Auxilium Pharmaceuticals, Inc. (AUXL) shares gained almost 16% with the company reporting better-than-expected preliminary revenue results for the fourth quarter of 2010. The company said that preliminary fourth quarter revenues increased 28.7% year-over-year to $61.8 million, $4.8 million above the Zacks Consensus Estimate. Full year preliminary revenues were $211.4 million, up 28.9% year-over-year, well above the Zacks Consensus Estimate of $206 million.

Detailed Preliminary Results

During the fourth quarter of 2010, the company reported preliminary Testim revenues of $53.4 million, up 13.3% year-over-year.

Preliminary Xiaflex fourth quarter revenues were $8.4 million, including $7.3 million in US revenues. This was above the guidance provided by the company. Auxilium Pharma had earlier guided towards Xiaflex revenues in the range of $7.0 – $7.5 million in the fourth quarter, including the $1.1 million recognized by the company related to the amortization of upfront payments received from Pfizer (PFE).

Xiaflex received US Food and Drug Administration (FDA) approval for Dupuytren’s contracture in February 2010 and was launched in March 2010. Auxilium Pharma has 100 sales reps promoting the product.

Xiaflex Upward Trend to Continue in 2011

For 2011, Auxilium Pharma expects Xiaflex net revenues in the range of $55.0 – $67.0 million. While Xiaflex is expected to post sales of $50.0 – $60.0 million in the US, Auxilium Pharma expects to recognize $5.0 – $7.0 million as royalty and milestone revenues under its agreement with Pfizer.

The implementation of the Xiaflex J-code from January 2011 should help improve uptake. Longer term, the implementation of a permanent CPT code, potentially in 2012, could help smoothen the reimbursement process and drive uptake.

Additionally, Xiaflex should gain approval in the EU in the first quarter of 2011. Auxilium Pharma is also studying Xiaflex for additional indications like Peyronie’s disease and frozen shoulder syndrome. The company moved Xiaflex into phase III studies for Peyronie’s disease. Top-line results from the phase III program should be out in the first half of 2012.

Neutral on Auxilium Pharma

We currently have a Neutral recommendation on Auxilium Pharma. We expect investor focus to remain on the successful commercialization of Xiaflex, and label expansion of the product for additional indications.

 
AUXILIUM PHARMA (AUXL): Free Stock Analysis Report
 
PFIZER INC (PFE): Free Stock Analysis Report
 
Zacks Investment Research