Auxilium Pharmaceuticals, Inc. (AUXL) recently received a $7.5 million milestone payment from Pfizer, Inc. (PFE) related to the first sale of Xiapex in Germany. Xiapex, which gained approval in the EU in late Feb 2011, is indicated for the treatment of Dupuytren’s contracture in adult patients with a palpable cord.
Dupuytren’s contracture is a condition that affects the connective tissue in the palm known as palmar fascia. Auxilium Pharma estimates that approximately 3% – 13% of the European population is affected by Dupuytren’s contracture. Xiapex is currently available in several EU markets including the UK, Germany, Denmark, Sweden, Finland, Norway and Austria.
Including the $7.5 million milestone payment, Auxilium has earned about $52.5 million in milestone payments from Pfizer. The company is entitled to receive an additional $22.5 million on the achievement of regulatory milestones for the Dupuytren’s contracture indication. This amount will fall due as and when Pfizer launches Xiapex in other major EU markets.
Pfizer and Auxilium Pharma have a strategic alliance for the development, commercialization, and supply of Xiapex in Europe and certain Eurasian countries. Pfizer paid Auxilium Pharma an up-front licensing fee of $75 million in return for a license to the 27-member EU states along with 19 other European and Eurasian countries. Pfizer also paid $15 million on the acceptance of the marketing authorization for the candidate in the EU.
Xiapex is already available in the US under the trade name Xiaflex. During the recently reported first quarter of 2011, Xiaflex sales came in at $12.3 million, including contract revenues and a one-time benefit arising from a change in revenue recognition. Xiaflex received US Food and Drug Administration (FDA) approval for Dupuytren’s contracture in February 2010 and was launched in March 2010.
Auxilium Pharma reported that about 2,700 physicians have received training on using Xiaflex, representing 44% of the target range. Auxilium Pharma is working on creating and increasing awareness among physicians and patients about Xiaflex. The company continues to present data on the clinical profile of Xiaflex.
The implementation of the Xiaflex-specific J-code in January 2011 could help improve uptake. The company reported that more than 93% of insured Americans have access to Xiaflex. Longer term, the implementation of a permanent CPT code, potentially in January 2012, could help smoothen the reimbursement process and drive uptake. However, till then, we expect Xiaflex ramp-up to remain modest.
Xiaflex revenues, which came in at $18.4 million in 2010, are expected to increase to $59 million-$71 million in 2011. A major part of the revenues will be generated in the US.
Auxilium Pharma is currently conducting phase III studies with Xiaflex for Peyronie’s disease. Top-line results from the phase III program should be out in the second quarter of 2012.
Neutral on Auxilium Pharma
We currently have a Neutral recommendation on Auxilium Pharma, which carries a Zacks #3 Rank (short-term Hold rating). Auxilium Pharma’s future relies heavily on Xiaflex. Going forward, we expect investor focus to remain on the successful commercialization of Xiaflex/Xiapex, and label expansion of the product for additional indications.
AUXILIUM PHARMA (AUXL): Free Stock Analysis Report
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