Auxilium’s lead product Xiaflex, for Dupuytren's contracture, looks almost certain to be on its way to full approval thanks to an unanimous vote from an FDA panel. Yesterday, the Arthritis Advisory Committee voted 12-0 to recommend the injection that reverses the painful curvature of the fingers caused by the disorder.
Expectations of a positive outcome have, however, been reflected in the shares that over the last few months have risen by a third to a 12-month high of $35.86 and in recent days some investors have taken the opportunity to take profits. The omens are now looking good for a smooth approval, especially given that currently the only treatment option for the disorder is surgery and that the drug appears to have the same efficacy as the surgical option, without the need for such invasive intervention.
Safety swings the day
Earlier fears about the immunogenicity of the drug failed to materialise during the panel discussions, as expected. Xiaflex is composed of collagenase which is already approved in several other treatments and has a long safety record (Event - Auxilium hoping the FDA will hand it approval for Xiaflex, September 8, 2009).
In the same vein, what appeared to impress the panel was the drug’s highly benign safety profile, this means that if approved Xiaflex only has to carry out phase IV studies rather than more onerous patient registry programmes.
Xiaflex’s remaining short road to approval should be helped by a study published two weeks ago showing that 64% of patients receiving up to three injections of the drug regained almost normal function of their fingers, compared with only 6.8% in the placebo group. The study also showed that the incidence and timing of recurring symptoms was the same in the control arm as those who suffered recurrence after surgery.
One of the issues that does, however, need to be resolved around the drug is who will be eligible to dispense it. While the drug was used by both rheumatologists and hand surgeons during the trials, it will come down to whether the FDA believes that the training offered by the company in the form of DVDs will be adequate. Understandably, hand surgeons are pressing their case, arguing that given their specialist training they should be administering the drug.
While the FDA has yet to set a new PDUFA date for the drug after missing its initial target of August 28, but with fast track status (Auxiliums Xiaflex moves into the fast lane, April 30, 2009) many are expecting a decision before the end of the October, indicating that Xiaflex could be on the market before the end of the year. Marketing authorisation would also trigger a milestone payment from development partner Pfizer, which signed a $485m licensing deal with the group in December 2008 for ex-US rights (Auxilium hits the jackpot with Pfizer deal, December 18, 2008).
Alongside Pfizer’s milestone payments, the drug is forecast to be the biggest growth driver at the company and is expected to achieve sales of $431m by 2014 and royalties of $43m in the same year. This figure could rise higher as Xiaflex is also being developed in Peyronie’s disease, or curvature of the penis, as well as the much wider indication of frozen shoulder syndrome. Expected orphan drug status in Dupuytren’s should protect revenues until 2017.
These will be welcome additional revenues given the threats to Auxilium’s only other marketed product, testosterone gel, Testim, which faces a generic challenge from Upsher-Smith Laboratories and possible competition in the form of Endo’s once monthly injected testosterone replacement treatment, Nebido.
The next tipping point for the shares will be the read out of the phase IIb data for Xiaflex in Peyronies’ disease, expected in the fourth quarter. Earlier data suggests that these trials too could be positive, an event that could push the shares up further. Also anecdotal evidence from doctors involved in the trials suggest that if approved there would be strong patient demand for the drug given that as with Dupuytren’s contracture the only alternative treatment is surgery.
With all these potential catalysts ahead the shares could yet reach the $40-$42 price target that some analysts have pencilled in for the stock.