Auxilium Pharma Launches Authorized Generic Testim - Analyst Blog

Auxilium Pharmaceuticals Inc. AUXL announced that it has inked a deal with Prasco, LLC to introduce an authorized generic version of Testim (testosterone gel). Testim is approved for the treatment of patients who have low or no testosterone. Prasco, which possesses product inventory, has started shipping the authorized generic version of Testim.

Testim, which delivered sales of $211.2 million last year, is under significant pressure with the product expected to post revenues of less than $85 million this year. Challenges being faced by Testim include a shrinking testosterone replacement therapy TRT gel market, lower Testim market share, downward pressure on TRT gel scripts due to concerns regarding safety, inventory destocking, and higher rebates.

Auxilium Pharma expects prescription volume in the TRT gel market to go down by 25% in 2014 from the 2013 level. Meanwhile, the testosterone gel market will become even more competitive when generic versions of AndroGel 1% enter the market.

Auxilium Pharma revised its guidance for 2014 primarily on the basis of lower expectations for Testim revenues for the year. The company cut its revenue guidance by $70 million to $380 million−$420 million (previous range: $450 million−$490 million).

Auxilium Pharma carries a Zacks Rank #5 (Sell). With Testim facing a bleak future, Auxilium Pharma is now heavily dependent on Xiaflex for growth.

Some better-ranked stocks in the health care sector include Gilead Sciences Inc. GILD, ANI Pharmaceuticals, Inc. ANIP and Quintiles Transnational Holdings Inc. Q. While Gilead and ANI Pharmaceuticals hold a Zacks Rank #1 (Strong Buy), Quintiles carries a Zacks Rank #2 (Buy).