Shares of Allergan (AGN) are under pressure this morning after Mylan (MYL) and Revance Therapeutics (RVNC) announced an agreement for the development and commercialization of a proposed biosimilar to Botox. Meanwhile, the Food and Drug Administration extended the PDUFA date for Allergan's uterine fibroid candidate, ulipristal acetate, with Credit Suisse analyst Vamil Divan arguing it may raise concerns over a potential regulatory rejection.

BOTOX BIOSIMILAR: Last night, Mylan and Revance Therapeutics announced a global collaboration and license agreement for the development and commercialization of a proposed biosimilar to Botox. The companies plan to work together to gain regulatory approval in the development of this biosimilar product and commercialize it in the U.S., Europe and applicable markets throughout the rest of the world. The collaboration includes an upfront payment of $25M to Revance, with contingent milestone payments upon achievement of additional clinical, regulatory and sales targets, plus sales royalties in all relevant markets.

ALLERGAN NDA REVIEW EXTENDED: Meanwhile, Allergan said it was notified by the FDA that the review of the New Drug Application for ulipristal acetate will be extended. The PDUFA target action date has been extended to August 2018 to provide time for a full review of the file. Ulipristal acetate is an investigational drug in the U.S. for the medical treatment of abnormal uterine bleeding in women with uterine fibroids. In Europe, ulipristal acetate is marketed under the trade name Esmya by Gedeon Richter. In Canada, ulipristal acetate is available under the trade name Fibristal and marketed by Allergan.

CREDIBLE LONGER-TERM THREAT: In a research note to investors, Morgan Stanley analyst David Risinger lowered his price target on Allergan to $181 from $200 following the news that Mylan and Revance plan to develop a biosimilar Botox. While the analyst assumes commercialization is several years away, he argued that the risk creates a long-term overhang on the durability of Allergan's most important franchise. Risinger reiterated an Overweight rating on Allergan shares. Also commenting on the Mylan and Revance agreement, Credit Suisse's Divan told investors he sees the collaboration as a credible longer-term biosimilar Botox threat, and believes it creates another legitimate overhang to add to prior concerns around risks to Allergan's flagship Botox franchise. Additionally, Divan said that the extension of the Esmya review is not surprising in light of some of the liver safety questions that have been raised in the EU, but the news does raise the specter of possible regulatory rejection. He reiterated an Outperform rating and $215 price target on Allergan's shares. Meanwhile, Wells Fargo analyst David Maris told investors in a research note of his own that the announced collaboration between Revance and Mylan is "clearly bad headlines news" for Allergan. The analyst noted, however, that this seems an "odd move" by Revance, which is also developing what it hopes to be a long-acting Botox-like product. For Allergan, it is unwanted noise around another key franchise, he contended, adding that while the news is more of a corporate rivalry and less a near-term commercial threat, it is likely to be another overhang for the shares.

PRICE ACTION: In morning trading, shares of Allergan have dropped about 3% to $149.92. Meanwhile, Mylan's stock has gained 5% to $42.35 and Revance has slipped about 3% to $30 per share.