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Kythera climbs as 'double chin' drug meets goals

NEW YORK (AP) -- Shares of Kythera Biopharmaceuticals surged Tuesday after the company said a drug intended to treat double chins met its goals in two late-stage clinical studies.

THE SPARK: The company said Monday that its ATX-101 injection reached its main and secondary goals in the trials. Kythera said the drug worked better than placebo a reducing fat in the submental area of the neck, which can create the appearance of a double chin. ATX-101 is intended to destroy fat cells while leaving other tissue largely unaffected. The company also said patients were happier after treatment with the drug than placebo.

Patients in the study received six injections about four weeks apart. Kythera said the side effects were generally mild or moderate and they included swelling, pain, bruising, numbness and redness.

THE BIG PICTURE: Kythera Biopharmaceuticals Inc. went public in October, raising $72.6 million in net proceeds. The IPO helped fund late-stage testing of ATX-101. The Calabasas, Calif., company does not have any approved drugs or other products in clinical testing.

German drugmaker Bayer AG holds the rights to ATX-101 outside the U.S. and Canada. Bayer plans to ask European Union regulators to approve the drug in 2014.

THE ANALYSIS: Cowen and Co. analyst Ken Cacciatore said he thinks Kythera will file for U.S. approval of ATX-101 in the second quarter of 2014, and said U.S. sales could surpass $500 million a year. He maintained an "Outperform" rating on the stock with a price target of $50 per share.

SHARE ACTION: Kythera Biopharmaceuticals shares rose $8.42, or 25 percent, to $41.95 on Tuesday. Earlier the stock peaked at $43.25. The company's IPO priced at $16 per share.