Washington Editor

Trying to better manage its products, Auxilium Pharmaceuticals Inc. dissolved its co-promotion partnership with Oscient Pharmaceuticals Corp. around Testim 1 percent testosterone gel and entered a lease for an existing biologics manufacturing facility to produce its lead investigational product.

Going forward, Auxilium will manage Testim's sales on its own and will ratchet up its sales force to about 150 territories from the current coverage of 94. FDA-approved for four years, the hypogonadism product's sales have grown to $16.5 million in the most recent quarter, and full-year forecasts range from $64 million to $68 million.

The Malvern, Pa.-based company also leased a nearby production site for AA4500, its injectable enzyme product in late-stage development for Dupuytren's contracture, Peyronie's disease and frozen shoulder syndrome. Auxilium plans to begin a final Phase III trial later this year for Dupuytren's, a disease in which the connective tissue that lies beneath the skin of the palm of the hand thickens and contracts, as well as a Phase IIb dose-optimization study in Peyronie's, a disease characterized by the formation of a scar or hard plaque in the shaft of the penis that causes curvature.

Collectively, the new sales plans for Testim and the manufacturing lease allow the company to take "more and more control" of its portfolio of products, CEO Armando Anido said in a conference call. Both initiatives represent "significant steps" to accelerate growth at Auxilium, he added.

That sentiment was echoed by Chief Financial Officer Jim Fickenscher. "By coincidence, both these things came together at once," he told BioWorld Today, "and we were pretty happy to take a little bit more control of each of those."

The deal with Oscient dates back just more than a year, to last May, and covered U.S. sales. That company, of Waltham, Mass., devoted about a third of its 250 sales representatives to promoting Testim to primary care physicians, Anido said. Auxilium had been promoting it to urologists, endocrinologists and select primary care physicians.

Approved for sale in 16 countries, Testim generated 17.6 percent of total U.S. prescriptions for testosterone gels in the last quarter. Auxilium traded the product's rights outside the U.S. for up-front money several years ago, so it is focused on domestic sales.

The companies, which mutually agreed to end their co-promotion agreement, will share profits from primary care sales through the end of last month, and Auxilium will pay Oscient $1.8 million as additional compensation for commercialization efforts by its sales force to date.

For Oscient, concluding the Testim agreement allows it to focus sales and marketing resources on the launch of Antara (fenofibrate), its recently acquired product for dyslipidemia, and on Factive (gemifloxacin mesylate), a treatment for acute bacterial exacerbations of chronic bronchitis and community-acquired pneumonia that is entering its third respiratory tract infection season.

Anido said Auxilium's manufacturing facility lease would become effective later this quarter. The 50,000-square-foot site includes fermentation and purification equipment for the production of AA4500, laboratories for in-process and final product release testing, as well as development labs that could be useful in activities related to AA4500's life cycle management and other potential product candidates. The facility had been owned by Neose Technologies Inc., of Horsham, Pa.

The real estate deal "reflects our continued confidence" in the product, which is expected to enter the Dupuytren's market in 2008, Anido added. Auxilium has a license to AA4500 from BioSpecifics Technologies Corp., of Lynbrook, N.Y., and has an existing pre-commercial manufacturing arrangement with Cobra Biologics Ltd., of Keele, UK. Going forward, a longer-term agreement with Cobra might come together, although the new facility affords an additional option for Auxilium, given that most of AA4500's active pharmaceutical ingredients can be produced there.

"We think that we can apply a specialty pharma focus field force on AA4500," Fickenscher said, "and make it a success."

To oversee contract manufacturing and the new production site, the company hired Mike Cowan as the head of manufacturing, and with the new lease and sales force expansion, costs are going up for Auxilium. Its full-year loss is expected to range between $48 million and $51 million, up from former guidance of $40 million to $43 million, because of higher research and development expenditures and selling, general and administrative expenses. Guidance for total revenues of $64 million to $68 million has not been affected by these transactions.

At June 30, Auxilium had $33.3 million in cash, cash equivalents and short-term investments, and Anido said that would last until the first quarter of next year. New funding could come through equity or debt sales, or by way of an overseas out-licensing arrangement for AA4500.

On Tuesday, shares in the company (NASDAQ:AUXL) traded down 10 cents to $8.55, and Oscient's stock (NASDAQ:OSCI) lost 2 cents to close at $1.18.