Kythera: Big Business in ‘Double Chins’

Finally, investors get excited about a biotech deal

   

When it comes to biotech IPOs this year, investors have treated them like a disease. But today we saw an exception: Kythera Biopharmaceuticals (NASDAQ:KYTH). The company issued 4.4 million shares at $16, which was at the top of the $14 to $16 range. So far in today’s trading, the shares are up 22%.

Kythera is actually not focused on curing serious health problems. Instead, it uses biotech innovations to make people look better. It’s known as “aesthetic medicine.”

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Kythera has an injectable drug called ATX-101, which reduces submental fat. Simply put, this is the stuff that gives people a “double chin.”

With the continued growth in obesity, ATX-101 is likely to get lots of interest. It also helps that physicians don’t have to purchase expensive equipment or rely on reimbursements from the federal government.

Yet ATX-101 is still in Phase III clinical trials, both in Europe and the U.S. As a result, the solution may not hit the market until 2014. But the good news is that the trials have been encouraging so far.

More important, ATX-101 will be the only injectable alternative in the market. So, if there’s approval, the upside could be huge. Consider that according to a research from GlobalData, the market for facial injectable drugs in 2011 was about $2.1 billion. And the annual growth rate is expected to be over 12% through 2018.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/kythera-big-business-in-double-chins/.

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