UPDATE: Allergan 1Q Earnings Sink On Charges; Outlook Raised

Allergan Inc.'s (AGN) first-quarter earnings declined 5.7%, weighed down by charges, but the Botox maker posted a double-digit sales gain with help from an array of drugs and medical devices and an improving market for cosmetic medical products.

Allergan's sales and adjusted earnings were ahead of both company and Wall Street projections. The Irvine, Calif., company raised its full-year sales and earnings view while saying the market for cosmetic products--hurt during the recession--remains on the mend.

"Allergan is off to a strong start for 2011," said David E.I. Pyott, Allergan's chairman and chief executive, on a conference call Wednesday. "Our cash-pay markets appear to be on an upswing."

The company's business for gastric bands for weight loss was one area that still appeared under significant pressure from continued high unemployment, however. Allergan sells a mix of products for medical treatments and aesthetic use, including Botox, which is used for both purposes.

Allergan's shares recently traded up 1.5% to $80.18, and are up about 17% so far this year.

Allergan reported first-quarter earnings of $158.3 million, or 51 cents a share, down from $167.9 million, or 55 cents a share, a year earlier. Excluding items such as charges in the recent period pegged to a partnership over an experimental migraine treatment, Allergan said its earnings rose to 77 cents from 65 cents.

The company's revenue rose 10% to $1.27 billion while product net sales were up 13% at $1.25 billion.

Analysts surveyed by Thomson Reuters had forecast earnings of 74 cents on sales of $1.22 billion in the recent quarter.

Among key Allergan products, sales of Botox rose 10% to $364.5 million. The injectable drug's sales are roughly split between cosmetic use and treating various medical problems.

Allergan last year won approval to sell Botox as a treatment for chronic migraine headaches. The company in February further expanded its migraine portfolio by agreeing to pay Map Pharmaceuticals Inc. (MAPP) up to $157 million to access Map's experimental migraine treatment Levadex, which the companies will jointly promote to U.S. specialists while sharing profits.

Elsewhere in Allergan's pharmaceutical portfolio, sales of eye drugs and skin-care products increased about 16%.

On the devices front, the breast-implant business posted an 8% gain but obesity intervention sales--which include the "Lap-Band" gastric band--dropped 15%. Pyott noted that the rate of bariatric procedures has been hurt by high unemployment, co-payments and barriers to surgery.

The company in February won approval for broader use of its stomach-shrinking product that allows the company to market Lap-Band to less severely overweight patients.

Looking ahead, Allergan raised its 2011 per-share earnings forecast by two cents to $3.56 to $3.62. The company also increased its sales view by $30 million to a range of $5.05 billion to $5.25 billion.

For the current quarter, Allergan projected per-share profit of 93 cents to 95 cents, excluding items, exceeding views of analysts polled by Thomson Reuters of 92 cents.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728;

jon.kamp@dowjones.com

--Tess Stynes contributed to this article.

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