Auxilium Pharmaceuticals Inc. raised $41.25 million after pricing its initial public offering.

The Norristown, Pa.-based company, which is focused on urologic and sexual health, sold 5.5 million shares at $7.50 apiece. Like most other biotech IPOs that have priced this year, the stock sold below the originally planned range between $8 and $9. Auxilium registered for the offering three months ago, intending to raise up to $86.25 million. (See BioWorld Today, April 23, 2004.)

On their first day of trading, the shares (NASDAQ:AUXL) lost 30 cents on volume of about 1.9 million, closing at $7.20.

Auxilium granted the underwriters a 30-day overallotment option to purchase up to an additional 825,000 shares. Deutsche Bank Securities Inc. in New York is acting as the sole bookrunner. Piper Jaffray & Co., of Minneapolis, and Thomas Weisel Partners LLC, of San Francisco, are co-managers.

In its prospectus, the specialty pharmaceutical company said it plans to use 30 percent of the proceeds to expand sales of its sole marketed product, Testim, a topical 1 percent testosterone gel indicated to treat hypogonadism. Such plans include increasing its sales capabilities and conducting additional clinical trials.

Auxilium markets Testim on its own in the U.S. through a 97-person sales force. The product was launched in the first quarter of last year.

Outside the U.S., the company has a license and distribution agreement with Paris-based Ipsen SA, which has marketing rights in all countries except the U.S., Canada, Mexico and Japan. Bayer Inc., a division of Leverkusen, Germany-based Bayer AG, has Canadian marketing rights. Auxilium, which plans to file for approval in Canada this year, received UK approval last year and has applied for regulatory approval in other European countries through the mutual recognition procedure.

Relative to the IPO-generated funds, another 40 percent of the proceeds are pegged for acquiring or in-licensing additional product candidates or approved products, and the remaining 30 percent is slated for working capital and other general corporate purposes.

In its pipeline, Auxilium is developing a product called M4500 for Peyronie's disease, through which scar tissue develops in the shaft of the penis, causing erectile pain and preventing intercourse. The enzyme product has orphan drug status from the FDA. The company also has an additional hypogonadism product in development and a treatment for overactive bladder. It also is working to develop delivery systems for androgen-replacement therapy and for use in treating erectile dysfunction and urinary incontinence.

Private investments since its 1999 inception total about $96 million to date, including $43 million in a Series D financing last fall. The company employs about 150 people.

Its IPO was the 24th U.S.-based offering in the biotech industry this year. More than a dozen other biotech companies remain in the IPO queue.