Allergan (AGN), a pharmaceutical company best known for developing Botox, fell 22.1% from $210.01 to $163.58, reducing the Fund’s return by 35 basis points. The stock fell after a federal judge invalidated patents covering the company’s $1.5 billion dry-eye drug, Restasis, thereby enabling a generic version to come to the market. Shares declined again after Revance Therapeutics, a clinical-stage biotech company, presented data showing that its competing Botox product lasts longer than Allergan’s Botox. We added to our position as the stock moved lower, because we think Allergan’s aesthetics franchise remains solid despite increasing competition. The stock is also cheap, trading at just 10 times expected 2018 earnings.
From Jerome Dodson (Trades, Portfolio)'s fourth-quarter 2017 Parnassus Fund shareholder letter.
