Can Allergan make double-chin drug pay off? Maybe, but slowly, analysts say

Allergan CEO Brent Saunders

With Wednesday's $2.1 billion agreement for California's Kythera, Allergan ($AGN) nabbed a chin fat drug that CEO Brent Saunders called a "pivotal entry point" for expanding the use of facial aesthetics in men. First, though, it has to launch it, and as analysts point out, it could face some hurdles along the way.

Kythera is currently in the middle of a "training-led launch" in the U.S. for the product, which the FDA approved in April under the moniker Kybella. Physician faculty education kick-started earlier this month, and the company will initiate doctor training programs later this summer. After completing training, qualified injectors will be able to buy the fat-fighter and use it to treat their patients, Allergan said in a Wednesday statement.

There are a couple factors working in Allergan's favor as it heads toward a rollout, Bernstein analyst Ronny Gal wrote in a Wednesday research note. First of all, "Allergan, with its significant experience in marketing aesthetic injectable products, is an ideal commercial organization" to take Kybella forward; the treatment will join the likes of Botox, a blockbuster that keeps churning out sales growth, in Allergan's facial portfolio.

And secondly, "we are … in the midst of an aesthetic 'golden age' where the entire field is growing quickly," he pointed out.

But that doesn't necessarily mean pushing Kybella will be a breeze. As Evercore ISI analyst Umer Raffat highlighted in a note to clients, there are some safety issues at play. In trials, the drug posted a 4% incidence of facial nerve injury--a "key safety event to keep in mind as Kybella launches," he wrote.

Beyond that, Allergan will be looking to take it where few aesthetics have gone before. "Products with this treatment profile are not ideal candidates to be big sellers," Gal wrote. And Kybella's ramp-up "will be slow, if we look to the fillers as an example."

Right now, consensus models show $400 million in U.S. sales by 2020 for Kybella, which, by Gal's calculations, means Kythera was a bit of a pricey pickup for Allergan. "They obviously have much higher expectations than we do" for Kybella, he wrote.

But the way Raffat sees it, the product has a chance to come up big for Allergan--depending on how much off-label usage it gets. That's a question an FDA advisory committee on the drug debated, pointing out that it may be used off-label to reduce fat in "larger body areas."

- read Allergan's release