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Allergan to acquire Kythera Biopharmaceuticals

Monday, June 22, 2015

Allergan, a global pharmaceutical company, has agreed to acquire Kythera Biopharmaceuticals, a Westlake Village, Calif.-based biopharmaceutical company, in a cash and equity transaction valued at $75 per Kythera share, or approximately $2.1 billion, subject to the fulfillment of certain customary conditions.

The fixed-value transaction consideration will be payable 80% in cash and 20% in new AGN shares issued to Kythera shareholders. Allergan’s 2015 earnings-per-share forecast provided on May 11 is unchanged as a result of the acquisition. The acquisition is expected to be breakeven in 2016 and accretive thereafter. The company remains committed to de-levering to below 3.5x debt to adjusted EBITDA by the end of the first quarter of 2016.

The acquisition of Kythera immediately enhances Allergan’s global facial aesthetics portfolio with the addition of Kybella (deoxycholic acid) injection, the first and only approved non-surgical treatment for contouring moderate to severe submental fullness, commonly referred to as double chin. Kybella was approved by the FDA on April 29. Kybella injection also is 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. The acquisition also will add Kythera’s development product setipiprant (KYTH-105), a novel compound for the prevention of male pattern baldness, as well as additional early-stage development candidates.

Brent Saunders, CEO and president of Allergan, said, “Kybella also is a pivotal entry point for expanding the use of facial aesthetic products in men, while Kythera’s setipiprant (hair-loss) development program can drive additional long-term value.”

Submental fullness is a common yet undertreated condition that can detract from an otherwise balanced and harmonious facial appearance—leading to an older and heavier look. Submental fullness can affect adults—both women and men—of all ages, weight and gender. Influenced by multiple factors including aging and genetics, submental fullness often is resistant to diet and exercise. According to a 2015 survey by the American Society for Dermatologic Surgery, 67% of consumers are bothered by submental fullness.

Kythera 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. Physician faculty education in the U.S. began in June. Kybella’s physician training programs will initiate in late summer. Qualified injectors in the U.S. will be able to purchase Kybella and treat their patients after they have been trained. 

Allergan’s acquisition of Kythera is subject to approval by the shareholders of Kythera, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and fulfillment of certain other customary conditions to closing. Pending such approvals and fulfillment of other conditions, Allergan currently anticipates closing the transaction in the third quarter of 2015.

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