Edgar Filing: ALLERGAN INC

425

Valeant’s perspectives on

R&D

Filed by Valeant Pharmaceuticals International, Inc.

(Commission File No. 001-14956) pursuant to Rule 425 under

the Securities Act of 1933 and deemed filed pursuant to

Rules 14a-12 and 14d-2 under the Securities Exchange Act of

1934

Subject Company: Allergan, Inc.

Commission File No.: 001-10269

Forward-looking Statements

This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Canadian securities

laws. These forward-looking statements include, but are not limited to, statements regarding Valeant Pharmaceuticals International, Inc.’s (“Valeant”) offer to

acquire Allergan, Inc. (“Allergan”), business development activities, including the timing of closing pending transactions, clinical results and timing of development

products, peak sales of products and its expected future performance (including expected results of operations and financial guidance), and the combined

company’s future financial condition, operating results, strategy and plans. Forward-looking statements may be identified by the use of the words “anticipates,”

“expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” “target,” “opportunity,” “tentative,” “positioning,” “designed,”

“create,” “predict,” “project,” “seek,” “ongoing,” “upside,” “increases” or “continue” and variations or similar expressions. These statements are based upon the

current expectations and beliefs of management and are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual

results to differ materially from those described in the forward-looking statements. These assumptions, risks and uncertainties include, but are not limited to,

assumptions, risks and uncertainties discussed in the company’s most recent annual or quarterly report filed with the Securities and Exchange Commission (the

“SEC”) and the Canadian Securities Administrators (the “CSA”) and assumptions, risks and uncertainties relating to the proposed merger, as detailed from time to

time in Valeant’s filings with the SEC and the CSA, which factors are incorporated herein by reference. Important factors that could cause actual results to differ

materially from the forward-looking statements we make in this communication are set forth in other reports or documents that we file from time to time with the

SEC and the CSA, and include, but are not limited to:

the ultimate outcome of any possible transaction between Valeant and Allergan including the possibilities that Valeant will not pursue a transaction with

Allergan and that Allergan will reject a transaction with Valeant;

if a transaction between Valeant and Allergan were to occur, the ultimate outcome and results of integrating the operations of Valeant and Allergan, the

ultimate outcome of Valeant’s pricing and operating strategy applied to Allergan and the ultimate ability to realize synergies;

the effects of the business combination of Valeant and Allergan, including the combined company’s future financial condition, operating results, strategy and

plans;

the effects of governmental regulation on our business or potential business combination transaction;

ability to obtain regulatory approvals and meet other closing conditions to the transaction, including all necessary stockholder approvals, on a timely basis;

our ability to sustain and grow revenues and cash flow from operations in our markets and to maintain and grow our customer base, the need for innovation

and the related capital expenditures and the unpredictable economic conditions in the United States and other markets;

the impact of competition from other market participants;

the development and commercialization of new products;

the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary

capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets;

our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of

our other obligations under cross-default provisions; and

the risks and uncertainties detailed by Allergan with respect to its business as described in its reports and documents filed with the SEC.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date

hereof. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this

communication or to reflect actual outcomes.

More Information

ADDITIONAL INFORMATION

This communication does not constitute an offer to buy or solicitation of an offer to sell any securities and no tender or exchange offer for the shares of

Allergan has commenced at this time. This communication relates to a proposal which Valeant has made for a business combination transaction with

Allergan. In furtherance of this proposal, Pershing Square Capital Management, L.P. (“Pershing Square”) has filed preliminary proxy statements with

the Securities and Exchange Commission (the “SEC”) on May 13, 2014 and June 2, 2014 (the “preliminary proxy statements”) and Valeant and

Pershing

Square

(and,

negotiated

transaction

agreed,

Allergan)

may

file

one

other

proxy

statements,

registration

statements,

tender

exchange offer documents or other documents with the SEC. This communication is not a substitute for the preliminary proxy statements or any other

proxy statement, registration statement, prospectus, tender or exchange offer document or other document Valeant, Pershing Square and/or Allergan

may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF VALEANT AND ALLERGAN ARE

URGED TO READ THE PRELIMINARY PROXY STATEMENTS AND ANY OTHER PROXY STATEMENT(s), REGISTRATION STATEMENT,

PROSPECTUS, TENDER OR EXCHANGE OFFER DOCUMENTS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR

ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED

TRANSACTION. Any definitive proxy statement(s) or definitive tender or exchange offer documents (if and when available) will be mailed to

stockholders

Allergan

and/or

Valeant,

applicable.

Investors

and

security

holders

may

obtain

free

copies

the

preliminary

proxy

statements,

and

will be able to obtain free copies of these other documents (if and when available) and other documents filed with the SEC by Valeant and/or Pershing

Square through the web site maintained by the SEC at http://www.sec.gov.

Consent was not obtained or sought with respect to third party statements referenced in this presentation.

Information regarding the names and interests in Allergan and Valeant of Valeant and persons related to Valeant who may be deemed participants in

any solicitation of Allergan or Valeant shareholders in respect of a Valeant proposal for a business combination with Allergan is available in the

additional definitive proxy soliciting materials in respect of Allergan filed with the SEC by Valeant on April 21, 2014 and May 28, 2014. Information

regarding the names and interests in Allergan and Valeant of Pershing Square and persons related to Pershing Square who may be deemed

participants

any

solicitation

Allergan

Valeant

shareholders

respect

Valeant

proposal

for

business

combination

with

Allergan

available

the

preliminary

proxy

statements.

The

additional

definitive

proxy

soliciting

material

referred

this

paragraph

and

the

preliminary

proxy

statements can be obtained free of charge from the sources indicated above.

Valeant’s thoughts on industry innovation

Innovation is critical for the future of healthcare and the success of

Valeant

Majority of innovation coming from outside the big industry players

Big Pharma, primarily sourcing innovation by buying later-stage

products driven by biotechs, venture capital, start-ups,

foundations, physicians, and academic centers

Leading products largely developed outside of Big Pharma

Valeant’s strength in R&D/innovation focused on:

Core areas of dermatology, ophthalmology, and branded

generics

Focused on line extensions and reformulations, where returns

are more certain, and where Valeant has expertise

Innovation and productivity in

the Pharmaceuticals industry

Source: “Diagnosing the decline in pharmaceutical R&D efficiency”, Jack W. Scannell, Alex Blanckley, Helen Boldon & Brian Warrington, Nature Reviews Drug

Discovery 11, 191-200 (March 2012);

R&D productivity in pharma has been declining

since the 1950s

1000

100

1.0

0.1

2010

2000

1990

1980

1970

1960

1950

Overall trend in R&D efficiency

Evidenced by both scientific & business

publications (1/2)

the CEO of GlaxoSmithKline, believes that declining

R&D productivity is his industry's primary problem

Rebuilding the R&D engine in Big Pharma, 2008

The number of new drugs approved per billion US

dollars spent on R&D has halved roughly every 9

years since 1950, falling around 80-fold in inflation-

adjusted terms.

Diagnosing the decline in pharmaceutical R&D efficiency, March

2012

The pharmaceutical industry is in a period of crisis

due to the low number of new drug approvals relative

to the high levels of R&D investment.

Getting pharmaceutical R&D back on target, March 2011

Evidenced by both scientific & business

publications (2/2)

The pharmaceutical industry is facing unprecedented

challenges to its business model. Experienced

observers and industry analysts have even predicted

its imminent demise

How to improve R&D productivity: the pharmaceutical industry’s

grand challenge, March 2010

Although investment in pharmaceutical research and

development (R&D) has increased substantially in this

time, the lack of a corresponding increase in the

output in terms of new drugs being approved indicates

that therapeutic innovation has become more

challenging.

The productivity crisis in Pharmaceutical R&D, June 2011

“Big Pharma”

economic returns from R&D

below the cost of capital

Source:

Forbes

Who's

The

Best

Drug

Research?

Companies

Ranked,

hiddenpipeline.com

Average ~3.7% vs. cost of capital ~10%

R&D spend across the top 10 pharmacos has

flattened after a decade of double digit growth

Note: Includes J&J, Roche, Bayer, Sanofi, Eli Lilly, Novartis, Pfizer, GSK, Merck, AstraZeneca

CAGR: 0%

26.6

1998

2000

31.3

27.8

38.1

42.8

44.8

52.5

58.9

58.8

22.2

2013

25.0

CAGR: 10%

62.4

67.5

67.1

66.6

68.5

Combined R&D spend

$ Billions

74%

18%

Top 50 products –

Sources of innovation

Products = 50

Big Pharma: Top 10 companies at time of discovery

SOURCE: Evaluate

Only 4 of today's top 50 products were

discovered, developed, and commercialized

internally by "Big Pharma"

External

innovation

Internal R&D:

Big Pharma

Internal R&D:

Small/mid-size

Pharma and Biotech

Listing of top 50 2014 drugs (1/2)

Rank

Company

Product

Originator

2014E

AbbVie

Humira

Knoll

12,049

Sanofi

Lantus

Hoechst

8,923

Gilead Sciences

Sovaldi

Pharmasset

8,773

Roche

Rituxan

IDEC Pharmaceuticals

7,879

GlaxoSmithKline

Seretide/Advair

Glaxo

7,832

Roche

Avastin

Genentech

7,338

Roche

Herceptin

Genentech

6,931

Johnson & Johnson

Remicade

Centocor

5,796

AstraZeneca

Crestor

Shionogi

5,349

Celgene

Revlimid

Celgene

4,885

Amgen

Enbrel

Immunex

4,727

Otsuka Holdings

Abilify

Otsuka Holdings

4,723

Novartis

Gleevec

Ciba-Geigy

4,588

Pfizer

Lyrica

Northwestern University

4,556

Amgen

Neulasta

Kirin-Amgen

4,485

Boehringer Ingelheim

Spiriva

Boehringer Ingelheim

4,273

Merck & Co

Januvia

Merck & Co

4,063

Pfizer

Prevnar 13

Wyeth

4,006

Pfizer

Enbrel

Immunex

3,917

AstraZeneca

Symbicort Turbuhaler

Astra/Yamanouchi

3,803

Gilead Sciences

Atripla

Emory University

3,437

Novo Nordisk

NovoRapid

ZymoGenetics

3,265

Teva Pharmaceutical

Industries

Copaxone

Weizmann Institute

3,248

Gilead Sciences

Truvada

Emory University

3,066

Biogen Idec

Avonex

Biogen

2,878

Big pharma developed in-house

Big Pharma: Top 10 companies at time of discovery

SOURCE: Evaluate

Listing of top 50 2014 drugs (2/2)

Rank

Company

Product

Originator

2014

Eli Lilly

Alimta

Princeton University

2,807

Eli Lilly

Humalog

Eli Lilly

2,786

AstraZeneca

Nexium

Astra

2,723

Merck & Co

Zetia

Schering-Plough

2,665

Novo Nordisk

Levemir

Novo Nordisk

2,526

Merck & Co

Remicade

Centocor

2,480

Novo Nordisk

Victoza

Scios

2,472

Sanofi

Plavix

pre-Sanofi-Synthélabo

2,413

Novartis

Gilenya

Yoshitomi Pharmaceutical

2,412

Novartis

Lucentis

Genentech

2,397

Merck KGaA

Rebif

Weizmann Institute

2,388

Biogen Idec

Tecfidera

Fumapharm

2,374

CSL

Privigen

CSL

2,327

Novartis

Diovan

Ciba-Geigy

2,313

Sanofi

Lovenox

Rhône-Poulenc

2,299

Johnson & Johnson

Zytiga

The Institute of Cancer

Research

2,294

Eli Lilly

Cialis

ICOS

2,294

Pfizer

Celebrex

G.D. Searle

2,263

Allergan

Botox

Oculinum

2,238

Alexion Pharmaceuticals

Soliris

Alexion Pharmaceuticals

2,188

Baxter International

Gammagard Liquid

Baxter International

2,181

Merck & Co

Janumet

Merck & Co

1,992

Roche

Lucentis

Genentech

1,966

Baxter International

Advate

Baxter International

1,952

Pfizer

Lipitor

Warner-Lambert

1,929

Big pharma developed in-house

Big Pharma: Top 10 companies at time of discovery

SOURCE: Evaluate

Allergan similar to Big Pharma with ~80% of

2013 revenue acquired externally

Product

Launch Date

2013 Sales

($M)

Origin

Botox

1989

~1,990

Purchased in 1987 from physician originator,

developed as a treatment for Strabismus

Alphagan

1996

~220

Acquired from Pfizer

Tazorac

1997

~90

Developed in house

Juvederm

2000

~300

Acquired in Inamed purchase in 2005

Lumigan

2001

~630

Developed in house

Restasis

2002

~940

UGA in 1993; subsequently co-licensed, co-

developed, and co-marketed with Inspire

Pharmaceuticals

Aczone

2005

~140

Bought from QLT in 2008

Combigan

2007

~250

Combination product leveraging Alphagan

Latisse

2008

~100

Fortunate side effect of existing product (Lumigan)

Breast implants

~420

Acquired in Inamed purchase in 2005

Other dermal fillers

~140

Acquired in Inamed purchase in 2005

SkinMedica

~80

Acquired in SkinMedica purchase in 2012

Source: annual reports, FDA, EvaluatePharma, press searches

Source: “Diagnosing the decline in pharmaceutical R&D efficiency”, Jack W. Scannell, Alex Blanckley, Helen Boldon & Brian Warrington, Nature Reviews Drug

Discovery 11, 191-200 (March 2012); Allergan 10Ks, annual reports

Industry R&D productivity vs. Allergan

spending

1000

100

1.0

0.1

2010

2000

1990

1980

1970

1960

1950

Overall trend in R&D efficiency

Allergan R&D spend trend ($B)

1.5

15E17E

1.2

2010

0.8

1.1

0.4

0.8

2000

0.2

0.1

1990

0.1

1.0

M&A has been an important part of many

leading

healthcare

companies’

strategies

Over the last 10 years number of Transactions with >$50M Deal Value

Source: Capital IQ

A similar debate has occurred in the technology

sector along with many other industries

Innovation has nothing to do with how many R&D dollars you have.

When Apple came up with the Mac, IBM was spending at least 100

times more on R&D. It's not about money. It's about the people you

have, how you're led, and how much you get it.

Steve Jobs, Forbes 1998

Indeed, the correlation between R&D spending and innovation isn't

clear. In terms of proportional research spending, Apple ranked last

on our list of top R&D spenders, with a 3.2% research and

development outlay ($844 million altogether). Yet nobody would

accuse Apple-creator of the iPod and iPhone-of not being

innovative, or of not being able to transform its successes into

bottom-line results. Apple's profit has grown an average of 62% over

its last two fiscal years.

CIO Zone Top 50 Technology R&D Spenders 2007

Valeant’s approach to R&D

1. Products developed in our labs

2. Lifecycle management programs

4. Late-stage product in-licensing

5. Late-stage / pre-launch product

acquisition

3. Branded Generics development

We Build a Robust Pipeline Drawn from Internal

and External Sources

Our output-driven R&D

approach has delivered

more launches than most

competitors

Our approach to R&D is

lower cost and lower risk

without sacrificing quality or

likelihood of approval

We have a robust internal pipeline, which is

supplemented with aggressive business

development

Focusing on R&D Output Rather than Input

Traditional Big Pharma input-driven

approach

Focus on shots on goal

Higher spend levels assumed to

generate more new products

Incentives linked to investment levels

Valeant’s output focused approach

Focus on productivity –

outputs

measured against inputs

Lower risk projects

Decentralization helps ensure right

products for right markets

Focus on line extensions and new

indications

Portfolio prioritization via rigorous,

unbiased peer scientific review

With overall industry R&D

productivity steadily declining,

traditional bets on R&D are unlikely

to pay off

Our R&D organization

Total

R&D

Employees

748

US R&D: 487

Ex-US R&D: 261

Majority of entrepreneurs have used proceeds to fund

further innovation

1: includes quality

Valeant

Launch

Products

(1/2)

–

derm

and

aesthetics

Product

Category

Description

Expected launch

date

Source

Est. peak sales ($M)

enVista™

inserter

(lens)

Eye Health

Launched

B&L

40-50

PureVision

2 for

Presbyopia

Eye Health

Daily contact lens

Launched

B&L

20-30

Victus™

enhancements

Eye Health

Multiple

enhancements

Lens fragmentation

2H 2014

B&L

100-200

Ultra

Eye Health

Silicone hydrogel

monthly lens

Launched

B&L

300-400

BioTrue®

multifocal

Eye Health

Daily contact lens

May-14

B&L

60-80

Trulign™

expanded

ranges (lens)

Eye Health

Broader range of

powers

Q2 2014

B&L

40-60

CeraVe®

baby line

Consumer

OTC moisturizer

Launched

Dow

15-20

Peroxiclear™

Consumer

Peroxide based

contact lens solution

Launched

B&L

50-70

Ossix®

Plus

Oral Health

Dental membrane

Launched

Partnered

from

Datum

Dental

10-20

Onset®

Oral Health

Dental analgesic

Launched

Acquired from Onset

40-50

Total

$1,255M-2,270M

Source: Valeant management estimates

Further

enhancements

Valeant has funded entrepreneurs and

innovation through acquisitions (1/2)

Acquired business from founder Gordon Dow and

President Bhaskar Chaudhuri

Majority of entrepreneurs have used proceeds to fund

further innovation

Acquired WW rights to Emerade anaphylaxis injector from

Larsson family

Larsson family continues in to work on next generation

Emerade

Partnered WW rights from Living Proof & 3 MIT scientists

responsible for development

Entrepreneurs continue to work on new platforms and

products

Valeant has funded entrepreneurs and

innovation through acquisitions (2/2)

Partnered with Brazilian Biotech -

Pelenova on

Regederm a novel scar treatment

Pelenova continuing to develop new therapies

Bought option to acquire Ideal Implant from Dr. Bob Hamas

and shareholders

Valeant payments to date have funded completion of clinical

study and seek FDA approval

Acquired WW rights for low dose brimonidine from Dr. Lee

Nordan and Dr. Jerry Horn

Dr. Nordan continues to develop novel therapies

Eye Therapies, LLC

Majority of entrepreneurs have used proceeds to fund

further innovation

Valeant acquisition R&D review

Have never stopped any program mid-stream/study

Peer review all programs

Programs placed into 2 categories

Invest:

high potential programs with strategic fit, carry to next

stage-gate and then re-assess

Programs continued to be re-assessed based on clinical data

Partner:

higher risk and/or lacking strategic fit, continue

development but look for strategic partner to lead development

going forward

Partnerships have included Valeant payments/funding to help

with continuing clinical program

No partner interest:

Products that cannot find a partner or are pre-

development ideas that do not have scientific and commercial

rationale are terminated

Typical in Pharma mergers to discontinue/rationalize R&D programs

Valeant has invested in or partnered over 70% of

acquired projects

Acquired

portfolio

Invested by

Valeant

Partnered

No partner

interest

development

–

Staccato(R) Loxapine

–

Istradefyllin approved in Japan in

Phase 3 in US

Status of out-partnered products

1 Staccato(R) Loxapine launched by Alexza and Teva as Adasuve in 2013

2 Includes products in negotiation

142

N/A

2 launched in select markets:

All others in Phase 2/3, 1 in Phase 1

E-TAZ, TWIN for acne vulgaris in

Failed to demonstrated clinical viability

No external parties interested in

partnering

No projects terminated before reaching

next milestone

Criteria used to terminate:

Dow Overview

Acquired dermatology R&D house with leading capabilities and track record

Developed/had a part in developing most major dermatology drugs

Full capabilities from preclinical through regulatory

Senior/R&D leadership retained to bring on capabilities and experience

R&D programs had largely been sourced internally

Reviewed all programs with both Valeant and Dow R&D, maintained all 8

significant R&D programs, bringing several to market through in-house

commercialization capabilities and successfully launching Acanya:

Approved/Filed

Acanya: Approved

Ram .08: Approved

IDP-108 (Jublia): Approved

Onexton: Filed

Phase IIB

IDP-118

4 compounds failed over time, all by missing endpoints

Biovail Overview

Merger to bring two specialty companies together to create scale

and

platform for acquisitions

Strong, growing Canadian business

US business with portfolio of tail assets

No research capabilities with R&D pipeline in-licensed or acquired from

parties

Reviewed all pipeline programs, Biovail primarily focused on orphan

neurology indications, with most products being non-strategic to Valeant

going forward

Scientists/R&D professionals and commercial voted (executive team did

not vote)

~60%

programs

partnered

companies

with

focus

neurology;

two

products have received approval to date

Launched generic fenofibrate

Terminated several Gx filings and low-probability life-cycle management

programs

Medicis Overview (1/2)

Acquired North American dermatology company with complementary

portfolio

Low growth, prior year with stock price that had underperformed S&P

over previous 10 years

Declining acne franchise

Underperforming aesthetic business

No research capabilities with significant capital expenditures to build

R&D pipeline from in-licensing and acquisitions, majority of

development activities outsourced

Notable partnerships/acquisitions:

Graceway

Galderma/Q-Med aesthetics

Sol-Gel

NNC

Medicis Overview (2/2)

Reviewed all 20 significant R&D programs led by Medicis R&D teams

Scientists/R&D professionals and Medicis commercial voted (executive

team did not vote), no material disagreement on prioritized programs

Maintained late stage programs, bringing 4 programs to the FDA for

approval:

Luzu: filed and launched

Metrogel 1.3%: filed and out-licensed to commercial partner

SPHAL: filed awaiting approval

Perlane LCM: filed awaiting approval

Brought in Emervel product from Galderma, which Medicis had

previously declined

Out-licensed/actively negotiating earlier stage dermatology programs

programs that were outside of the core dermatology/aesthetics platform

Terminated programs were mainly oral acne products where

approval/regulatory guidance has become increasingly difficult

B&L Overview (1/2)

Acquired global eye health company as platform worldwide

Global franchise in contact lens, solutions, and OTCs

Strong franchise in surgical devices

Strong US pharmaceuticals business

R&D portfolio largely built from capital expenditure for in-licensing,

acquisitions, and partnerships with in house research largely focused in

contact lenses

Notable acquisitions:

Ista

TPV

Eyeonics

Notable in-licenses:

Latanoprostine

Mapracorat

Mimetogen, licensed between signing and close

Brimonodine

B&L Overview (2/2)

Reviewed ~100 R&D programs with both Valeant and B&L R&D teams

Scientists/R&D professionals and B&L commercial voted (executive

team did not vote), no material disagreement on prioritized programs

Maintained ~74% of programs, including all late stage R&D programs,

bringing all programs to their next stage-gate:

Ultra: filed and launched

Peroxiclear: launched

Latanoprostine: in Phase III

Brimonodine: in Phase III

Mimetogen: Phase II, in-licensed between signing and close

Mapracorat: failed Phase III endpoints

Terminated programs were largely very early stage/conceptual

programs with little investment to date

No products partnered to date