What: Shares of Kythera Biopharmaceuticals (NASDAQ: KYTH) shot up by 22% today after the company agreed to sell itself to Botox-maker Allergan (NYSE:AGN) for $75 per share, or $2.1 billion. Through this deal, Allergan will gain access to Kythera's newly-approved injected cosmetic treatment, Kybella, for submental fat, commonly known as "double chin". In addition, Allergan will add a host of intriguing experimental candidates in the cosmetic drug arena to its clinical pipeline, such as setipiprant for male pattern baldness. Per the press release, Kythera shareholders will receive 80% of the transaction in cash and the remaining 20% in the form of Allergan shares. 

So what: Kythera's management believes Kybella could generate roughly $500 million in domestic sales, and a similar amount overseas down the road. If this line holds, Allergan just executed perhaps the best deal in the pharmaceutical industry, from a valuation creation standpoint, in recent memory. 

Now what: Allergan is uniquely positioned to launch Kybella given its strong presence in the facial cosmetic market with Botox. In fact, there is a good chance that there will end up being a fair amount of cross-over between the Botox and Kybella target markets. As such, this novel product should contribute almost immediately to the drugmaker's top-line, making it a key drug to watch going forward.  

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