Bayer Signs Deal with Kythera – Analyst Blog

Bayer AG (BAYRY) and Kythera Biopharmaceuticals Inc. recently entered into a licensing deal whereby the latter will grant ex-US and Canada rights of its lead product ATX-101 to Intendis, the dermatology wing of Bayer. ATX-101 is currently being evaluated for the reduction of localized fat under the chin (submental fat).

 

Kythera has retained development and marketing rights for all potential indications of the candidate in the US and Canada.

 

Submental fat is a localized subcutaneous fat deposit immediately beneath the chin and jaw line and, currently, there are no approved drugs in the US for its correction.

 

For the deal, Bayer will make an upfront payment of $43 million to Kythera. The latter can also receive up to $330 million on the achievement of certain development, manufacturing and commercialization milestones. Moreover, Kythera is also eligible to receive tiered double-digit royalties on the sales of the drug made by Bayer outside the US and Canada.

 

Kythera and Intendis plan to commence phase III trials with ATX-101 in Europe by the end of 2010.

 

Kythera Biopharma is a biotechnology company involved in developing prescription therapeutics for restorative, preventative care, and aesthetic medicine markets. The company also has active or exploratory programs in adipolysis, dermal contouring, pigmentation modulation, photoaging, and topical neuromodulation.

 

We currently have a Neutral recommendation on Bayer, which is supported by a Zacks #3 Rank (short-term Hold rating). We believe the successful development of ATX-101 should allow Bayer to expand its dermatology product portfolio.