Leerink Downgrades Kythera, Says Allergan Deal Likely To Close At $75 Mark

In a report published Monday, Leerink analyst Seamus Fernandez downgraded the rating on

from Outperform to Market Perform, while raising the price target from $61 to $65. Analyst Seamus Fernandez cited feedback from physicians as indicating that

is best-positioned to "deliver the full value of Kybella," given the company's broad portfolio. Kythera's shares could "trade sideways" till the deal closes in 3Q15. On June 6, Kythera hosted a 1.5 day training module in San Diego. In the report Leerink noted, "Specialists indicated a high level of excitement among the attending. Concern around injection site pain and/or swelling was low, most likely because the incidence of serious events (mandibular nerve injury) was relatively low." Fernandez quoted specialists as saying that price could be "a limiting factor for Kybella," since patients' out-of-pocket cost to complete all necessary treatments is estimated at around $4.5k, which is on par with liposuction. "We view discounts offered by AGN to high volume users as a likely accelerant to adoption. While price elasticity on the pt side is less clear, we take some comfort in the high demand among injectable-experienced pts and the fact pts are willing to spend $4.5k for the surgical option," the report added. Fernandez believes that another higher bidder is "unlikely to emerge" and expects the transaction to close at $75 per share in in 3Q15.