ALLERGAN, INC. 
(Reuters) - Shire (>> Shire PLC) has won U.S. approval for its most important new medicine, a treatment for dry eyes, in a fresh boost for the company which completed its $32 billion (£24.3 billion) acquisition of U.S. rare diseases specialist Baxalta last month.
The Dublin-based drugmaker has been a big stock market winner following Britain's decision to leave the European Union, benefiting from the strength of the dollar against sterling and investor demand for defensive sectors like pharmaceuticals.
Investors are looking for more good news next month when Shire reports quarterly results. Chief Executive Flemming Ornskov said on Tuesday he would update forecasts for the savings to be made from the Baxalta deal on Aug. 2, raising hopes that more costs will be eliminated than the annual $500 million initially forecast.
Shire's share price, already up 20 percent since the UK referendum vote on June 23, gained another 3 percent on Tuesday on news the U.S. Food and Drug Administration had approved lifitegrast eye drops for treating signs and symptoms of dry eye disease.
Lifitegrast, which will be marketed as Xiidra in the United States, is expected to launch in the third quarter. It treats an eye disease that affects nearly 16 million adults in the United States.
It is Shire's first FDA-approved medicine in ophthalmics and marks an important step in the group's ambition to become a leader in this market.
It is also the first new drug to treat dry eye disease since Allergan's (>> Allergan, Inc.) Restasis won approval in 2002 and analysts said the label description for Shire's product compared very favourably with its competitor.
Consensus forecasts currently point to annual Xiidra sales of just over a $1 billion in 2021, according to Thomson Reuters Cortellis, against $1.4 billion expected for Restasis this year. But that Shire figure may now be revised up.
"With a strong label and better tolerability profile, Xiidra could do even better," said Berenberg Bank analyst Alistair Campbell.
Industry analysts believe there is still a significant opportunity in the dry eye market, as current treatments such as Restasis and steroids are far from optimal.
Ornskov said Xiidra was a "trailblazer" for Shire, which is building up a significant capacity in ophthalmics. Another drug for infectious conjunctivitis is now entering final-stage clinical testing.
Outside the United States, Ornskov has high hopes for Xiidra in Europe and Canada, where the company is discussing filing options with regulators, as well as Japan.
Leerink analyst Jason Gerberry said Xiidra had clear benefits over old products, since it works as early as two weeks after treatment, while Restasis can take six to eight weeks, according to ophthalmology specialists.
Xiidra is also indicated for treatment of both signs and symptoms of dry eye disease, whereas Restasis was approved only on a demonstrated improvement in objective signs of dry eye.
An often chronic disease, dry eye is associated with inflammation that may eventually lead to damage to the surface of the eye.
Shire's drug had been rejected initially by the FDA in October, when Shire was asked for an additional clinical study, but the company remained confident it would satisfy the U.S. regulator.
(Additional reporting by Amrutha Penumudi in Bengaluru; Editing by Keith Weir, Greg Mahlich)
By Ben Hirschler
