Auxilium Pharmaceuticals Announces Fourth Quarter and Full Year 2010 Financial Results, Guidance for 2011

MALVERN, Pa., Feb. 10, 2011 /PRNewswire/ -- Auxilium Pharmaceuticals, Inc. (Nasdaq: AUXL), a specialty biopharmaceutical company, today announced financial results for the fourth quarter and the year ended December 31, 2010. The Company also highlighted important commercial, regulatory and clinical development progress during the year 2010 and provided financial and operational guidance for 2011.

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For the quarter ended December 31, 2010, Auxilium reported record net revenues of $61.8 million compared to net revenues of $48.0 million in the fourth quarter of 2009, an increase of 29%. For the full year 2010, net revenues totaled $211.4 million compared to net revenues of $164.0 million for the full year 2009, an increase of 29%.

For the quarter ended December 31, 2010, Auxilium reported a net loss of $(16.4) million compared to a net loss of $(11.9) million in the fourth quarter of 2009. For the full year 2010, Auxilium’s net loss was $(51.2) million, compared to a net loss of $(53.5) million for the full year 2009.

“In 2010, we believe that Auxilium made good progress toward our vision of becoming a rapidly growing, profitable and sustainable biopharmaceutical company. We achieved record revenues for Testim®, launched XIAFLEX® in the U.S. for Dupuytren’s contracture, initiated XIAFLEX global phase III clinical trials for Peyronie’s disease and Pfizer, our EU partner, received a positive CHMP opinion for Xiapex® for Dupuytren’s contracture,” said Armando Anido, Chief Executive Officer and President of Auxilium. “As we look forward to 2011 and beyond, we expect Testim revenues to continue to grow and believe that the potential global market for XIAFLEX represents a blockbuster opportunity, which could provide sustainable long-term growth and profitability for the Company.”

2010 and Recent Highlights:

XIAFLEX:

• Worldwide revenues for XIAFLEX were $18.4 million for the year ending December 31, 2010 versus $3.6 million in 2009.
• Sales of XIAFLEX in the U.S. were $14.1 million in 2010, representing approximately 4,500 vials of XIAFLEX. The product was launched in late March 2010.
• Beginning January 1, 2011, a new XIAFLEX-specific J-code (J0775) was available for use in the U.S. to identify XIAFLEX for obtaining reimbursement from Medicare, Medicaid and commercial health plans.
• On December 16, 2010, Auxilium’s EU partner, Pfizer Inc. (Pfizer), received a positive opinion from the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) recommending European Union (EU) approval for Xiapex (EU tradename for collagenase clostridium histolyticum) as treatment for Dupuytren’s contracture in adult patients with a palpable cord. Pfizer expects EMA approval of Xiapex in the first quarter of 2011.
• On December 6, 2010, The Journal of Hand Surgery published in its December online edition the Company’s pivotal CORD II phase III clinical trial of XIAFLEX. The CORD II study is the second pivotal clinical trial examining the treatment of Dupuytren’s contracture with XIAFLEX.
• On October 12, 2010, the U.S. Patent and Trademark Office issued U.S. Patent No. 7,811,560 covering XIAFLEX with independent claims that recite a drug product, a process for producing the drug product, and pharmaceutical formulations comprising the drug product. As a result, the Company expects XIAFLEX to have patent protection through 2028.
• On October 11, 2010, the Company announced that the first subject had been dosed with XIAFLEX in the largest ever global phase III program for the treatment of Peyronie’s disease, a devastating disease that is estimated to affect approximately 5% of adult men.(i) Auxilium anticipates completing enrollment for the double-blind studies in the first quarter of 2011 and reporting top-line results in the first half of 2012.

TESTIM:

• Worldwide revenues for Testim were $193.0 million for the year ending December 31, 2010, up 20% over 2009.
• Testim U.S. revenues were up 25% over the prior year to a record $190.0 million.
• Testim U.S. prescriptions in the fourth quarter of 2010 grew by 10% over the fourth quarter of 2009 to approximately 180,000 according to National Prescription Audit data from IMS Health, Inc. (IMS), a leading market research firm.
• Total prescriptions for the testosterone replacement gel market segment grew 12% in the fourth quarter of 2010 versus the same period in 2009, according to data from IMS.
• In October, 2010, the U.S. Food and Drug Administration (FDA) issued a response to the Citizen Petition submitted on behalf of Abbott Laboratories regarding testosterone gel products. In its response, FDA stated that an application for a potential generic testosterone gel with a different penetration enhancer than the originator must be submitted as a 505(b)(2) New Drug Application (NDA) rather than an Abbreviated New Drug Application. FDA further stated that the NDA would be treated as a separate application requiring independent patent certification and notification and would be clocked for regulatory purposes from the time it is provided, resulting potentially in a new 30-month stay.

2011 Financial Guidance and Strategic Priorities

For 2011, Auxilium anticipates that:

• XIAFLEX revenues will be in the range of $55 million to $67 million;
• Testim revenues will be in the range of $200 million to $210 million;
• Research and development spending will be in the range of $60 million to $70 million;
• Selling, general and administrative expenses will be in the range of $170 million to $180 million;
• Net loss will be in the range of $35 million to $45 million; and,
• Total stock-based compensation recognized in 2011 will be in the range of $15 million to $20 million.

Auxilium will focus on the following strategic priorities in 2011:

• Maximize XIAFLEX net revenues for Dupuytren’s contracture in the U.S. and global Testim revenues;
• Support Pfizer in the launch of Xiapex for Dupuytren’s contracture in the EU;
• Complete enrollment in the Peyronie’s disease phase III double-blind studies in the first quarter of 2011, with top-line results anticipated in first half of 2012; and,
• Advance XIAFLEX new indication(s).

Fourth Quarter 2010 Revenue Details

Auxilium reported the following unaudited net revenues (all amounts in millions of dollars) for the quarter ended December 31, 2010:

Contract Revenues represent amortization of previously received upfront and milestone payments.

Fourth Quarter 2010 Financial Detail

The net loss for the fourth quarter of 2010 was $(16.4) million, or $(0.34) per share, compared to a net loss of $(11.9) million, or $(0.25) per share, reported for the fourth quarter of 2009. Net loss for the fourth quarter of 2010 includes total stock-based compensation expense of $6.0 million, compared to $4.4 million for the fourth quarter of 2009.

Gross margin on net revenues was 72% for the quarter ended December 31, 2010 compared to 78% for the comparable period in 2009. Gross margin reflects the costs of products sold, royalty obligations due to the Company’s licensors, the amortization of the deferred costs associated with the Pfizer contract and period costs related to production. The reduction in the gross margin rate is due to a $3.9 million provision for XIAFLEX inventory that may expire in 2011 prior to expected future sales to customers, and lower amortization in 2010 of deferred milestone payments, partially offset by the contribution of high margin XIAFLEX product sales and the impact of year-over-year price increases on U.S. Testim revenues.

Research and development spending for the quarter ended December 31, 2010 was $14.0 million, compared to $11.4 million for 2009. The increase in expense results principally from the commencement of start-up activities related to the phase III XIAFLEX clinical trials for Peyronie’s disease and costs related to development of a larger scale XIAFLEX production process.

Selling, general and administrative costs for the quarter ended December 31, 2010 were $47.0 million, compared to $38.7 million in the comparable 2009 period. The increase was primarily due to the addition of the sales and reimbursement field force and infrastructure, and promotional and training activity in support of the launch of XIAFLEX for Dupuytren’s in the U.S., and higher non-cash stock-based compensation expense.

As of December 31, 2010, Auxilium had $128.2 million in cash, cash equivalents and short-term investments, compared to $142.4 million at September 30, 2010.

2010 Revenue Details

Auxilium reported the following unaudited net revenues (all amounts in millions of dollars) for the full year 2010:

Contract Revenues represent amortization of previously received upfront and milestone payments.

Full Year 2010 Financial Detail

Auxilium reported a net loss of $(51.2) million, or $(1.08) per share, for the full year 2010, compared to a net loss of $(53.5) million, or $(1.22) per share, for the full year 2009. Net loss for 2010 includes total stock-based compensation expense of $18.0 million, compared to $17.9 million for the full year 2009.

Gross margin on net revenues was 76% for the full year 2010, compared to 77 % for the full year 2009.

Research and development costs for the full year 2010 were $48.0 million compared with $51.4 million for the full year 2009.

Selling, general and administrative expenses totaled $164.7 million for the year ended December 31, 2010, compared with $129.2 million for the year-ago period.

Conference Call

Auxilium will hold a conference call today, February 10, 2011 at 10:00 a.m. ET, to discuss fourth quarter and full year 2010 results, as well as the financial and operational guidance it has provided for 2011. The presentation slides to be used during the call are now available on the “For Investors” section of the Company’s web site under the “Presentations” tab. A question and answer session will follow the presentation. The conference call and the presentation slides will be simultaneously web cast on the “For Investors” section of the Company’s web site under the “Events” tab. The conference call will be archived for future rev