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Canada Approves Auxilium's Xiaflex

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Auxilium Pharmaceuticals, Inc.’s Xiaflex recently gained approval in yet another country. Auxilium Pharma and partner Actelion said that Xiaflex has been granted approval in Canada for the treatment of Dupuytren's contracture in adults with a palpable cord.

Actelion, which entered into a collaboration agreement with Auxilium Pharma earlier this year, intends to launch Xiaflex in Canada in the first half of 2013. Other countries covered under the collaboration include Australia, Brazil and Mexico, where regulatory filings are expected to be submitted by year end.

Under the terms of the agreement, Auxilium Pharma is entitled to receive $0.5 million on Xiaflex’s approval in Canada. The company is also entitled to receive tiered double-digit royalties on sales of Xiaflex in Actelion's territories.

Xiaflex is currently approved in the US and the EU (trade name: Xiapex) for the Dupuytren’s contracture indication. It is currently under development in Japan.

Meanwhile, Auxilium Pharma is set to seek approval for a second indication for Xiaflex by year end. The company recently presented much-awaited positive phase III results on Xiaflex from the IMPRESS (The Investigation for Maximal Peyronie's Reduction Efficacy and Safety Studies) trials which were conducted to evaluate Xiaflex for Peyronie’s disease.

Xiaflex is being studied for other indications as well, including the treatment of cellulite (edematous fibrosclerotic panniculopathy) and the treatment of frozen shoulder syndrome.

Auxilium Pharma will most likely succeed in gaining approval for a second indication for Xiaflex. If all goes well, Xiaflex could be on the market for the Peyronie’s indication by late 2013. FDA approval would make Xiaflex the first biologic therapy to be approved for Peyronie’s.

The company estimates that about 65,000-120,000 patients are diagnosed with Peyronie’s every year in the US with 5,000-6,500 patients opting for injectable therapies or surgery. This represents significant commercial potential for Auxilium Pharma.

We are also positive on the company’s efforts to drive Testim sales. Auxilium Pharma recently signed an agreement with GlaxoSmithKline‘s (GSK) US subsidiary, GlaxoSmithKline LLC, for the co-promotion of Auxilium Pharma’s Testim (1% testosterone), which is approved for the treatment of hypogonadism or low testosterone level. We expect Testim sales to benefit from the additional promotional effort.

We currently have a Neutral recommendation on Auxilium Pharma. The stock carries a Zacks #2 Rank (short-term Buy rating).

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