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Auxilium slumps on 1Q sales, makes $585M purchase

Auxilium slides on weak 1st-qtr sales; company buys urology product maker Actient for $585M

Associated Press

CHESTERBROOK, Pa. (AP) -- Auxilium Pharmaceuticals Inc. reported disappointing first-quarter sales on Monday and said it is spending $585 million to buy a urology drug company.

Auxilium said sales of its two approved drugs, Xiaflex and Testim, both decreased because of lower sales in the U.S. It said both drugs appear to be losing market share and reduced its sales expectations for both products.

The company also said it bought Actient Holdings LLC from private equity firm GTCR for $585 million. In the process Auxilium said it will get two testosterone drugs, impotence treatments and two respiratory drugs.

Shares of Auxilium fell $1.49, or 9.3 percent, to $14.54 in morning trading. Earlier the stock fell to an annual low of $14.45.

The company said sales of testosterone drug Testim fell 23 percent to $45.5 million. Auxilium said fewer health care plans are covering Testim and said the drug is losing market share, although the pace of those losses is slowing down. Sales of Xiaflex grew 39 percent to $20.7 million in total, but U.S. sales slipped and Auxilium said total revenue from the drug fell short of its expectations.

Xiaflex is approved to treat a rare condition called Dupuytren's contracture, which causes the tendons of the hand to thicken and shorten, making the fingers curve inward.

Auxilium said it lost $8.2 million, or 17 cents per share, in the first quarter. A year ago Auxilium reported a loss of $1.7 million, or 4 cents per share. Excluding one-time charges the company said it lost 5 cents per share in the latest quarter. Revenue fell 10 percent, from $66.2 million from $73.6 million.

Analysts were expecting net income of 3 cents per share and $334.6 million in revenue, according to FactSet.

The company said it paid GTCR $585 million. Owners of Actient shares will also get warrants to buy 1.3 million Auxilium for $17.80 per share, and Auxilium agreed to pay up to $50 million based on sales targets for Actient products. Auxilium said it took out a new $225 million secured loan to help fund the purchase.

Actient had $125 million in adjusted revenue in 2012. Its biggest-selling product is Testopel, a long-lasting testosterone implant. Auxilium said the product had $58 million in sales in 2012. Actient's other products include the testosterone drug Testopel, an impotence drug Edex, two respiratory drugs, and Osbon ErecAic, which uses vacuum therapy to treat impotence.

Auxilium reported $172.5 million in revenue in 2012. It now expects $360 million to $415 million in revenue in 2013, including $85 million to $95 million from Actient. It lowered its sales forecast for Testim by more than $30 million, to a range of $210 million to $240 million, and cut its sales estimate for Xiaflex by $10 million to a range of $65 million to $80 million from Xiaflex.

The company had expected $325 million to $355 million in revenue for the year. On average analysts are forecasting $334.6 million in revenue.

Auxilium is trying to win approval to market Xiaflex as a treatment for Peyronie's disease, which causes abnormal curvature of the penis. If it gains that approval, it plans to start marketing the drug for that condition during the fourth quarter of 2013.

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