NEW DELHI – An Indian biotechnology company with headquarters in Pennsylvania and best known for its urology and testosterone therapies is looking to overcome a series of reverses through a $75 million restructuring and a merger with a Canadian company.

Not even the company, Auxilium Inc., (NASDAQ:AUXL) is entirely sure why sales of its testosterone products have dropped so rapidly, but much of the blame might be in a pair of studies in the U.S. that raise a possible – but not conclusive – link between testosterone replacement and higher risk of heart problems. Over the past year, India has put in place a series of regulatory curbs on the marketing of testosterone replacement therapies that are Auxilium's flagship products.

The overall market for testosterone replacement therapy (TRT) declined by about 20 percent this year due to reasons that are "difficult to quantify."

"Auxilium has faced significant challenges this year, in particular a dramatic decline in the testosterone replacement therapy market. We are making difficult but necessary changes at the operational level to strengthen our balance sheet, reinforce our competitive position and, we believe, drive shareholder value," said Adrian Adams, Auxilium's president and CEO.

"One potential factor includes recent journal publications about the potential link between testosterone replacement therapy and cardiovascular risk," an Auxilium spokeswoman told Bioworld Today.

Auxillium is an emerging domestic leader in the development of innovative first- and second-line products across multiple indications ranging from urology to testosterone replacement, but the company is now expanding into orthopedic conditions, such as frozen shoulder syndrome, and dermatology.

In a recent announcement, the company said it wants to use the restructuring to reduce annual operating expenses by at least $75 million and stabilize cash flow to ensure sustained growth in earnings. A substantial part of the restructuring is expected to be completed by the end of 2014, with the full $75 million run-rate achieved by the middle of next year.

The company needs to become more efficient and competitive ahead of an anticipated merger with Canadian biotechnology company QLT Inc., although the company insists the restructuring efforts are independent of the proposed merger.

QLT, headquartered in Vancouver, British Columbia, specializes in eyecare products and is traded in both Nasdaq (NASDAQ:QLTI) and the Toronto (TSX:QLT) exchange.

Auxilium plans to implement a series of cost-saving measures almost immediately, including cutting almost one-third of its staff, realigning its three separate sales forces into two, focusing its R&D on frozen shoulder syndrome and cellulite and improving manufacturing efficiency. The firm also has plans to consolidate commercial operations and improve manufacturing efficiency.

The company said it took these steps after an assessment of its broadened product portfolio, its cost structure and its shareholder value.

The company's current pipeline includes Xiaflex (collagenase clostridium histolyticum) for the treatment of frozen shoulder syndrome, cellulite and human and canine lipoma. It is currently undergoing phase II trials.

With a new research focus, Auxilium wants to expand its current portfolio of about a dozen products.

The spokeswoman said, "While Auxilium is committed to urology, with our core therapeutic focus and anchor position in men's health care, its product portfolio and R&D pipeline is augmented by a growing therapeutic and strategic footprint in orthopedics and ongoing research in dermatology."

In recent briefing documents, the FDA said it had not found conclusive evidence of a causal link between the TRTs and cancer but an advisory committee did say Sept. 17 that additional studies are warranted. (See BioWorld Today, Sept. 19, 2014.)

But as sales of testosterone products rose, concerns emerged over potential health risks have grown. The FDA was first prompted to reassess the cardiovascular safety of testosterone therapy after an observational study of older men, about 60 years old, published in the Journal of the American Medical Association in November 2013. The study suggested a 30 percent increase in the risk of stroke, heart attacks and death among patients that had been prescribed testosterone therapy.

Another major observational study was published in PLoS One in January 2014. The study reported a twofold increase in the risk of heart attacks in the first three months after starting testosterone treatment in older men (about 65 years old). Among younger men with a history of heart disease, the researchers found a two- to threefold increase in the risk of heart heart attack in the 90 days following an initial prescription.