AbbVie Ban on Botox Rival Seen as Setback for Evolus, Daewoong

A 21-month U.S. ban on imports of Jeuveau wrinkle treatment is “a major setback” for Evolus Inc. and its partner Daewoong Pharmaceutical Co. in their bid to compete with AbbVie Inc.’s Botox, though the restriction on sales will be shorter than expected, analysts said.

The U.S. International Trade Commission on Wednesday upheld a judge’s finding that Evolus and Daewoong manufactured Jeuveau with a secret process stolen from AbbVie’s South Korean partner, although it said a bacterial strain involved isn’t covered by trade secrets. The ruling in the case reduces an initial 10-year ban proposed by the judge, which was based on his findings that the bacterial strain was a trade secret.

The ITC ruling was “a major setback,” said Mizuho analyst Vamil Divan, though “the 21-month ban is better than the 10-year ban proposed by the Administrative Law Judge in the Initial Determination back in July.”

Evolus, whose shares plunged by as much as 23% on the news Wednesday, were up as much as 30% in early trading Thursday in New York.

The import ban will take effect after the completion of a 60-day presidential review period. Either President Donald Trump or, after Jan. 20, President-elect Joe Biden could veto the ban on public policy grounds, though such actions are rarely taken.

AbbVie’s Allergan unit and the South Korean drugmaker Medytox Inc. claimed that Jeuveau was developed using a stolen trade secret for a way to turn the deadly botulinum toxin into a wrinkle treatment. Evolus and Daewoong denied any theft or that any trade secret was involved, and argued the dispute didn’t belong before the U.S. agency.

“There’s no immediate impact to the availability of Jeuveau in the United States,” said Crystal Muilenburg, a spokeswoman for Evolus. “We will now focus on overturning the decision by mobilizing interested parties close to this matter through the presidential review process. We remain committed to finding a resolution to this legal matter, including reasonable settlement terms with Allergan’s new owner, AbbVie, and Medytox.”

If nothing happens with the presidential review, the ruling Wednesday suggests Jeuveau won’t be back on the market until the latter half of 2022, “well after any potential recovery from demand that has been pent-up through the pandemic” and potentially behind another competing product from Revance Therapeutics Inc. that may enter the market, Mizuho’s Divan said.

Evolus and Daewoong called the avoidance of the longer ban a victory, though they plan to ask that the 21-month ban be put on hold while they appeal that part of the ruling.

In a statement, Daewoong called the ruling a “dangerous and costly precedent that would threaten future development of potentially life-saving therapies.”

The decision “would be a significant blow to an American company, will cost U.S. jobs amid the recession and will hurt consumer choice, innovation, and healthy competition in this marketplace,” a Daewoong spokesperson said.

AbbVie spokeswoman Adelle Infante said the company welcomes “fair and lawful competition” and that “the market has grown considerably” for Botox alternatives. “We believe competition offers choice to customers and we continue to support the healthy growth of the aesthetics market through our continued investments,” Infante said.

The commission also issued a cease and desist order, meaning Evolus won’t be able to sell any imported products that it’s already brought into the U.S. It wouldn’t affect any products already sold to its customers. During the presidential review period, Evolus can continue selling the product as long as it posts a bond equal to $441 for each 100-unit vial. Evolus said it plans to post the bond.

The commission issued only a notice of its final decision. The full opinion will be available in a couple of weeks, after lawyers for both sides get a chance to redact confidential information.

The case was filed at the Washington agency in February 2019, days before Evolus received U.S. regulatory approval to sell Jeuveau, which is made in South Korea by Daewoong. It’s Evolus’s only product, generating $35.2 million in the nine months ended Sept. 30. Evolus has said an import ban could be “catastrophic” to the company’s future.

While Jeuveau is cutting into Botox’s market share, the trade secrets at issue don’t involve the popular shot that’s been on the market since 1989. Instead, Allergan and Medytox claim a former employee handed over results of its research into a new process to make a new beauty treatment from the deadly toxin.

The case is In the Matter of Certain Botulinum Toxin Products, Complaint No. 337-1145, U.S. International Trade Commission (Washington).

©2020 Bloomberg L.P.

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