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.”
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.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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