-- In August, the Company received clearance from the U.S. Food and Drug
Administration to resume its phase III clinical trials for XIAFLEX
(clostridial collagenase for injection), formerly referred to as AA4500, in
the treatment of Dupuytren's contracture.
-- In September, the Company announced that the first patients have been
dosed in the Company's second U.S. phase III pivotal trial (CORD I) and the
Australian phase III study (CORD II) for XIAFLEX for the treatment of
Dupuytren's contracture.
-- In September, data presented at the 62nd annual meeting of The
American Society for Surgery of the Hand (ASSH) in Seattle, Washington by
Dr. Marie Badalamente, Professor, Department of Orthopaedics, State
University of New York at Stony Brook showed that XIAFLEX was an effective
non-surgical treatment in patients with Dupuytren's contracture of varying
severities.
Testim:
-- According to IMS Health, Inc. (IMS), total prescriptions for Testim in
the U.S. grew 33.4% over the third quarter of 2006 to our highest quarterly
level.
-- Net sales of Testim for the third quarter of 2007 were favorably
impacted by an increase in wholesaler inventories in the U.S. We believe
this impact to be approximately $0.8 million.
-- Testim continued to gain significant market share in the U.S., ending
the month of September with a 20.7% share of total prescriptions for
testosterone gels, up from 19.8% at the end of June 2007 and up from 18.2%
at the end of September 2006, according to IMS.
-- Total prescriptions within the gel segment of the testosterone
replacement therapy market in the U.S. grew 17% over the third quarter of
2006, according to IMS.
-- In September, the United States Patent and Trademark Office issued a
Notice of Allowance for the pending U.S. patent application covering the
Testim composition. The issue fee has been paid, and we expect that the
patent will issue in late 2007 or early 2008.
-- In October, the manuscript "Efficacy of Testosterone Gel Substitution
(Androgel or Testim) among sub-optimally responsive hypogonadal men" by L.
Lipshultz, E. Grober, M. Khera, M. Espinoza was posted in the International
Journal of Impotence Research web site. The data from this independent
study show improvements in symptoms of decreased libido, energy levels and
erectile function in 76 percent of hypogonadal men after switching brands
of testosterone replacement gel therapy. Total testosterone levels
increased significantly in patients who switched to Auxilium's Testim® 1%
(testosterone gel) following suboptimal response to Solvay S.A.'s
Androgel® (testosterone gel) 1% but did not increase significantly in
patients who switched from Testim to Androgel.
Other:
-- We continued to build out our management team with seasoned executives
who recently joined the Company.
- Mr. Robert Dufour has joined Auxilium in the role of Vice President,
Marketing. Mr. Dufour joins us from Wyeth Pharmaceuticals where he
was most recently Vice President, Global Business Manager, Oncology,
responsible for leading and building a cross-functional team that
prepared the organization for Wyeth's launch of Torisel, and he
brings 20 years of experience to our marketing team.
- Ms. Nancy Fetrow has joined Auxilium in the newly created role of
Vice President, Project Management. Ms. Fetrow joins us from Astra
Zeneca where she held positions of increasing responsibility within
the Clinical Drug Development and Project Management departments,
and she brings over 20 years of experience to the role.
- Mr. William Groff has joined Auxilium in the role of Sr. Director,
Manufacturing. Mr. Groff comes to us from CollaGenex and has over 10
years of experience in the development and manufacture of small
molecule products, inclusive of ointments, gels and solid dosage
forms.
- Mr. David Petko has joined Auxilium in the role of Senior Director,
Engineering & Facilities. Prior to joining Auxilium, Mr. Petko was
Engineering Director, Worldwide Engineering & Real Estate, Johnson &
Johnson Corporate. He has more than 20 years of pharmaceutical and
biopharmaceutical experience in the areas of solid dosage, sterile,
and bioprocess engineering.
-- We were named as one of the 10 best places to work in the greater
Philadelphia area by Philadelphia Business Journal.
-- We were named a "Rising Star" in the Deloitte & Touche USA LLP 2007
Technology Fast 50 Program for the Greater Philadelphia area, a ranking
of the region's 50 fastest growing technology and life sciences
companies by percentage revenue growth.
Revised 2007 Financial Guidance
For 2007, Auxilium anticipates that:
-- net revenues will be in the range of $92 million to $96 million,
instead of the previously announced range of $88 million to $92 million,
due to higher than anticipated sales of Testim;
-- research and development spending will be in the range of $40 million
to $44 million, instead of the previously announced range of $38 million to
$42 million, primarily due to initiation of phase III clinical trials for
XIAFLEX for the treatment of Dupuytren's contracture in the third quarter
instead of the fourth quarter of 2007;
-- as previously announced, selling, general and administrative expenses
will be in the range of $74 million to $77 million; and
-- net loss for 2007 will be in the range of $39 million to $43 million,
instead of the previously announced range of $40 million to $44 million.
Third Quarter 2007 Financial Detail
For the quarter ended September 30, 2007, Auxilium reported net revenues of
$26.2 million compared to net revenues of $17.6 million in the third
quarter of 2006. During the third quarter of 2007, we saw an increase in
wholesaler inventories. We estimate that for the third quarter of 2007,
wholesaler inventories increased approximately $0.8 million. The net loss
for the third quarter of 2007 was $(6.9) million, or $(0.17) per share,
compared to a net loss of $(11.8) million, or $(0.39) per share, reported
for the third quarter of 2006. Total stock-based compensation expense for
the third quarter of 2007 was $1.6 million compared to $1.0 million for the
third quarter of 2006.
Auxilium's gross margin on net revenues was 75.5% for the third quarter of
2007 and 74.6% for the third quarter of 2006. Gross margin reflects the
cost of product sold as well as royalty payments made to the Company's
licensor on the sales of Testim. The improvement in gross margin reflects
the impact of year-over-year price increases, partially offset by increases
in lower margin international product shipments and coupon usage.
Research and development costs for the third quarter of 2007 were $9.8
million compared with $8.5 million for the comparable year-ago period. The
increase in research and development costs was primarily due to the
increased spending for development and manufacturing of XIAFLEX.
Selling, general and administrative expenses totaled $18.2 million for the
quarter ended September 30, 2007 compared with $17.1 million for the
year-ago quarter. The cost for the third quarter of 2006 included the $1.8
million cost to terminate Auxilium's co-promotion agreement with Oscient
Pharmaceuticals, Inc. Excluding this termination cost, the increase was
primarily due to higher investment in promotional spending for Testim,
including the cost of increasing our sales force, pre-launch marketing for
XIAFLEX, and higher stock-based compensation expense.
At September 30, 2007, Auxilium had $82.5 million in cash, cash
equivalents, and short-term investments compared to $87.2 million at June
30, 2007.
Year-to-Date September 30, 2007 Financial Detail
-- Net revenues for the nine months ended September 30, 2007 were $68.0
million compared to $49.0 million for the first nine months of 2006, a 39%
increase.
-- For the nine months ended September 30, 2007, Auxilium reported a net
loss of $(28.8) million, or $(0.77) per share, compared to a net loss of
$(33.2) million, or $(1.13) per share, for the first nine months of 2006.
Total stock-based compensation expense for the first nine months of 2007
was $4.3 million compared to $2.0 million for the comparable period of
2006.
-- Gross margin on net revenues was 74.5% for the nine months ended
September 30, 2007, compared to 74.0% for the comparable 2006 period.
-- Research and development costs for the nine months ended September 30,
2007 were $28.3 million compared with $25.7 million in the year ago period.
-- Selling, general and administrative expenses totaled $53.9 million for
the nine months ended September 30, 2007 compared with $45.5 million for
the year-ago period.
Conference Call
Auxilium will hold a conference call today, October 31, at 10:00 a.m. EDT,
to provide an update on the business and discuss third quarter 2007 results
as well as the revised financial guidance it has provided for 2007. The
conference call will be simultaneously web cast on Auxilium's web site and
archived for future review until November 15, 2007.
Conference call details: Date: Wednesday, October 31, 2007 Time: 10:00 a.m. EDT Dial-in (U.S.): 888-713-4213 Dial-in (International): 617-213-4865 Participant Passcode: 14134504 Web cast: http://www.auxilium.com To access an audio replay of the call: Access number (U.S.): 888-286-8010 Access number (International): 617-801-6888 Conference ID#: 60006034About Auxilium Auxilium Pharmaceuticals, Inc. is a specialty biopharmaceutical company with a focus on developing and marketing to urologists, endocrinologists, orthopedists and select primary care physicians. Auxilium markets Testim® 1%, a topical testosterone gel, for the treatment of hypogonadism through its approximately 190-person sales and marketing team. Auxilium has four projects in clinical development. XIAFLEX™ (clostridial collagenase for injection), formerly referred to as AA4500, is in phase III of development for the treatment of Dupuytren's contracture and is in phase II of development for the treatment of Peyronie's disease and Frozen Shoulder syndrome (Adhesive Capsulitis). Auxilium's transmucosal film product candidate for the treatment of overactive bladder (AA4010) is in phase I of development. The Company is currently seeking a partner to further develop this product candidate. Auxilium has two pain products using its transmucosal film delivery system in pre-clinical development. Auxilium has rights to six additional pain products and products for hormone replacement and urologic disease using its transmucosal film delivery system. Auxilium also has options to all indications using XIAFLEX for non-topical formulations. For additional information, visit http://www.auxilium.com. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 In addition to historical facts or statements of current condition, this release contains forward-looking statements within the meaning of the "Safe Harbor" provisions of The Private Securities Litigation Reform Act of 1995, including statements regarding Auxilium's expected financial performance during 2007 and the financial milestones that it may achieve for 2007, including 2007 net revenues, research and development spending, selling, general and administrative expenses, and net loss, the timing of the enrollment of patients in the phase III trials for XIAFLEX for the treatment of Dupuytren's contracture, the interpretation of clinical trial results, the timing of the issuance of a U.S. patent covering the Testim composition, impact of recent additions to the management team, and the drivers of Testim sales and market share growth. Forward-looking statements often address Auxilium's expected future financial position or business strategy and plans and objectives of management for future operations, and often contain the words "believe," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "potentially" and similar expressions. Forward-looking statements provide Auxilium's current expectations or forecasts of future events. Auxilium's performance and financial results could differ materially from those reflected in these forward-looking statements due to:
-- the success of research and development activities;
-- the performance of third-party manufacturers and suppliers;
-- decisions by regulatory authorities as to whether and when to approve
drug applications;
-- decisions by regulatory authorities as to whether and when to proceed
to the next phase of clinical trials;
-- difficulties or delays in manufacturing;
-- competition from currently marketed products, generic products, and
new products;
-- legislative and regulatory action in the jurisdictions in which
Auxilium markets or seeks to market its products;
-- claims and concerns that may arise regarding the safety or efficacy of
its products; and
-- increase in costs or expenses.
A more detailed list and description of the risks and uncertainties that
Auxilium faces may be found under the heading "Risk Factors" in Auxilium's
Annual Report on Form 10-K for the year ended December 31, 2006 and in
Auxilium's Quarterly Report on Form 10-Q for the period ended June 30, 2007
which are on file with the Securities and Exchange Commission. Given these
risks and uncertainties, any or all of the forward-looking statements
contained in this release may prove to be incorrect. Therefore, you should
not rely on any such factors or forward-looking statements. Auxilium
undertakes no obligation to update publicly any forward-looking statement.
AUXILIUM PHARMACEUTICALS, INC.
Condensed Consolidated Statement of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------ ------------ ------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Net revenues $ 26,236 $ 17,640 $ 67,996 $ 49,005
------------ ------------ ------------ ------------
Operating expenses:
Cost of goods
sold 6,421 4,484 17,371 12,721
Research and
development* 9,833 8,450 28,256 25,677
Selling, general
and
administrative* 18,159 17,120 53,867 45,499
------------ ------------ ------------ ------------
Total
operating
expenses 34,413 30,054 99,494 83,897
------------ ------------ ------------ ------------
Loss from
operations (8,177) (12,414) (31,498) (34,892)
Interest income
(expense), net 1,224 645 2,650 1,697
Other income
(expense), net 3 (1) -- 5
------------ ------------ ------------ ------------
Net loss $ (6,950) $ (11,770) $ (28,848) $ (33,190)
============ ============ ============ ============
Basic and diluted
net loss per
common share $ (0.17) $ (0.39) $ (0.77) $ (1.13)
============ ============ ============ ============
Weighted average
common shares
outstanding 39,850,584 30,081,510 37,465,765 29,472,146
============ ============ ============ ============
*includes the
following amounts
of stock-based
compensation
expense:
Research and
development $ 308 $ 109 $ 802 $ 232
Selling, general
and
administrative 1,333 874 3,479 1,769
AUXILIUM PHARMACEUTICALS, INC.
Selected Consolidated Balance Sheet Data
(In thousands)
(Unaudited)
September 30, December 31,
2007 2006
-------------- --------------
Cash, cash equivalents and short term
investments $ 82,534 $ 54,744
Working capital 73,997 46,819
Total assets 110,542 76,759
Other long-term liabilities 11,361 11,737
Total stockholders' equity 72,503 42,329
Contact Information: For More Information, Contact: James E. Fickenscher Chief Financial Officer Auxilium Pharmaceuticals, Inc. (484) 321-5900 Gregory Gin Lazar Partners, Ltd. (212) 867-1762