French drugs group Ipsen and its US partner Medicis said the Food and Drug Administration had agreed to consider the US marketing of Reloxin in a potential boost for the would-be Botox competitor.
The two companies filed an application in March in a bid to penetrate the massive market for anti-wrinkle treatments based on botulinum toxin, dominated by Allergan's Botox.
The FDA has agreed to examine the marketing of Reloxin as an aesthetic medicine in the United States, the two companies said.
Medicis will pay Ipsen $25 million under the terms of their partnership following the FDA agreement to study the drug.
If their botox product is approved, Medicis will pay a further $75 million and market Reloxin in the United States.
Reloxin is a botulinum toxin type A designed to reduce the appearance of glabellar lines or frown lines.
Sales of Botox, Allergan's biggest product, totalled $1.212 billion in 2007 and Allergan forecast in January it would sell between $1.365 billion and $1.415 billion this year.
Last year, sales of Botox for cosmetic purposes grew by 29 percent, while therapeutic use of the drug -- mainly for movement disorders and spasticity -- increased 19 percent.
However fears of recession have raised questions over the demand for botox injections, which cost around $400 and work by temporarily paralyzing nerves to iron out facial wrinkles.
Allergan chief executive David Pyott told Reuters in a March interview that consumers may have the shots less frequently but that he saw it as a resilient brand with international growth.
In contrast to most pharmaceuticals, cosmetic botox treatments are paid for out of consumers' pockets, making them more vulnerable to an economic downturn.
Allergan is meanwhile developing Botox for chronic daily headaches and as a treatment for overactive bladders. Ipsenshares were up 2.6 percent at 40.47 euros, valuing the firm at about 3.4 billion euros, in firmer market.
The stock is down 2.2 percent this year, but has outperformed the broad French market by 7 percent and a basket of European healthcare stocks by 11 percent. -Reuters