By Matthew Willett

Allergan Inc. exercised for $71 million its option to purchase the outstanding shares of its affiliate, Allergan Specialty Therapeutics Inc., developers of treatments for pain and glaucoma and a photodynamic therapy, among others.

ASTI was formed in December 1997 when Irvine, Calif.-based Allergan spun off programs it retained after the dissolution of Allergan Ligand Retinoid Therapeutics Inc., a joint venture with Ligand Pharmaceuticals Inc., of San Diego. (See BioWorld Today, Nov. 25, 1997, and Dec. 1, 1997.)

Suki Shattuck, Allergan¿s director of investor and media relations, said the decision to buy ASTI was motivated by the value of ASTI¿s programs.

¿It originally spun out in 1997,¿ Shattuck said. ¿It was formed strictly to do research and development on some of the more further-from-market products. Allergan had an obligation to buy ASTI once its cash level dipped below $15 million. It was either buy them or, essentially, close them and let the projects die.¿

Allergan kept an option to buy back products and technology developed by ASTI when it spun off the company, which initially was funded by Allergan with $200 million, and Allergan kept an option to buy out the affiliate itself for a minimum of $60 million.

The buyout of 3.27 million shares at $21.70 per share will result in the transfer of several research programs to Bardeen Sciences Co., a privately owned research and development company. Allergan will keep commercialization rights in return for royalties to Bardeen. Those programs include Memantine, a Phase III glutamate blocker for prevention of optic nerve damage in glaucoma patients; the oral formulation of Tazarotene as an acne treatment, which is in Phase II testing; the preclinical chronic pain candidate AGN 197075; a hypotensive lipid/timolol combination; and a preclinical photodynamic therapy, ATX-S10.

Allergan also will transfer to Bardeen a tyrosine kinase inhibitor in very early stage investigation for the treatment of age-related macular degeneration- and diabetic retinopathy-associated neovascularization, as well as AGN 195795, a Phase II compound for treatment of glaucoma and ocular hypertension; Androgen Tears; and two projects in the preselection phase aimed at vision sparing and retinal disease.

Allergan will keep several programs, Shattuck said.

¿We¿ll have a project that evaluates neurotoxins we¿re studying in the application of pain,¿ Shattuck said. ¿We¿ll keep the retinoid portfolio, and Tazarotene, which is currently marketed in the gel and cream formulation for topical use in treatment of acne and psoriasis. We¿re studying the same molecule in an oral form for acne and psoriasis and cancer applications, and Allergan will be keeping the psoriasis and cancer applications to develop further. Bardeen will further explore the application for acne.¿

She added that Allergan will keep a topical drug for ocular allergy, Epinastine, in Phase III; a Phase I Acular combination therapy for treatment of infective corneal ulcers; and an Acular reformulation for post-surgical pain in preclinical testing, as well as an Alphagan (brimonidine) combination therapy, a brimonidine/timolol combination in Phase III.

Allergan¿s stock (NYSE:AGN) rose $2.39 Tuesday to close at $79.50.