Implant News Boosts Allergan, Mentor

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Shares of Allergan (AGN) and Mentor (MNT) prices surged on Nov. 20, after news that the Food and Drug Administration approved the silicone-filled breast implants that the two companies make.



Irvine, Calif.-based Allergan, the provider of implants under the brand INAMED, climbed 7.8% to $121.32 per share on the New York Stock Exchange. Santa Barbara's Mentor, which makes MemoryGel implants, gained 10.9% to $52.78 per share.



The companies said Nov. 17 that the FDA is now allowing them to sell the implants to women who want them for cosmetic reasons. Previously, the companies could only sell them overseas or to women seeking breast reconstruction and revision surgery through clinical studies. But the companies still have to take steps such as providing physician training and conducting a post-approval study for 10 years.



"We believe that the devices will capture substantial market share in coming years. However, we think near term EPS benefit will be muted by required post-launch studies, device failure reporting and physician training costs," said Standard & Poor's Corp. analysts Phillip Seligman and Robert Gold in a research note. [S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.]



S&P kept a buy opinion on Allergan but upgraded Mentor to hold from strong sell.



"Over the past 14 years we have remained devoted to returning MemoryGel implants to the U.S. market, and we are pleased to be able to provide women seeking breast augmentation and reconstruction with important new options," said Mentor CEO Joshua H. Levine in a press release.



Unlike earlier breast implant devices, today's implants have a thicker shell and a barrier layer designed to withstand more than 25 times the force of a normal mammogram without failure.



"Allergan is pleased that the FDA has further recognized the vast body of scientific evidence supporting the performance of these devices," said David E.I. Pyott, Allergan's CEO, in the release. "Our ability to offer surgeons in the U.S. a comprehensive portfolio of saline-filled and silicone gel-filled breast implants results in greater options for women considering breast augmentation, reconstruction or revision surgery."