Auxilium Pharmaceuticals, Inc. (AUXL) recently announced the launch of Xiapex in its first major market in the EU – the United Kingdom (UK). With this launch, Auxilium Pharma will be entitled to receive a $30 million milestone payment from partner Pfizer (PFE).
Including the $30 million milestone payment, Auxilium has earned about $45 million in milestone payments from Pfizer. The company is entitled to receive an additional $30 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.
Auxilium Pharma and Pfizer gained EU approval for Xiapex for the treatment of Dupuytren’s contracture in adult patients with a palpable cord in late Feb 2011.
Dupuytren’s contracture is a condition that affects the connective tissue in the palm known as palmar fascia. Auxilium Pharma estimates that approximately 13% of the European population is affected by Dupuytren’s contracture.
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 fourth quarter of 2010, Xiaflex sales came in at $8.4 million, including $1.1 million related to the amortization of upfront payments related to the out-licensing of Xiaflex to Pfizer. Xiaflex received US Food and Drug Administration (FDA) approval for Dupuytren’s contracture in February 2010 and was launched in March.
Auxilium Pharma reported that, as of the end of Jan 2011, about 2,400 physicians have received training on using Xiaflex.
The implementation of the Xiaflex J-code from January 2011 could help improve uptake. Longer term, the implementation of a permanent CPT code, potentially in 2012, could help smoothen the reimbursement process and drive uptake. However, till then, we expect Xiaflex ramp-up to remain slow.
Xiaflex revenues, which came in at $18.4 million in 2010, are expected to increase to $55 million – $67 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 with top-line results expected in the first half of 2012.
Neutral on Auxilium Pharma
We currently have a Neutral recommendation on Auxilium Pharma, which translates into 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, and label expansion of the product for additional indications.
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