Judge puts freeze on Merz bid to challenge Botox

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Merz Pharmaceutical's would-be foray into botulinium-based cosmetics has been stopped in its tracks, thanks to an order issued by a California district judge.

The German drugmaker was poised to launch a new cosmetic indication for its botulinum-toxin product, Xeomin, at the American Academy of Dermatology's annual meeting next week. Merz won the add-on indication, for use in smoothing out the space between the eyebrows, last July. But Allergan sued in 2010, alleging its competitor poached its sales force that year as Merz was gearing up to launch Xeomin for muscle spasms, and that those very same reps helped themselves to proprietary information before severing ties with the California company.

US District Court Judge Andrew Guilford sided with Allergan, issuing an injunction against Merz in a trial without a jury, as reported by Bloomberg. He's decided not to release his full opinion in the matter, including the duration of the Merz sales freeze, until this Friday (to read a news summary of his opinion, click here.).

In the meantime, Allergan said it's quite pleased with the judge's ruling: "For more than 20 years, we have invested millions of dollars in the research, clinical development and marketing of Botox (onabotulinumtoxinA), and we are pleased that our intellectual property has been protected by yesterday's decision,” it said in an e-mail.

Allergan's lawyers asked for a yearlong stay of Xeomin cosmetic sales and a ban on pursuing Allergan customers, as well as return of trade secrets.

That delay is likely to benefit other players in the aesthetic space. Leerink Swann analyst Seamus Fernandez said in a recent research note that Xeomin poses more of a threat to Medicis' Dysport than to Allergan's Botox. Heavy sampling has helped Merz land about 8% of the botulinium-toxin market, Fernandez wrote in a subsequent note. But, according to Xeomin's label, Merz's drug can iron out wrinkles for up to three months, while Botox's smoothing effects last up to four months.

That's not to say Allergan doesn't stand to gain from the status quo: almost 49% of Botox sales have come for cosmetic purposes over the past three years. According to the company's annual report, Botox is marketed for 25 distinct uses, from excessive sweat control to muscle stiffness and migraine headaches. Sales hit $1.6 billion in 2011.
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