Auxilium's Xiaflex moves into the fast lane

Despite the grumbling of a minority of bears in the market Auxilium Pharmaceuticals has achieved the goal of getting fast track status for Xiaflex, its injectable treatment for Dupuytren's contracture, the painful shortening of the tendons in the hand. The drug is now expected to go up in front of US regulators on August 28 for approval.

The fact that many had been expecting a positive decision (Event – Auxilium's Xiaflex fast track status to be decided, April 21, 2009), was reflected in the lack of movement in Auxilum’s shares which yesterday lost almost 3% of their value amid a generally lower US market for biotech companies. But what the fast-tracking of Xiaflex should mean is that if it does get approval it could start generating revenues for Auxilium before the end of the year.

With several analysts having hold recommendations on the stock and few other catalysts on the horizon (see table), approval of the first non-surgical treatment for Dupuytren’s should also be the spark to get the shares, which have lost 17% of their value since the start of the year, moving upwards again.

Event Status Product NPV NPV as % of Mkt Cap Event Type Event Start Date End Date
In-Play (43%) Testim 328 33% US Patent Date Uncertain Patent Update on Testim 25 Oct 2008 31 Dec 2009
Starts in 154 days Xiaflex  773 78% Phase II Trial Results Phase IIb Trial Results for Xiaflex for Peyronie’s Disease 01 Oct 2009 31 Dec 2009

Xiaflex is also being developed in Peyronie’s disease, curvature of the penis, and the much bigger market of frozen shoulder syndrome. With its potential multi-use the drug is forecast to be the primary growth driver at Auxilium over the next seven years with sales of $439m expected by 2014.

The drug’s marketing authorisation should also help Auxilium mitigate increasing competition to Testim, the group’s only marketed product. The testosterone gel is gearing to go head-to-head with Endo Pharmaceuticals’ Nebido by the end of the year and is also facing a generic challenge from Upsher-Smith Laboratories, which filed an ANDA in October. As such, while fast track status is a step in the right direction, Xiaflex needs to continue to defy the bears and stick on the fast track, to help Auxilium climb out of the doldrums.

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