ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2012

ORGANIZATION AND DESCRIPTION OF BUSINESS [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

We are a biopharmaceutical company involved in the development of an injectable collagenase for multiple indications. We are a party to a development and license agreement with Auxilium Pharmaceuticals, Inc. ("Auxilium") for injectable collagenase (which Auxilium has named XIAFLEX^® (collagenase clostridium histolyticum)) for clinical indications in Dupuytren's contracture, Peyronie's disease and frozen shoulder (adhesive capsulitis). Auxilium has an option to acquire additional indications that we may pursue, including cellulite, for which we have granted Auxilium the right to initiate early development studies at its cost, and human and canine lipoma. Auxilium is currently selling XIAFLEX in the U.S. for the treatment of Dupuytren's contracture. Auxilium has an agreement with Pfizer, Inc. ("Pfizer") pursuant to which Pfizer has the right to market XIAFLEX for Dupuytren's contracture and Peyronie's disease in Europe and certain Eurasian countries, and will do so under the registered trademark XIAPEX^® (collagenase clostridium histolyticum). Pfizer received marketing authorization for Dupuytren's contracture by the European Commission on February 28, 2011 and began sales in certain countries in the European Union in April 2011. In addition, Auxilium has an agreement with Asahi Kasei Pharma Corporation ("Asahi") pursuant to which Asahi has the right to commercialize XIAFLEX for the treatment of Duputyren's contracture and Peyronie's disease in Japan. Auxilium also has an agreement with Actelion Pharmaceuticals Ltd. ("Actelion") pursuant to which Actelion has the right to commercialize XIAFLEX for the treatment of Duputyren's contracture and Peyronie's disease in Canada, Australia, Brazil and Mexico. Actelion was granted a Notice of Compliance (approval) by Health Canada for XIAFLEX for the treatment of Dupuytren's contracture in adults with a palpable cord in Canada.

Pursuant to a March 2006 agreement (the "DFB Agreement") between the Company and DFB Biotech, Inc. ("DFB"), we continue to receive earn-out payments based on the sales of Santyl.  Our right to receive earn-out payments with respect to the marketed topical product sold to DFB expires in June 2013, but earn-out payments for second generation collagenase products, if any, continue indefinitely.

Operational Highlights

On May 7, 2012, we announced the initiation of a placebo controlled randomized Phase II clinical trial, Chien-804, to evaluate the efficacy of XIAFLEX for canines with benign subcutaneous lipomas. The single injection study will evaluate 32 dogs randomized 1:1 XIAFLEX to placebo. Auxilium has the option to license development and marketing rights to this canine lipoma indication.  We anticipate that we will complete enrollment by the first half of 2013.

In a May 9, 2012 press release, Auxilium announced that The Journal of Urology had published on its website, Auxilium's phase IIb clinical trial of XIAFLEX for the potential nonsurgical treatment of Peyronie's disease.  Top line data from this trial had been previously reported by Auxilium. The study appeared in the June 2012 print version of The Journal of Urology.

On June 4, 2012, we announced positive top-line results from the IMPRESS (The Investigation for Maximal Peyronie's Reduction Efficacy and Safety Studies) Phase III clinical program of XIAFLEX for the treatment of Peyronie's disease, which was conducted by our partner Auxilium. Results from the two randomized, double-blind, placebo-controlled studies at 52 weeks demonstrated statistically significant improvements in both co-primary endpoints of the trials, including percent improvement from baseline in penile curvature deformity compared to placebo and change from baseline (improvement) in the Peyronie's disease bother domain of Auxilium's Peyronie's Disease Questionnaire ("PDQ") compared to placebo. Auxilium expects to submit a supplemental Biologics License Application ("sBLA") filing to the U.S. Food and Drug Administration ("FDA") by the end of 2012.

On June 26, 2012, we announced that we initiated a Phase II trial of XIAFLEX for the treatment of human lipoma. Human lipomas are encapsulated deposits of benign fat often detected as bulges under the skin and are diagnosed in 575,000 U.S. patients annually. We anticipate that we will complete enrollment by the first half of 2013.

In a July 9, 2012 press release, Auxilium and Actelion announced that Auxilium was granted a Notice of Compliance (approval) by Health Canada for XIAFLEX for the treatment of Dupuytren's contracture in adults with a palpable cord in Canada. Under the terms of the Collaboration Agreement between Actelion and Auxilium, Actelion received exclusive rights to commercialize XIAFLEX for the treatment of Dupuytren's contracture and Peyronie's disease in Canada, Australia, Brazil and Mexico upon receipt of the respective regulatory approvals. Pursuant to the Collaboration Agreement, Auxilium intends to transfer regulatory sponsorship of the dossier to Actelion and Actelion will be primarily responsible for the applicable regulatory and commercialization activities for XIAFLEX in Canada and, upon approval, in the remainder of these countries. Actelion expects to make XIAFLEX available to patients in Canada in the first half of 2013.

In a July 30, 2012 press release, Auxilium announced positive top-line data from its open-label phase IIIb trial evaluating XIAFLEX for the treatment of adult Dupuytren's contracture patients with multiple palpable cords.  Auxilium enrolled 60 patients at eight sites throughout the U.S. and Australia.  In the third quarter of 2012, Auxilium expects to begin a larger study with XIAFLEX for the concurrent treatment of multiple palpable cords that, if successful, may allow the Company to seek FDA approval and expansion of the Dupuytren's label.  Based on research by SDI Health, LLC estimating that 35 to 40% of annual Dupuytren's surgeries in the US are performed to treat two or more cords concurrently, Auxilium is conducting these studies to seek a multicord indication for XIAFLEX from the FDA.  Auxilium expects topline results in the first half of 2014.