Auxilium Pharmaceuticals, Inc.
) reported earnings (including stock-based compensation expense)
of 10 cents per share in the third quarter of 2013, well above
the year-ago loss of 21 cents and the Zacks Consensus Estimate of
earnings of 5 cents per share.
Revenues, which increased 52% to $108.1 million, were above
the Zacks Consensus Estimate of $102 million. Results were
boosted by the recently acquired subsidiary, Actient, which
contributed $38.3 million to third quarter 2013 revenues. Higher
Xiaflex sales also contributed to the increase which was
partially offset by lower Testim U.S. revenues.
Quarter in Detail
Lead product Testim posted sales of $52.3 million in the third
quarter of 2013, down 6% year-over-year. Testim revenues in the
U.S. declined 7% to $50.7 million. Sales included inventory
stocking worth $3 million - $4 million. Sales were negatively
impacted by slowing growth of the testosterone replacement
therapy (TRT) market.
The TRT gel market continues to slow down and the company said
that the market is expected to grow in the low single digit range
compared to 2012.
Meanwhile, Xiaflex U.S. revenues grew 20% to $15.9 million.
Auxilium Pharma is working on expanding Xiaflex' label. The
company is currently seeking FDA approval for Peyronie's disease
- a response should be out by Dec 6, 2013. Xiaflex is also in a
phase IIa study for the treatment of cellulite.
While Testopel generated revenues of $20.6 million, Edex
revenues were $8 million. Both are products gained through the
Research and development expenses for the reported quarter
increased 11.3% to $11.8 million due to higher spending on
activities related to the Xiaflex multi-cord studies. Selling,
general and administrative expenses grew 4.5% to $57.8 million
mainly due to the Actient acquisition as well as higher marketing
and advertising spend related to the potential launch of Xiaflex
for the Peyronie's indication.
2013 Guidance Updated
Auxilium Pharma now expects revenues of $370 million to $401
million (old guidance: $363 million to $405 million). Testim
guidance was lowered to $200 million to $210 million (old
guidance: $210 million to $225 million) reflecting the continuing
softness in the TRT gel market. U.S. Xiaflex sales guidance of
$55 million to $65 million remained unchanged.
The company now expects ex-U.S. and deferred revenues for
Xiaflex of $15 million to $16 million (old guidance: $13 million
to $15 million). Meanwhile, Testopel and other revenues are
expected in the range of $55 million - $60 million (old guidance:
$45 million - $55 million) and $45 million - $50 million (old
guidance: $40 million - $45 million), respectively.
R&D guidance remained unchanged at $45 million - $55
million. SG&A guidance was narrowed to $205 million - $210
million from $205 million - $215 million.
Net income is expected in the range of $25 million - $30
million (old guidance: $23 million - $28 million). Auxilium
Pharma remains on track to generate cost synergies of at least
$20 million from the Actient acquisition by 2014.
Auxilium Pharma has also in-licensed Stendra, which is
approved for erectile dysfunction. The company expects to start
shipping the product from December and full promotional
activities will commence in January. Auxilium Pharma's 150 person
PRIMERA sales force will promote Stendra - the sales force will
target physicians who account for about 45% of PDE5 inhibitor
Auxilium Pharma's third quarter results were strong barring
Testim's performance. Xiaflex sales improved and the Actient
acquisition boosted revenues. We are encouraged by the company's
efforts to build its urology portfolio. Stendra, in-licensed from
), is the first new chemical entity in the PDE5 inhibitor market
in ten years.
The market opportunity for erectile dysfunction treatments is
significant with U.S. sales of about $3 billion in 2012. About
60% of men being treated with currently available PDE5 inhibitors
switch to other treatments due to dissatisfaction. A fast onset
of action (30 minutes), no specific meal restrictions, the
ability to be taken with modest alcohol consumption, and a
favorable side effect profile could help Stendra pick up
Auxilium Pharma currently carries a Zacks Rank #3 (Hold). We
expect investor focus to remain on the regulatory status of
Xiaflex for the Peyronie's indication. Companies that currently
look well-positioned include
) with both being Zacks Rank #1 (Strong Buy) stocks.
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