Auxilium Pharmaceuticals reports total revenues of $109.6 million for Q3 2014

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Oct 30 2014

Auxilium Pharmaceuticals, Inc. (NASDAQ: AUXL), a fully integrated specialty biopharmaceutical company, today announced financial results for the third quarter ending September 30, 2014. The Company highlighted important corporate, commercial, regulatory and clinical development updates from the quarter.

"We are very pleased with the continued momentum and strong performance of the core growth products in our portfolio this quarter, especially the XIAFLEX franchise, which more than doubled in revenues over the same period in 2013. Additionally, STENDRA traction continues as the product is now the first and only erectile dysfunction treatment approved to be taken approximately 15 minutes before sexual activity," said Adrian Adams, Chief Executive Officer and President of Auxilium. "Given our recent announcement of the proposed acquisition of Auxilium by Endo International plc, we believe there is now an even greater opportunity to fully realize our current and future products' potential and drive significant shareholder value."

Auxilium has a total of twelve approved products, including seven promoted across men's healthcare and orthopedics – STENDRA^®, XIAFLEX^® for Peyronie's disease (PD), XIAFLEX for Dupuytren's contracture (DC), TESTOPEL^®, edex^®, the Testim^® franchise and Osbon^® ErecAid^®. The Company's ongoing R&D programs include cellulite, with positive results of its Phase 2a trial announced ahead of schedule in August 2014, and Frozen Shoulder Syndrome (FSS), with a Phase 2b trial ongoing and on track for anticipated data review in the first quarter of 2015.

Third Quarter 2014 Financial Results:

Total revenues for the three-month period ended September 30, 2014 were $109.6 million, compared to $108.1 million for the third quarter of 2013. Compared to 2013, year-to-date net revenues increased two percent overall and 77 percent excluding the Testim franchise. Core product revenues for the third quarter included:
- XIAFLEX U.S. net revenues (for PD and DC combined) of $34.6 million, representing a 118 percent increase from the third quarter of 2013 – we believe the initial launch momentum for XIAFLEX for PD is strong with 1,450 physicians REMS certified, 5,150 patients submitted to the Auxilium Advantage program for payer reimbursement for treatment and an estimated 9,000 product vials shipped to physicians through the end of September. XIAFLEX for DC also continued to grow steadily, with approximately 5,863 vials sold in the third quarter, a 16 percent increase over the same period in 2013. Additionally, XIAFLEX for DC has approximately a 32 percent share of all DC procedures as of July 2014.
- STENDRA U.S. net revenues of $9.3 million – initial product launch momentum is positive with STENDRA gaining an 8.0 percent share of all new PDE5 prescriptions and a 4.2 percent share of total PDE5 prescriptions amongst Auxilium's target physician population, those doctors responsible for approximately 45 percent of all PDE5 prescriptions. In the third quarter, Auxilium also increased the number of physicians prescribing STENDRA by 45 percent over the second quarter of 2014 to 16,430 and the productivity per target prescriber, with 12.3 prescriptions written to date per physician
- TESTOPEL U.S. net revenues of $20.2 million – with 75 percent of top plans' price books now reset, TESTOPEL purchasing continues to normalize.
- Testim franchise U.S. net revenues of $26.2 million – $15.3 million for the branded Testim product and $10.9 million for the Authorized Generic to Testim.
- See Table 1 attached for further details on revenues
Gross margin on net revenues was approximately 77 percent (non-GAAP basis) for the third quarter 2014 compared to 74 percent for the same period in 2013 – the increase is primarily due to manufacturing initiatives undertaken as well as a shift in product sales from products with a lower margin, including the Testim brand, to higher margin products, including XIAFLEX and STENDRA. R&D spending was $9.5 million (non-GAAP) compared to $11.1 million for the third quarter of 2013 – this decrease resulted principally from lower spending on the XIAFLEX MULTICORD Phase 3 clinical trial for DC, offset partially by increased spending on the XIAFLEX Phase 2 trials for cellulite and FSS.
Selling, general and administrative costs were $55.4 million (non-GAAP) compared to $55.1 million for the third quarter of 2013.
Net income for the third quarter 2014 (non-GAAP) was $13.6 million, or $0.27 per basic and fully diluted share, compared to net income of $8.8 million or $0.18 per share (basic and fully diluted) for the third quarter of 2013 – this was primarily due to a decrease in operating expenses. As of September 30, 2014, Auxilium had $77.9 million in cash, cash equivalents and short-term investments, compared to $44.7 million at June 30, 2014, and outstanding debt of $302.4 million ($350.0 million at par value) in 2018 convertible senior notes and $295.3 million ($305.1 million par value) in a secured term loan.

Recent Corporate Milestones:

Announcement of the proposed acquisition of Auxilium by Endo International plc ("Endo") for approximately $2.6 billion in cash and stock – Endo has stated that it expects the proposed transaction to be immediately accretive and that it is designed to create a leading specialty healthcare company with an expanded platform for future growth. The companies entered into a definitive agreement under which Endo, subject to certain conditions, will acquire all outstanding Auxilium common shares for consideration of $33.25 per Auxilium share in all cash, a cash-and-stock mix or all stock, in accordance with the terms of the agreement. Endo has stated that it expects to generate up to $175 million of annual run rate operating expense reductions, inclusive of the $75 million reductions previously announced by Auxilium in September 2014
FDA approval of the STENDRA supplemental New Drug Application (sNDA), making STENDRA the first and only oral erectile dysfunction treatment approved to be taken approximately 15 minutes before sexual activity.
FDA approval of the XIAFLEX for DC supplemental Biologics Application (sBLA), expanding the use of XIAFLEX to the treatment of up to two DC joints in the same hand during a single treatment visit. It is estimated that 35-40 percent of surgical procedures to treat DC have been performed on multiple joints.
Announcement of positive data from the randomized, double-blind Phase 2a clinical trial of collagenase clostridium histolyticum (or CCH) in patients with cellulite. The mid and high-level doses of CCH demonstrated statistically significant improvement in cellulite across all endpoints and nearly 70 percent of mid and high dose patients were satisfied or very satisfied with treatment results.
The first data presentation of positive safety and efficacy data from the XIAFLEX MULTICORD (MULtiple Treatment Investigation of Collagenase Optimizing the Resolution of Dupuytren's) Phase 3b clinical trial at the 69^th Annual Meeting of the American Society for Surgery of the Hand (ASSH). This study evaluated CCH for the treatment of two Dupuytren's cords concurrently in the same hand as well as expanded flexibility with timing of the finger extension procedure.