A matter of aesthetics

KYTHERA acquires rights to ATX-101 outside of the U.S. and Canada from Bayer Consumer Care

Lloyd Dunlap
CALABASAS, Calif.—KYTHERA Biopharmaceuticals Inc. and Bayer Consumer Care AG jointly announced that KYTHERA has reacquired all rights outside of the U.S. and Canada to ATX-101, a proprietary formulation of a purified synthetic version of deoxycholic acid currently in late-stage development for the reduction of submental fat (double chin). In 2010, KYTHERA licensed the commercial rights to ATX-101 outside of the U.S. and Canada to Bayer.
 
Erica Mann, global president of Bayer HealthCare’s Consumer Care Division explained the company’s decision by saying “While we believe ATX-101 will fulfill an unmet global need, Bayer’s strategic focus has evolved since we licensed ATX-101 in 2010. Our decision to take an equity position in KYTHERA is a testament to our belief in the potential for ATX-101, and will allow us to participate in KYTHERA’s future success.” Analysts suggest that the drug could be a $500 million-per-year product.
 
“We are very pleased to acquire all rights to ATX-101 outside the U.S. and Canada, giving us full global rights to develop and commercialize ATX-101,” said Keith Leonard, KYTHERA’s president and CEO. “We appreciate Bayer’s investment in the ATX-101 global development program over the past four years. During that time we strengthened our financial position and assembled a senior executive team with global aesthetic development and commercialization expertise. I am confident in our ability to maximize the long-term global value of ATX-101. While our primary focus remains filing our U.S. New Drug Application in the second quarter of 2014, we also plan to make multiple ex-U.S. regulatory submissions in the next 12 months.”
 
Leonard noted in a conference call following the announcement that the deal was structured to preserve KYTHERA’s strong cash position—$190 million pro forma as of November 2013—to assist in a strong marketing rollout when ATX-101 is approved, both in the United States and abroad. “As we scan the landscape of the aesthetics medicines market with the goal of building a leading aesthetics company, regaining control of ATX-101 was the best deal,” he said. He added that the U.S. comprises about half of the total market for facial injectables and that the ex-U.S. market is large enough to justify the reacquisition.
 
Under the new agreement, KYTHERA Holdings Ltd., a wholly-owned Bermuda subsidiary of KYTHERA Biopharmaceuticals, acquired rights to develop and commercialize ATX-101 outside the U.S. and Canada. Bayer will receive $33 million in KYTHERA common stock, plus a $51 million note, payable no later than 2024. Bayer is also eligible to receive certain long-term sales milestone payments on annual sales outside of the U.S. and Canada.
 
In clinical trials, ATX-101 resulted in a reduction of fat under the chin with more than 90 percent of patients in a long-term follow-up study of treatment responders maintaining a meaningful reduction of the fat after two years. Patients treated with ATX-101 reported high satisfaction with their treatment and the improvements in their appearance and self-perception
 
The company released top line results from its pivotal Phase 3 clinical program for ATX-101 in the U.S. and Canada in September 2013. The trials were conducted in approximately 70 centers and enrolled about 1,000 patients. In addition, positive and consistent results from multiple Phase 3 trials were reported in the U.S. and Europe, and will provide the basis for regulatory submissions for approval of ATX-101. If approved, ATX-101 will be a first-in-class submental contouring injectable drug.
 
In their analysis, investment firm Leerink stated that “In our view, KYTHERA’s repurchase of ex-US ATX-101 rights from Bayer is a significant positive, bolstering the company’s overall strategic value as management now gears up for global regulatory filings of its first-in-class injectable aesthetic product to treat submental fat (double chin). The $84 million price tag for an international filing-ready Phase 3 asset with little to no near-term cash outlay leaves plenty of headroom for a successful U.S. launch and several potential OUS (outside U.S.) approvals. [The] management team’s global regulatory and commercial expertise provides substantial incremental leverage and country-by-country potential approvals bolster KYTHERA’s 2015 catalysts beyond the U.S. filing. We expect [the company] to trade positively on the news; our model is under review.”
 
KYTHERA Biopharmaceuticals was founded in 2005 on the premise of building a new kind of biotechnology company—one aimed squarely at bringing great science, clinical rigor and real innovation to the growing area of aesthetic medicine. KYTHERA is named after an island off the coast of southern Greece, in the Mediterranean Sea. Southernmost of the Ionian Islands, the island of Kythera was the chief center for the worship of Aphrodite, the Greek goddess of beauty and love. It is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel prescription products for the aesthetic medicine market. In addition to ATX-101, KYTHERA maintains other active research interests in hair and fat biology, pigmentation modulation and facial contouring.

Lloyd Dunlap

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