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Based in Calabasas, CA, KYTHERA Biopharmaceuticals (NASDAQ:KYTH) scheduled a $60 million IPO with a market capitalization of $255 million at a price range mid-point of $15, for Thursday, October 11, 2012.

Ten IPOs are scheduled for the week of October 8. The full IPO calendar is available here.

S-1A filed September 24, 2012

Manager, Joint Managers: J.P. Morgan; Goldman, Sachs.
Co Managers: Leerink Swann: Lazard Capital Markets.

SUMMARY
Biopharma KYTH is in Bayer-sponsored Phase III clinical trials for a prescription product that KYTH believes has sales potential in the U.S. of $500 million.

Venture-funded KYTH has established a major partnership with Bayer (OTCPK:BAYRY) that has resulted in significant milestone payments.

CONCLUSION
Nevertheless, several biopharma companies that recently tried to IPO have gone on a day-to-day basis, which means they may not IPO, including GlobeImmune (NASDAQ:GBIM). And Regulus Therapeutics (NASDAQ:RGLS) recently IPO'd at a 43% discount from the price range mid-point market capitalization.

The problem is no one knows when and if Phase III clinical trials will be successful.

Therefore, we would watch KYTH from the sidelines.

BUSINESS
KYTH is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel prescription products for the aesthetic medicine market.

KYTH's objective is to develop first-in-class prescription products using an approach that relies on the scientific rigor of biotechnology to address unmet needs in the rapidly-growing market for aesthetic medicine.

KYTH's initial focus is on the facial aesthetics market, which comprises the majority of the aesthetic medicine market.

KYTH's product candidate, ATX-101, is a potential first-in-class, injectable drug currently in Phase III clinical development for the reduction of submental fat, which commonly presents as an undesirable "double chin."

Based on clinical trials conducted to date, ATX-101 has exhibited significant, meaningful and durable results in the reduction of submental fat.

KYTH believes ATX-101, if approved, has the potential to reach long-term annual sales of $500 million in the United States

BAYER COLLABORATION
In August 2010, KYTH entered into a collaboration arrangement with Bayer to develop and commercialize ATX-101 outside the United States and Canada.

Bayer operates in over 80 countries and is well-positioned to commercialize ATX-101 outside the United States and Canada through its dermatology division, which reaches more than 50,000 dermatologists in markets worldwide.

In connection with establishing the collaboration arrangement, KYTH received an upfront payment of $43.6 million. In May 2012, KYTH received a $15.8 million payment from Bayer triggered by Bayer's decision to pursue continued development and regulatory approval for ATX-101 after receipt of positive results from the European Phase III clinical trials for ATX-101.

In addition, KYTH also received $17.4 million from Bayer to fund certain further global development activities of ATX-101 under the terms of the collaboration arrangement.

KYTH remains eligible to receive up to $297 million in additional payments contingent upon Bayer's achievement of specified regulatory and commercialization milestones pursuant to the collaboration arrangement.

In addition, if ATX-101 is approved for commercial use in territories licensed to Bayer, KYTH will be eligible to receive escalating royalties in the mid- to high-teens based on Bayer's net product sales of ATX-101.

LICENSE AGREEMENT WITH LOS ANGELES BIOMEDICAL RESEARCH INSTITUTE
In August 2005, KYTH entered into an exclusive license agreement with Los Angeles Biomedical Research Institute at Harbor/UCLA Medical Center, or LA Biomed, pursuant to which KYTH obtained a worldwide exclusive license to practice, enforce and otherwise exploit certain patent rights related to ATX-101.

KYTH's exclusive license requires KYTH to pay LA Biomed a milestone payment of $0.5 million upon receipt of marketing approval of ATX-101, as well as non-royalty sublicense fees equal to 10% of any sublicense income, up to an aggregate of $5.0 million.

Additionally, upon commercialization of a licensed product or service, KYTH is obligated to pay low- to mid-single digit royalties on net product sales of ATX-101 by KYTH and Bayer.

ATX-101 CLINICAL DEVELOPOMENT
To support approval of ATX-101, KYTH is pursuing a rigorous, science-based clinical development program. ATX-101 is the subject of four pivotal Phase III clinical trials for the reduction of submental fat, consisting of two ongoing trials in the United States and Canada, and two recently completed trials in Europe.

PRE-IPO 5% SHAREHOLDERS
Entities affiliated with Versant Venture II, L.L.C., 20%
ARCH Venture Fund VI, L.P., 16%
Prospect Venture Partners III, L.P., 15%
Entities Affiliated with JAFCO Co., Ltd., 7%
Fidelity Contrafund: Fidelity Advisor New Insights Fund, 11%

USE OF PROCEEDS

  • KYTH expects to net $53 million from its IPO.

  • KYTH intends to use substantially all of the net proceeds from this offering to fund the U.S. Phase III clinical trials of ATX-101. The balance is allocated for working capital and general corporate purposes, including research and development.

Disclaimer: This KYTH IPO report is based on a reading and analysis of [ticker]'s S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: KYTHERA Biopharmaceuticals