Dublin-based Botox maker Allergan has agreed to acquire Kythera Biopharmaceuticals, for more than $2 billion. Allergan hopes to bank on the medical cosmetic drug firm's recently approved treatment for double chins.
The deal values Kythera at $75 a share, of which Allergan will pay 80% in cash and 20% in new Allergan stock that will be issued to Kythera shareholders. News of the pending deal drove shares of Kythera up to $74.18 late Wednesday morning from its Tuesday closing price of $60.72.
Kythera received approval from the Food and Drug Administration in April for its drug treatment Kybella, the only nonsurgical treatment for fat that develops below the chin, also known as double chin.
“The acquisition of Kythera is a strategic investment that strengthens our leading global position in aesthetics and continues to position us for long-term growth,” said Brent Saunders, CEO and president of Allergan, in a statement issued Wednesday. “Kybella is an exciting new product that offers patients the first and only clinically proven, nonsurgical treatment for submental fullness (excess fat under the chin).”
The acquisition is expected to be completed by the end of the third quarter of 2015 pending approval by Kythera shareholders.
Kybella is being viewed by many as the first major advancement in aesthetic drug treatment since Botox. Kythera wants to begin selling the drug sometime after August. Before using the treatment, physicians must first complete the company's training program on how to safely administer it. Those sessions are set to start this month.
The treatments take about 20 minutes and patients experience visible results in two to four treatments, according to Kythera.
Kythera has estimated the drug could generate up to $500 million in annual sales. The company has not announced a price for Kybella, but some estimate it could cost up to $1,000 to complete the treatment regimen.
“Allergan's world-class medical aesthetics, global footprint, history and commitment to developing leading aesthetic products makes them ideally suited to realize the maximum commercial potential of Kybella,” said Keith Leonard, CEO and president of Kythera in a statement released Wednesday. “We look forward to working with Allergan to ensure a successful U.S. launch of Kybella, as well as to secure additional approvals globally.”
Shares of Allergan were down $.05 from its opening price of $298.02 to sell at $297.97 late Wednesday morning.