Wrinkle fillers could face off in '06
Medicis' drug Restylane could see competition from Inamed's Juvederm in 2006.
By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - Restylane, an injectable facial drug from Medicis that makes wrinkles disappear, could face some wrinkles of its own in 2006.

Restylane has grown solidly since its U.S. market debut two years ago, becoming the lead dermal filler in the U.S. market. The drug, based on a naturally occurring bacteria, competes with collagen-based dermal fillers in a market that totaled $250 million to $300 million in 2005.

Its maker, Medicis (up $1.24 to $33.66, Research), based in Scottsdale, Ariz., reported total sales of $278 million in the nine months ended Sept. 30, 2005. Medicis did not provide individual sales figures for Restylane. But Gary Nachman, analyst for Leerink Swann, estimated that Restylane sales totaled $110 million in FY 2005, which ended in June, 2005, and he projected an increase to $130 million in FY 2006. Nachman said that sales have grown quickly since the drug entered the U.S. market on Jan. 6, 2004, almost exactly two years ago.

Restylane comes nowhere close to the blockbuster status of Botox, a facial injectable from Allergan (up $0.81 to $114.66, Research), based in Irvine, Calif., that totaled $604 million in sales for the first nine months of 2005. But Restylane, a gel that fills in spaces in the face to smooth wrinkles, is not considered a direct competitor to Botox, which works as a cosmetic by paralyzing facial muscles to make wrinkles disappear. Botox is also used to calm muscle spasms elsewhere in the body.

Also, both products are used on different parts of the face, with Botox typically being used around the eyes and forehead and Restylane being used primarily around the mouth and nose. Both of the products last for several months before requiring fresh injections.

"Essentially what [Botox] does is paralyze the muscle, so if you inject too much of it, it causes botulism and you can't use your muscles," said Nachman. "With Restylane, there's really no safety issues. It just fills the gaps and then over time is absorbed into the body."

However, Restylane could get some competition from Inamed this year. Inamed (up $0.40 to $90.96, Research), a California-based cosmetics company that specializes in breast implants, has filed an application for another dermal filler, Juvederm, with the Food and Drug Administration. If the FDA approves Juvederm, Inamed plans to enter it into the U.S. market this year.

"Restylane is a great product, but the market is just becoming more competitive," said Nachman.

Allergen is currently trying to take over Inamed in an ongoing bidding process, and if it succeeds, then Inamed could use the market clout from Allergen's Botox to grab market share for Juvederm, said analysts. Eli Kammerman, analyst for Cathay Financial, said Juvederm sales should be bolstered by the fact that the product could last six to 10 months before requiring a fresh injection, as opposed to four to six months for Restylane.

"I would expect, over a two to three-year period, that Juvederm could outsell Restylane," said Kammerman, who expects Juvederm to enter the U.S. market in the third quarter. "With the benefit of being paired with Botox, it could happen in less than that."

Kammerman said that Mentor Corp. (up $0.78 to $49.20, Research) is also developing a non-collagen dermal filler called Puragen, which the company plans to file with the FDA in March. Puragen, Juvederm and Restylane are all based on the same naturally occurring bacteria.

Jonah Shacknai, founder and chief executive officer of Medicis, said he wasn't worried about looming competition in the U.S., because Restylane has already shown it can compete with the other products in Europe and Canada, even though its much more expensive than Juvederm.

"For us, the comforting note to all this is that even at half price, Juvederm has not taken a noticeable dent out of Restylane sales," said Shacknai.

The analysts interviewed for this story do not own stock in the companies mentioned here. Top of page

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