Washington Editor

Shares of Auxilium Pharmaceuticals Inc. climbed 17.4 percent Wednesday on news that the FDA had approved Xiaflex (collagenase Clostridium histolyticum) as the first drug in the U.S. to treat Dupuytren's contracture, a slowly progressive fibroproliferative disease, in which abnormal collagen deposits result in nodules and rope-like cords in the hand, eventually limiting finger movement.

"Finally the day we've all been waiting for," CEO Armando Anido said. He noted that the company had been waiting to hear from the FDA since August 2009 for the decision.

Shares of Auxilium (NASDAQ:AUXL) gained $4.88 Wednesday, to close at $32.96.

Hand surgery to divide or excise the diseased connective tissues - procedures that are often risky for nerve, artery and tendon damage - has been the mainstay of treatment for Dupuytren's contracture.

Xiaflex works by breaking down the excessive buildup of collagen in the hand. Xiaflex 0.58 mg is injected into the targeted Dupuytren's cord, which sometimes can spontaneously pop. But patients most often must return to the physician's office the next day for a passive finger extension procedure to disrupt the cord.

The injections and finger extension procedures may be administered up to three times per cord at about four-week intervals, according to Xiaflex's labeling.

The FDA placed no restrictions on which joints can be treated or any limitations on the severity of the contracture, Anido noted.

In one 66-patient study, 44 percent of those injected with Xiaflex were treated successfully, compared with 5 percent receiving a placebo. In a separate 306-patient study, 64 percent of patients given Xiaflex were treated successfully, compared with 7 percent administered a placebo.

Xiaflex's benefits over surgery are "well-recognized," said Cowen & Co. analyst Eric Schmidt. Given the significant "pent-up demand" for a drug therapy option, Auxilium should be able to demand "premium pricing" for the product, Schmidt wrote in a research note.

During a conference call with investors and analysts Wednesday, Auxilium officials said they were waiting to price the drug until just before its launch in late March. They expected Xiaflex revenues to be split evenly between Medicare and the commercial market.

Wedbush PacGrow LifeSciences analyst Kimberly Lee estimated peak sales for Xiaflex in Dupuytren's of $392.4 million, with 2010 Xiaflex sales at $71.6 million.

Auxilium plans to begin shipping Xiaflex to its distribution partners in about three or four weeks, Anido said.

Reimbursement for the drug could be the "strongest headwind" the company faces during Xiaflex's launch, he said. But, Anido added, the company plans to have a reimbursement hotline with specialists and trained sales representative available to "work closely with physicians as questions arise."

Auxilium plans to hire a 100-member sales team, consisting of 75 sales reps, supplemented by managers, reimbursement specialists and managed care directors, he said. In addition, the company will have 11 trained medical science liaisons on board to provide medical support for the product, Anido added.

"We believe that we have a comprehensive plan in place for the launch," he said. "The team has been in prep mode for sometime now and is eager to get this product in the hands of appropriate physicians."

The FDA did not impose a restrictive distribution program that could have limited Xiaflex's use to only certain specialists, as suggested last fall during an agency advisory committee meeting by some panelists who raised concerns that physicians without appropriate training in hand injection techniques and extension procedures would attempt to use the drug and possibly injure patients. (See BioWorld Today, Sept. 17, 2009.)

Regulators did, however, require Xiaflex to have a risk evaluation and mitigation strategy (REMS) program, which consists of a prescriber communication plan and a patient-friendly medication guide.

In addition, Xiaflex's labeling advises that the drug should be administered by health care providers experienced in injection procedures of the hand and in the treatment of Dupuytren's contracture.

Auxilium plans to initially target 7,000 hand surgeons, orthopedic surgeons, plastic surgeons, general surgeons and rheumatologists in its marketing strategy, Anido assured investors and analysts. Physicians must attest that they have completed a training program before Auxilium ships Xiaflex to their offices or outpatient facilities, he added.

The prescriber training program includes a manual and 20-minute video about how to properly reconstitute and inject Xiaflex and perform the finger extension procedures, Anido noted. Auxilium also intends to roll out a number of marketing and medical education programs at the drug's launch, he said.

Although no serious allergic reactions have been observed with Xiaflex, the drug's labeling warns prescribers to be prepared to address those events. "Such a response would not be unexpected because this foreign protein could prompt an immune system reaction," the FDA said in a statement.

Xiaflex's warnings also alert prescribers and patients about a risk for tendon rupture or serious injury to the injected extremity. Prescribers are warned to avoid injecting the drug into tendons, nerves, blood vessels or other collagen-containing structure of the hand.