The share price of
Auxilium Pharmaceuticals, Inc
) fell 9.6% after the company announced its second-quarter results
on Aug 7. However, share prices have recovered approximately 3.1%
Auxilium Pharma reported second quarter 2014 loss (including
stock-based compensation expense) of 54 cents per share, much wider
than the Zacks Consensus Estimate of a loss of 45 cents per share.
The company had reported earnings of 14 cents per share in the
Auxilium Pharmaceuticals, Inc - Earnings
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Second quarter revenues decreased 17.4% year over year to $83.0
million. Revenues were impacted by a decrease in Testim and
Testopel revenues. However, the quarter saw an increase in Xiaflex
and Stendra revenues. Revenues, however, fell short of the Zacks
Consensus Estimate of $91 million.
Quarter in Detail
Testim posted sales of $26.1 million in the second quarter of
2014, down 52% year over year. Testim revenues in the U.S. declined
77.6% to $11.9 million. Sales were negatively impacted by slowing
growth of the testosterone replacement therapy (TRT) market.
The company launched Stendra for erectile dysfunction and
Xiaflex for Peyronie's disease (PD) earlier this year. Auxilium
Pharma recorded Stendra U.S. net revenues of $6.1 million
(including product shipment to wholesalers).
We note that Auxilium Pharma is looking to expand Stendra's
label to include the 15-minute onset of action claim. The FDA is
expected to render a final decision on Sep 20, 2014. The product's
fast onset of action and a favorable side effect profile could help
Stendra pickup share. We note that the company in-licensed Stendra
from VIVUS Inc. (
Xiaflex's U.S. revenues grew 75.3% to $26.3 million. A strong
initial launch momentum has been observed for Xiaflex for the PD
While Testopel generated revenues of $4.2 million, Edex revenues
were $7.5 million with 52% market share. Both products were gained
from the Actient acquisition.
Research and development expenses (including stock-based
compensation expense) for the reported quarter declined 16.9% to
$11.3 million benefiting from lower spending on Xiaflex. Selling,
general and administrative expenses (including stock-based
compensation expense) declined 7.6% to $69.2 million.
The company reiterated its revenue guidance of $380−$420
million. The Zacks Consensus Estimate of $410 million falls within
the guidance range.
In 2014, the company expects Testim revenues to be less than $85
million due to a shrinking TRT gel market, lower Testim market
share, and downward pressure on TRT gel scripts due to concerns
regarding safety, inventory destocking and higher rebates.
On a year-to-date basis, the company saw a decline of 19% in the
TRT gel market. The company expects to report break-even results or
a loss of up to $15 million this year.
Auxilium Pharma currently carries a Zacks Rank #4 (Sell).
Auxilium Pharma's second quarter results missed both revenues and
earnings estimates primarily due to lower Testim revenues.
Auxilium Pharma is now treating Testim as a mature product and
hence the company is banking heavily on the successful
commercialization of Xiaflex and Stendra.
Meanwhile, in a bid to diversify its portfolio (ophthalmology
and the orphan drug space) and save taxes, Auxilium Pharma entered
into a definitive agreement to merge with Canadian entity QLT (
) in an all stock deal in Jun 2014. The merger is expected to close
in the fourth quarter of 2014.
) is a better-ranked stock in the healthcare sector with a Zacks
Rank #1 (Strong Buy).
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