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Allergan Wins U.S. Court Order Blocking Merz's Sale Of Xeomin

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3/12/2012 11:20 AM ET

Allergan Inc. (AGN: Quote), the maker of anti-wrinkle treatment Botox, said Monday that a U.S. district court issued a permanent injunction preventing German drugmaker Merz Pharma GmbH and its unit Merz Aesthetics from selling a rival cosmetic product Xeomin in the facial aesthetics market for ten months.

Allergan said that U.S. District Judge Andrew Guilford, after conducting a full trial, ruled that Merz Pharmaceuticals and Merz Aesthetics violated California's Uniform Trade Secrets Act. The judge also concluded that Merz misappropriated important trade secrets belonging to Allergan.

Allergan has alleged that its trade secrets were stolen by Merz. According to the company, Merz recruits from Allergan brought in confidential materials, including sales statistics and client lists.

In 2010, Allergan sued Merz and its U.S. units as well as former Allergan sales representatives who where hired by Merz. The German company is alleged to have made the recruitment as it was preparing to sell Xeomin for the treatment of certain muscle spasms in 2010, putting the product in competition with Botox.

Judge Guilford noted that the trade secrets misappropriated by Merz include "the specific identities and financial details"- including sales targets, actual sales amounts, and product volumes over time - of Allergan's relationships with virtually all of its physician customers in the U.S. for Botox Cosmetic and Juvederm, and a large segment of Allergan's physician customers in the U.S. for Botox.

The court also found that Merz misappropriated Allergan's strategic marketing plans, including its plans to address competition from Merz Aesthetics and Merz Therapeutics. "The value of this information is incalculable," the court noted.

Further, the court said that the right of free competition does not include the right to use the confidential work product of others.

Irvine, California-based Allergan said that in addition to the U.S. ruling, it prevailed last week in two separate cases that were filed against Merz in Europe.

The company noted that the Hamburg Regional Court in Germany issued a ruling prohibiting Merz from claiming a 1:1 dose equivalent ratio between units of Allergan's Botox and Merz's Xeomin, which is in line with a prior decision of that court in December 2011.

In Spain, Merz was found to be in breach of the Spanish Pharmaceutical Code for referring to a conversion ratio without, at the same time, making an express warning that the unit doses are not interchangeable.

In Monday's regular session, AGN is trading at $92.03, up $0.16 or 0.17 percent on a volume of 396,758 shares.

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by RTT Staff Writer

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