Crooked-penis drug developer rises after Pfizer deal
12:11 PM EST, December 19, 2008
Auxilium Pharmaceuticals Inc., the biotechnology company developing a drug to treat penis curvature and hand lumps, rose the most in seven weeks in Nasdaq trading after Pfizer Inc. bought the rights for as much as $485 million.
Auxilium, of Malvern, Pennsylvania, gained $3.39, or 15 percent, to $26.28 at 4 p.m. New York time in Nasdaq Stock Market composite trading, its biggest jump since Oct. 30. Auxilium said late yesterday that New York-based Pfizer, the world's biggest drugmaker, would help develop the shot Xiaflex for 46 European and Asian countries.
The medicine targets Peyronie's disease, a curvature of the penis, and Dupuytren's contracture, a growth of hard tissue in the hand. Both conditions are caused by the buildup of collagen, or scar tissue. Xiaflex is a biotechnology drug made up of three types of enzymes that can break down collagen.
"We continue to believe that Auxilium shares are positioned to outperform the market by more than 25 percent over the next 12-18 months as Xiaflex's development progresses and investors better appreciate its opportunity in Dupuytren's and Peyronie's," said Eric Schmidt, an analyst at Cowen & Co. in New York, in a note to clients today.
In Peyronie's disease, the buildup of collagen on the shaft of the penis reduces flexibility, causes pain and can interfere with sexual intercourse. It affects an estimated 1 to 3 percent of men, according to Weill Cornell Medical Center in New York. In Dupuytren's contracture, which is found in 3 to 6 percent of Caucasians, especially those of northern European descent, collagen buildup in the palm can contract the fingers and impair use of the hand.
$75 Million Now
Pfizer will pay Auxilium $75 million up front, $150 million more if the drug meets regulatory goals and as much as $260 million if it reaches sales milestones, the companies said. Auxilium will remain primarily responsible for developing and making Xiaflex, though Pfizer may help with research in the countries where it has marketing rights.
BioSpecifics Technologies Corp., a Lynbrook, New York-based company that licensed the enzyme product to Auxilium, said in a statement today that it will receive 8.5 percent of the money paid by Pfizer. That's enough to fund operations through the first half of 2012, BioSpecifics said. The company rose $3.05, or 18 percent, to $20 in over-the-counter trading.
Auxilium said it expects to file an application with the U.S. Food and Drug Administration early next year for the drug's use in treating the hand condition. The medicine is in the second of three phases of testing usually required for FDA approval for the penis-curvature condition and another illness known as frozen shoulder syndrome.
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