Specialty biopharmaceutical company,
Auxilium Pharmaceuticals, Inc.
) recently entered into a co-promotion agreement with
) U.S. subsidiary, GlaxoSmithKline LLC. The companies signed an
agreement for the co-promotion of Auxilium Pharma's Testim (1%
testosterone), which is approved for the treatment of hypogonadism
or low testosterone level.
The deal provides Glaxo with exclusive rights to co-promote
Testim in the U.S. with Auxilium Pharma through September 30, 2015.
Glaxo will use its established sales force to promote Testim to
testosterone replacement therapy (TRT) prescribers, especially
primary care physicians. Glaxo already has a presence in this
market where its sales reps promote cardiovascular, metabolic and
The companies have settled on a baseline revenue forecast for
the co-promotion period - once Testim sales exceed this forecast,
Glaxo will be compensated by the amount that Testim net sales
exceed the baseline. Moreover, Glaxo is entitled to specified tail
payments in certain circumstances.
Glaxo's sales force will start promoting Testim early in the
third quarter of 2012. Auxilium Pharma believes that the additional
sales effort will increase the target audience to the top 25% of
high-volume gel writers. Historically, the current Testim sales
force has targeted the top 13% of the 159,000 US gel TRT
Meanwhile, reach to primary care physicians, urologists and
endocrinologists will increase with the additional detailing.
2012 Revenue Guidance Raised
Following the announcement of the Glaxo co-promotion agreement,
Auxilium Pharma increased its revenue guidance for 2012 to $293 -
$315 million (old guidance: $283 to $305 million). The company also
trimmed its net loss guidance and now expects a loss in the range
of $5 - $10 million (old guidance: $5 - $15 million). Testim
revenues are now expected in the range of $225 million to $235
million (old guidance: $215 to $225 million). Testim sales were
$207.9 million in 2011. Auxilium Pharma said that it expects
SG&A spend towards the higher level of its previously issued
guidance range of $180 - $190 million.
We are pleased with Auxilium Pharma's efforts to drive Testim
sales. With urology being a key focus area at Glaxo, Testim sales
should benefit from the additional promotional effort. Moreover, it
has been seen that TRTs are sensitive to promotional efforts. Given
the increasingly competitive environment, the additional sales
effort should come in handy. The testosterone therapy market, while
lucrative, has several players like
) AndroGel franchise (1% and 1.62%),
) Fortesta, and
) Axiron .
According to IMS Health data, annual testosterone therapy sales
in the U.S. exceeded $1.6 billion, with testosterone gels posting
sales of $1.4 billion. We believe the company will be able to
achieve its raised revenue guidance range.
We currently have a Neutral recommendation on Auxilium Pharma,
which carries a Zacks #3 Rank (short-term 'Hold' rating). We expect
near-term investor focus to remain on top-line results on Xiaflex
from phase III studies (IMPRESS) for Peyronie's disease. Results
should be out in June 2012. Positive results would allow the
company to file for approval by year end.
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