Allergan To Buy Kythera Biopharma For $2.1 Bln

(RTTNews) - Botox maker Allergan plc (AGN) has agreed to acquire Kythera Biopharmaceuticals Inc. (KYTH) for about $2.1 billion in cash and stock, the two companies said Wednesday. Kythera is a developer of prescription products for the aesthetic medicine market.

Kythera's lead product, Kybella, is the first and only approved non-surgical treatment for reduction of submental fullness, or double chin. The acquisition of Kythera will complement Allergan's existing portfolio in facial aesthetics.

Under the terms of the deal, Allergan will acquire Kythera for $75 per share, representing a 23.5 percent premium to Kythera's closing stock price of $60.72 per share on Tuesday.

The fixed-value transaction consideration will be payable 80 percent in cash and 20 percent in new Allergan shares issued to Kythera shareholders. The transaction, subject to approval by Kythera's shareholders, is expected to close in the third quarter of 2015.

Keith Leonard, CEO and President of Kythera said, "We look forward to working with Allergan to ensure a successful U.S. launch of Kybella, as well as to secure additional approvals globally."

Allergan noted that the acquisition of Kythera will immediately enhance its global facial aesthetics portfolio with the addition of Kybella injection. Kybella was approved by the U.S. Food and Drug Administration or FDA on April 29, 2015.

Kybella injection is also being developed for potential introduction into international markets. Kythera has submitted Kybella injection for regulatory approval in Switzerland, Canada and Australia, with other market applications to follow.

Submental fullness can affect adults - both women and men - of all ages, weight and gender. It is influenced by multiple factors including aging and genetics, and is often resistant to diet and exercise.

Westlake Village, California-based Kythera said it is executing a training-led launch in the U.S., supported by a training program designed to educate physicians and qualified injectors on the safe use of Kybella and its approved indication.

According to the company, physician faculty education in the U.S. began in June 2015, while Kybella physician training programs will be initiated in late summer. Kythera noted that qualified injectors in the U.S. will be able to buy Kybella and treat their patients after they have been trained.

Allergan said its earnings outlook for fiscal 2015 that was provided on May 11, 2015 is unchanged as a result of the acquisition. The company expects the acquisition to be break even in 2016 and accretive thereafter.

Further, Allergan said it remains committed to de-levering to below 3.5x debt to adjusted EBITDA by the end of the first quarter of 2016.

Allergan was acquired by Actavis plc (ACT) for $70.5 billion in cash and stock. The acquisition was completed by Actavis in mid-March 2015.

For Allergan, J.P. Morgan is serving as financial advisor and Covington & Burling LLP is serving as lead legal counsel. Goldman Sachs is serving as financial advisor to Kythera, while Latham & Watkins LLP is serving as its lead legal counsel.

AGN closed Tuesday's trading at $298.02, down $3.33 or 1.11 percent on a volume of 1.35 million shares.

KYTH closed Tuesday's trading at $60.72. In Wednesday's pre-market activity, the stock is gaining $13.75 or 22.65 percent to $74.45.