropriate administration?

Scott M. Whitcup

And so -- I mean, clearly there is some off-label use already for crow's feet, but where we see the big benefit is there are still a number of injectors who remain just doing glabellar and for which we're unable to train them because it's off-label. So though there are some off-label use, the ability one, to train those investigators as Frederick said and then two, potentially to do a DTC down the line we see as an important opportunity, which is why we're predicting the $100 million incremental sales potential.

Gregory Waterman - Goldman Sachs Group Inc., Research Division

Greg Waterman, Goldman Sachs. You mentioned increased pigmentation for bimatoprost scalp. I was wondering if you could characterize that for us a little bit more and whether there's any impact in terms of lighter skin or lighter hair.

Frederick Beddingfield

So do you want me to?

Scott M. Whitcup

Go ahead.

Frederick Beddingfield

We know that bimatoprost has an effect on the melanin or pigment synthesis pathway through -- probably through an effect on tyrosinase, which is one of the key enzymes, and that causes hairs to get darker. We've seen that in actually almost every study where we've shown some hair growth. We see that those hairs get darker. It's a well-known fact in LATISSE trials, we actually measured darkness of the hairs. So we see that in the scalp growth as just an added benefit because the hairs will appear more noticeable if they're darker, even the hairs that are say, currently there, if they're getting darker, they will also appear more noticeable. So it's a benefit. So when we're talking about that pigmentation, we're talking about the hair follicle itself, making the follicle more noticeable.

Scott M. Whitcup

Do we have a couple of questions, if any?

David Amsellem - Piper Jaffray Companies, Research Division

David Amsellem for Piper Jaffray. So a couple of quick ones on the formulation for bimatoprost. Can you comment on the nature of the formulations, is it a foam or a gel? Any color you can provide there? And then on usage of BOTOX in crow's feet, what's the extent to which doctors are hesitant to inject near the eyes? Has that been a problem? And even if that's added to the label, do you expect that to be a problem?

Scott M. Whitcup

I'll answer the first one. The formulation, we haven't disclosed anything, so -- at least for the time being if we look at a number of formulations, including some of the things you've mentioned but haven't said exactly what it is. On injecting close to the eyes, I think Frederick is well aware of what people are doing and can answer that.

Frederick Beddingfield

I would say that doctors are very comfortable injecting BOTOX near the eyes and in our clinical studies, we found no reason to not be comfortable. The doctors got more and more comfortable as they did it more and as Scott has mentioned, there is some off label use and in that, we do pharmacovigilance data on whether the uses are on-label or off-label. We haven't seen any signals there for years. So we're not concerned about that.

Catherine J. Arnold - Crédit Suisse AG, Research Division

Catherine Arnold from Crédit Suisse. Could you talk about the Phase II trial for scalp? Is there -- the dose frequency, is it once a day or there are multiple dosing schedules in that regard? How far along are you in the applicator, whatever it may be in terms of formulation? Can you just give us a sense for how far down the road you are on ease-of-use?

Scott M. Whitcup

Sure. I've been careful of what I say because I don't want to say too much and then we have to kill everyone in the audience. The dosing frequencies, potentially one of the benefits of the bimatoprost for scalp hair growth, I mean minoxidil, which you probably know is twice-a-day application, even though rarely does any person ever apply it twice a day I think. So it would be a once-a-day application in the optimal setting, so that's what we are studying, that's what we hope will work out. So that's an important potential benefit there. And that's just like LATISSE, it's a once-a-day application as well as you're aware. I think your other questions were -- with regard to ease of application, the current applicator is not necessarily the commercial applicator that we would use in this trial, we're just using a sort of one that was quick to get into the clinic. We'll probably optimize that further. We've been doing some market research on how we would do that and there are several interesting options there, but I think suffice it to say that the formulation and the mode of delivery will hopefully be preferable to current products.

David Risinger - Morgan Stanley, Research Division

Dave Risinger for Morgan Stanley. So it sounds like you're going to have a dual filing for both hair loss and hair coloring as well. But with respect to the Phase III, so you're wrapping up Phase II later this year. If the -- I mean, if the data is compelling, it sounds like you have the formulation done so you can move into Phase III pretty quickly. Obviously, you always provide conservative time lines, but would the Phase III be a 6-month program such that you could see Phase III data as soon as late 2014?

Scott M. Whitcup

Well, we haven't had our end of Phase II meetings, so it'd be premature to give you timing. We expect that the endpoint for maximum growth should be similar to the biology we're seeing with LATISSE, so 6 months should be enough to see, but the FDA may very well want 12-month data, and they are becoming much more conservative of you being able to file early in supplement files with safety data. So if they want a year of safety because they realize this is a huge opportunity that it may not be possible to expedite the filing, so you just need take that into consideration when you're -- should that one be approved.

David Risinger - Morgan Stanley, Research Division

Two questions on bimatoprost for scalp. But first on efficacy, what we've heard is off label that the efficacy is similar to minoxidil. Would you agree with that? And how confident are you to get efficacy of the Propecia? Secondly on the formulation, I'm a little confused because it looks like you're testing 3 formulations in Phase II according to Have you nailed down the formulation or what are you testing? What are those 3 different items that you're testing in Phase III?

Scott M. Whitcup

To your first question, what's been done in the clinic of using LATISSE? So we believe, inadequate formulation and inadequate concentration and although they showed efficacy, they weren't comparing it to known treatment. So based on those data, all we know is there appears to be a proof of concept that the biology works. It's really the Phase II data that will tell us what degree of hair growth we're getting and is it similar to minoxidil. And then we'll know because we're comparing it and you could hypothesize what that would look like compared to Propecia. You're right, we looked at a number of formulations and clearly what we've taken into the clinic is what we think is the ideal formulation but based on the Phase II data, we may do some final optimization before Phase 3.

I think that's all the time we have for this section. The last session, I think, is another exciting opportunity on the plastic surgery side, so Greg Altman will talk about SeriScaffold.

Gregory H. Altman

So I noticed I've been introduced by my name rather than doctor. I have a PhD, but amongst the distinguished presenters, I guess that's not good enough to earn the title. I'm currently the Vice President and General Manager of the Boston offices of Allergan Medical, where we're pioneering silk-based biomaterials for soft tissue repair. It's my sincere pleasure to introduce to you today the SeriScaffold platform technology and its applications and unique opportunities within plastic surgery.

We see a unique and tremendous opportunity with very attractive growth rates in the global surgical mesh marketplace. Today, there is a $1.6 billion global opportunity within surgical meshes and the growth rates are primarily being driven by general surgeon uptake of meshes as well as plastic surgery, and their use of surgical meshes in a variety of application. Quickly, interim applications such as breast reconstruction here, surgical mesh has become the standard of care. Today, about 60% of all breast reconstructions are performed with the use of a biological material or synthetic mesh, which I'll talk about in a minute.

We feel there is about $400 million of opportunity within the plastic surgery franchise. Today, there are multiple opportunities. But we also see some very unique ones on the horizon, specifically applications in head, neck and abdominal and wound care applications. Specifically today, I think you all know Allergan Medical sells breast implants and tissue expanders into the breast reconstruction market, and we see the use of the SeriScaffold as a unique opportunity to compliment some of those technologies, and I'll talk specifically about the surgical needs in the next few slides.

One of the things I want to talk about that we really don't pay a lot of attention to when we think about surgical meshes is ab wall repair as well. There's cosmetic opportunities in ab wall, we speak of that in terms of abdominoplasty following massive weight-loss surgery, body contouring, et cetera. But what we don't really understand is there's a tremendous patient population that undergoes multiple surgeries in the abdomen. And over time, the abdominal fascia weakens. As a result, surgical meshes are used in these applications, often we're spending more than $10,000 per device to reconstruct the abdomen in a procedure called complex hernia repair. And what also sometimes doesn't really rise to our attention is that it's the plastic surgeon called upon to come into the OR to assist does not lead those complex hernia repairs. So we see a very nice synergistic opportunity between scaffold and plastic surgery.

Today, there's 2 classes of biomaterials that comprise the competition. One is one-class, it's referred to typically as biologics and this is because it's tissue harvested from a cadaver, whether it's of human origin or animal origin. As result, these cadaveric grafts are premium priced, and they're used in selective cases. But as you can see by KCI and LifeCell's success in the U.S. marketplace, they've rapidly penetrated the marketplace and represent a significant portion of the global opportunity.

Synthetic meshes, mainly polymer meshes don't necessarily interact with the body's cues for healing. These materials have been used surgically for decades, predominantly in hernia repair. We've been using synthetic meshes for at least the past 40 years. Davol and Ethicon have really pioneered synthetic meshes, whether they are absorbable or non-degradable materials. They're advantageous because they last forever. They do not interact with the body, so they are there to be depended on.

We also have synthetic meshes that absorb rather rapidly and as a result, they don't necessarily provide the mechanical need to the surgical side of the patient over the patient's lifetime. So there is a clear unmet need when we think about the combination of biologics and synthetics. We really want a material that can provide the patient long-term support and mechanical stability, but we want that product to interact with the body's cues for healing, such as the patient's own tissue that is doing the work for the long-term.

What I'd like to do is introduce you to SeriScaffold and some of its unique features and benefits. The material, as Scot mentioned, our first product is 510(k) cleared, it's CE mark registered and it's indicated with a very broad label for soft tissue support and repair to reinforce deficiencies where weaknesses and voids exist.

So one of the unique things in SeriScaffold is the new ancient material. It's been used in the human body for over 4,000 years. The first publication for the use of a silk medical device was, I think, 874 A.D. where we actually used some silk in someone's knee to try to hold it together. Unfortunately, I think that patient didn't do too well, otherwise, Allergan wouldn't be the first company in the world, actually, getting a medical device through the FDA.

So one of the unique features about silk is it comes from a cocoon, and that's actually a tissue-free source, which means it doesn't have any cellular contaminants or tissue contaminants with it, so it's actually a unique bioprotein. So it's a protein that can interact with the body's mechanisms for healing, but it doesn't bring a lot of the contaminants along with it. As result we're able to use silk, which happens to be as strong as steel in very innovative ways. We're able to craft it via textile engineering to create very nice porous lattice structures. And with these porous lattice structures very similar to meshes today, we can facilitate new blood vessel growth rather rapidly and that blood vessel growth can then support tissue generation which ultimately leads to function from the patient's own tissue over his or her own lifetime. And as result because it's derived from silk, it's flexible and drapable. Multidirectional designs conform easily to different anatomical locations, so we see a very nice opportunity behind the silk-based SeriScaffold platform.

And one of the unique features is our proprietary manufacturing process, which I'll talk about in a minute. It's a rigorous process that delivers loss-to-loss consistency, so we have tremendous control over the variability or lack thereof in our product portfolio.

So of interest, those of you that are wearing any silk garments today, you're wearing a material that comes in the form of a multi-filament natural fiber, okay? The silk worm produces this fiber with a variety of different protein-based glues. These glues hold the cocoon together and when we spool the cocoon or unspool the cocoon, we're able to use textile engineering and create a variety of different shapes and forms. We've been in the scientific labs trying to remove this filament -- excuse me, remove this glue for quite some time and give us a pure silk fiber material. What we've learned at Allergan is how to proprietary manufacture this material such that we do not damage any of the inherent protein structure or mechanical structure of the silk filament, yet we get rid of the contaminants here.

So as a result, we now have a material that is very consistent, much like the synthetic platform, but it's a purified natural protein that is biocompatible and actually bioresorbed. So Allergan is the first company to commercialize or we will commercialize, I'll talk to you about that in a minute, to commercialize a long-term bioresorbable silk-based biomaterial. And that's a tremendous opportunity for the company because we're really introducing a new class of biomaterials onto the market. We're able to use, again, textile engineering to create final fabric products.

So the concept of tissue engineering, we've all been enamored with this field for the past 20-some-odd years, is that we're able to provide an input, a scaffold or a drug, and that input goes away over time such that we cue the body to heal, such that we have new tissue generation that again, supports the patient over his or her lifetime.

Excuse me, can we go back? So what we want to do is we want to accomplish the functional output of the surgery via the patient's own healing processes. And we want the scaffold to go away over time but gradually, such that we can cue the body to different stages of healing over time.

Here are some empirical data shown in our long-term large animal studies. And again, we're very pleased with the results. Here you see the scaffold's contribution to the wound repair site and over time, we see native tissue contributing to that repair site. The dotted line represents the goal or the strength of fascia that we were attempting to heal. So what we see here is over time, starting at about 6 months, all of the work is being done by the patient's own tissue and then the bottom image is you see empirical evidence of the SeriScaffold to actually bioresorbing over time as a result of interaction with the patient's healing cascades.

And again, this is at the macro level, looking at the processes, tissue generation via a scaffold approach. So after one month of time, you actually see very nice tissue integration and then growth here throughout the pores, in the porous lattice of the material. Over time, we're actually starting to regenerate tissue that looks like a cadaveric implant at time 0 from some of our competitors and by 12-months, you have fully functional material that has strength, but is largely the patient's own natural tissue, at which point the scaffold has done its job and is bioresorbing slowly. Because it's a protein, it breaks down into amino acids, so we don't have many harmful side effects or contaminants in the local environment.

Again, I mentioned earlier the ability of this biomaterial to serve as a technology platform for a variety of new products. If you think about our IP and about our knowledge base, it solely is around how to manipulate the material in fiber form. As a result, we've also brought together fabric technology and engineering. We're able to create a variety of unique structures and features, some that may have different thicknesses, different stiffnesses, different elasticities for different anatomical sites because as you can imagine, reconstructing the breast compared to the abdomen, compared to wound healing or even tendon repair, sometimes requires different mechanical needs, and so forth.

So here’s some early results from some clinical work that's been performed with the SeriScaffold for soft tissue repair. I alluded to earlier the needs in breast reconstruction. One of the interesting things in terms of breast reconstruction is the mortality rate following breast cancer diagnosis has been going down dramatically in this country, and that's really good news for those of us that have been affected by breast cancer. One of the corollaries, though, is that surgery is increasing dramatically. We're just under 100,000 breast reconstructions performed each year in this country. And as I mentioned to you earlier, about 60% of those reconstructions require some kind of surgical mesh support following mastectomy. What happens during mastectomy is we remove the glandular tissue, which is typically the site for the cancer formation. Once that glandular tissue is removed along with some of the adipose tissue, we actually have taken away a vital blood supply to the underlying skin. If we do implant-based reconstruction with either a tissue expander or a breast implant we're not only now putting an increased mechanical load on their skin, but we're also asking it to stretch over time, so it's lost the -- excuse me, it's lost a vascular network and we're asking it to do more work than it was previously doing in a normal breast.

So SeriScaffold in this application was used to reinforce the skin following mastectomy and only after 3 months, as shown here, you can see very nice integration that correlates to a lot of our preclinical results. So we're very pleased with how the result, how the product is performing both in animals and humans to date. In this image, you could see at the time of exchange when we take the tissue expander out the breast pocket and replace it with an implant, we sometimes manipulate the pocket. And at that point in time, it's important that the surgeon has native tissue to work with. And you can see that we have some very nice work and results going on here.

In the abdomen, this happens to be a cosmetic patient, but this was one that lost approximately 120 pounds following massive weight loss surgery and elected to go in for body contouring. In this particular case Dr. John Gross, who provided us with these photos -- excuse me, if we could go back, elected to use 2 forms, 2 pieces of SeriScaffold here to reinforce the fascia. So you can imagine if you gained weight over a long period of time, you extend or expand the fascia. And the fascia is holding your abdominal muscles together. If you lose weight rapidly, that fascia doesn't have time to rebound. As a result, it's weakened. So patients pay, in some instances, up to $10,000, $12,000 for abdominoplasty and some significant body contouring work only to find 6 months after surgery that their fascia, not their stomach, not that they've gained weight, but their fascia has released and they've developed abnormal pouches. So the idea here is that SeriScaffold over time can help reinforce the fascia both in aesthetic cases, but also -- both in aesthetic cases and surgical cases for complex hernia repair. And again, we see some very nice results after 12 months of surgery.

So in conclusion, we're presenting to you today for the first time a very novel technology platform. This is the first and only silk-based bioresorbable medical device cleared by the FDA to date. It bioresorbs over the long-term because of how it interacts with the body and as result of that, we're able to facilitate the generation of a neovascular network throughout the device and long-term tissue generation for the patient that serves the patient in his or her functional needs.

So we see this technology playing an important synergistic role in Allergan Medical's pipeline. We're targeting right now a large and growing market within plastic surgery. Both the technology is patented protected, and the manufacturing process contains some very critical proprietary elements and we're currently scaling up right now to meet projected demand in 2013 and the out years. We expect to be able to commercially launch the product in the U.S. in early '13 and as Dr. Whitcup mentioned, we view this as a $100 million to $250 million opportunity in peak year sales for the organization.

Thank you very much.

Scott M. Whitcup

Any questions for Dr. Altman?

This is an area that you're not used to questioning Allergan about. Questions on...

Unknown Attendee

So I guess 2 questions. I saw wound healing on as one of the targets, I mean, is this something that you think would compete with Dermagraft and Apligraf? And second, is it -- what kind of clinical data do you have to support the 510(k)?

Scott M. Whitcup

So in terms of the 510(k), subsequent to it being FDA cleared, given the potential uses and need for clinical data to help with the launch, Greg's team has done a number of studies to help support that, and that data will be available as we prepare to launch that next year. In terms of wound healing, it's not something we really specifically have targeted, but maybe Greg could comment a little bit.

Gregory H. Altman

I think based on some the earlier results we've seen and in our ability to facilitate neovascularization quickly and generate tissue, we do think in certain areas where coverage is not the absolute need but stability of that wound, we think scaffold can play a very big role.

Scott M. Whitcup

Question just behind.

Seamus Fernandez - Leerink Swann LLC, Research Division

Seamus Fernandez of Leerink Swan. So maybe you can just help us understand a little bit the dynamics of the market, $100 million to $250 million opportunity. Can you just at least walk us through the sort of waterfall or the pyramid of how we're getting to that -- those types of numbers?

Scott M. Whitcup

Sure. I'll let Greg go through that. I mean, clearly as a wide base support of technology it could have potentially even beyond the plastic surgery, we tended to start the area that we're at already. But maybe Greg can take you through how we got to those initial estimates there.

Gregory H. Altman

I think if you consider the fact that Allergan implants are used in 50% of all implant-based reconstructions in the U.S. and numbers approaching that in Europe, I think there's a large portion of that growth attributed to breast reconstruction and difficult breast surgeries as well the majority of our customers today, while they may be doing a study case in a clinic, they are also in the hospital being consulted on ab wall repair. And one of the unique things is how we can actually create multiple sizes and styles within our current 510(k) that could compete against the very expensive biologics and ab wall repair. So I think between just breast reconstruction and ab wall and the customers we're calling on today, I think we can, with some confidence, support those numbers.

Seamus Fernandez - Leerink Swann LLC, Research Division


Scott M. Whitcup

Yes. We haven't even gotten to pricing that.

Seamus Fernandez - Leerink Swann LLC, Research Division

Just to your market dynamic question in terms of the current market, because the numbers you were talking about related to the market for meshes in plastic surgery, I think a lot of us are familiar with hernia repair side of the market, but what are the products in the plastic surgery setting that are currently sort of the main products? What will be your main competition in that particular set?

Scott M. Whitcup

Greg, you can go ahead.

Gregory H. Altman

Okay. So I think if you look at breast reconstruction and ab wall repair, so in breast reconstruction in the U.S., it's predominantly biologics, it's human cadaveric products. It's AlloDerm and the Flex HDs of the world whereas in Europe, it's very difficult to get cadaveric material into the marketplace, so the majority of materials used in breast reconstruction in Europe is of synthetic origin. If you look at ab wall repair where you require much larger sizes there, we don't have much flexibility in how we design our human cadaver grafts. So products such as Stratus and other porcine or bovine-based biologics play in those particular usage areas as well. Did I answer your question?

Scott M. Whitcup

Do we have one more question? All right. If not, I promised the group we'd get you out on time, so I will go to the conclusion and summary.

So I think what you've seen this afternoon is a look into the pipeline, some programs that you've known about, but our goal today was to introduce you to a number of programs that you haven't seen yet.

So again, our late stage update this morning, filing of idiopathic OAB that Cornelia talked to you about, Greg on SeriScaffold. We didn't spend a lot of time on LUMIGAN unit, but they're clearly -- you saw the segments in ophthalmology that light, preservative-free and so getting our 2 major products in Europe industry that does preservative-free formulation we think will be important for the ophthalmic franchise. And then a Phase III program that although it's been sitting on, has not gotten a lot of notoriety and again, Frederick told you that this will be filed later this year for approval end of '13, early '14. So a lot of updates on the late stage side, but clearly some of the interesting opportunities in our early clinical development portfolio.

Moving into osteoarthritis pain, in our Phase I/II program with BOTOX. Some positive early, even in the first 2 lowest doses of in TEM in postherpetic neuralgia, an exciting technology on the ophthalmology side that may be a paradigm shift in the way glaucoma is managed with our bimatoprost sustained-release platform, and a novel NCE off the 2 agonists for the adjunctive market going into the clinic later this year. Multiple products on the wet and dry AMD side, and then in addition to LATISSE for brow, clearly the big opportunity on the aesthetic side, bimatoprost for scalp hair growth.

So you'll see new R&D pipeline slides, so in addition to updating you on some of the existing programs, you can see we've added 5 brand new programs in ophthalmology on the neurology side, again BOTOX for osteoarthritis pain, updating you on OAB being filed and then finally, on the aesthetic side, hopefully later this year, we plan to file BOTOX for crow's feet lines, and then the SeriScaffold again gathering the data, up scaling the manufacturing in preparation for what we hope will be a successful launch of that product next year.

So with that, I think our conclusion is that the late-stage pipeline remains robust. We're refilling the pipeline with a number of internal programs. But again, keep your eyes out for us to announce where they make sense, activities on the business development side either by in-licensing, early-stage opportunities or where possible, acquiring marketed products that fit our strategy.

So with that I'd like to, again, thank all of you for coming, the people on the webcast for listening, the IR folks for helping organize this, all the scientists right here who presented who I think did a great job and team of scientists and development people around the globe and most of all, not to forget, we have tens of thousands of patients who enroll in these trials to bring these products to market to the people who need them and a shout out to them as well for helping us get new products to market. So enjoy your afternoon and thanks again for coming.

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