Revance, Mylan Move Forward With Botox Rival; Analyst Sees Long Path Ahead

After several postponed decisions, Mylan Inc (MYL) has announced that it is moving forward with a Botox biosimilar development program in collaboration with Revance Therapeutics (RVNC). On the news MYL rose 3% in Monday’s trading, RVNC was up 4%, and Botox owner AbbVie (ABBV) fell 2%.

Feedback from the U.S. FDA in February 2019 indicated that the 351(k) regulatory pathway for an onabotulinumtoxinA product is viable, Revance said. Based on this meeting, along with the results from additional characterization and analysis, the two companies are now proceeding with the development program.  

“We are excited to move forward with Revance on a clear and achievable development pathway for what will potentially be the first biosimilar to BOTOX” said Mylan President Rajiv Malik. “This collaboration adds another high-profile, large-market, complex biologic, across both aesthetic and therapeutic categories, to our industry-leading biosimilars pipeline.”

Mylan and Revance signed a collaboration and license agreement in February 2018 for to develop a Botox biosimilar, with commercialization by Mylan. The agreement included an upfront payment of $25 million to Revance, and was extended for $5 million in 2019.

With Mylan’s decision to move forward, Mylan will now pay $30 million to Revance. The agreement also allows for up to $70 million in milestone payments to RVNC alongside sales target milestone payments and royalties.

“In all, we don’t think this is surprising as the program has been in the works for some time” comments RBC Capital analyst Randall Stanicky. “MYL has since been focused on getting additional clarity on FDA’s regulatory expectations. The decision to now move forward thus implies that MYL is reasonably confident it can meet those expectations” he said.

However the analyst does not see this coming before 2025, writing, “there are still regulatory hurdles that need to be overcome, and we do not expect a biosimilar BOTOX.”

That said, this decision has out-year competitive considerations for ABBV should MYL/RVNC ultimately succeed (global BOTOX sales are >7% of total 2021E revenue for ABBV), the analyst points out.

“But there are significant technical hurdles that need to be overcome and this is not a near-term event… We expect some focus to remain here, and it will add some headline to watch but it is not a near-term threat [to ABBV]” he concludes.

Stanicky has a buy rating on MYL with a price target of $26 (45% upside potential). He also reiterated a buy rating on ABBV with a $102 price target (12% upside potential).

Overall, MYL has a cautiously optimistic Moderate Buy consensus while Revance scores a more bullish Strong Buy Street consensus. The $28 average analyst price target for Revance indicates 30% upside potential lies ahead. (See Revance stock analysis on TipRanks).

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