Allergan said it would pay $2.47bn in cash to acquire the maker of machines that freeze and remove fat cells, as the drugmaker best known for its Botox wrinkle treatment expands its offering for plastic surgeons and cosmetic dermatologists.Zeltiq’s CoolSculpting machines use a process known as cryolipolysis to reduce the temperature of fat cells to roughly 4C, at which point they die and are eliminated from the body.
The technology is based on the findings of two Harvard scientists who in 2008 found that some children who ate Popsicles ended up with dimples in their cheeks, leading them to the discovery that the ice-lollies were freezing and eliminating small pockets of fat.
Zeltiq says its treatments are most commonly used by people seeking to eliminate fat on their abdomen and flanks or “love handles”, while it is also used by those looking for thinner thighs and arms.
Zeltiq expects to generate $420m in revenues in 2017 and Allergan said the acquisition would start boosting its earnings before the end of the year. The all-cash offer of $56.50 a share represents a 14 per cent premium to Zeltiq’s closing price on Friday.
The field of aesthetic medicine has become increasingly attractive to pharmaceutical groups because the vast majority of sales are made directly to consumers, who pay for the products in cash out of their own pockets.
That means drugmakers do not have to deal with cash-strapped healthcare systems, which are trying to push down the prices of medicines after years of above-inflation increases.
“Medical aesthetics is probably one of the best and fastest growing businesses in the pharmaceutical arena,” said Brent Saunders, Allergan’s chief executive, on a call with analysts to discuss the deal. “Zeltiq is a very strong complementary fit to our existing medical aesthetics business and importantly increases our presence in the cash pay arena.”
Vamil Divan, analyst at Credit Suisse, said the deal would give “Allergan a stronger presence in the cash-pay business at a time when there are increasing concerns around drug prices and payer pressure”.
Last week, Allergan reported that fourth-quarter sales of its facial fillers — which are used to plump up lips and remove fine lines — had increased to $237.8m, a 28 per cent increase compared with a year ago, while revenues from Botox grew 13.7 per cent to $793.3m.
However, the company has had less success with Kybella, a fat-killing injection for double chins it acquired for $2.1bn in 2015. Sales of the treatment, which is heavily advertised on US television, have stagnated in recent months.
The Zeltiq deal is the latest in a string of small “bolt-on” acquisitions engineered by Mr Saunders after the US government thwarted a $160bn takeover of the group by Pfizer last April.
Many of the deals have focused on risky experimental drugs, prompting unease among some investors, but last week Mr Saunders said future acquisitions would be tilted towards companies that will boost Allergan’s earnings.
Allergan struck a deal to buy regenerative medicine company LifeCell for $2.9bn in December and agreed to pay as much as $1.7bn in September for Tobira Therapeutics, a San Francisco-based start-up that specializes in liver diseases.
It also spent $639m to acquire Vitae Pharmaceuticals, a drugmaker focused on medicines for skin conditions.
Besides this looking like a somewhat reasonable deal from a valuation standpoint (14% premium only?) the real question is whether anyone on here knows how the whole fat freezing thing works?
Seriously? All those gym rats and no one cares about dropping more fat with less work?
I read an article on it. Works best on specific areas as the machine needs to like press a piece of fat and cool it down. Apparently white fat cells die at certain temps without permanent damage to the skin. You go, they grab a fat roll, put it between like a vice and it squeezes down and freezes. Takes like an hour or something and you go home. No aspirin as that reduces the impact. Fat cells die and are passed through your urine.
The bigger thing is that kybocera or whatever, the next fat shot. It is used in Europe off label and works for all types of fat. Dissolves it. I could see a future where you just get a shot and it kills targeted fat.
Not bad. I read an article about Nanobots the other day and how these could theoretically be used to just constantly get rid of excess body fat. The result of the article was that we can then all eat dozens of bags of Dorito chips every day...ffs...
Fun stuff about biomedical engineering these days. They are performing precision-point surgeries via robotics these days.
So, this means I can splurge on junk, right?
Apparently, yes. I'm actually curious whether they'll make immortality happen...Peter Thiel seems to be a big believer and investor and he's pushing hard fwiw
IMO, fat is the least of a persons issues. Until nanobots rid us of salt, cholesterol, diabetes and other killers, we will still have national health issues. I guess we'll have skinny, pretty people dying of shit instead of the My 600lb Life people.
Expedita reprehenderit provident itaque officiis. Laborum est non quia et. Sunt assumenda rerum placeat praesentium quasi ipsum minus.
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