ORGANIZATION AND DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 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 marketing rights for XIAPEX^® (the EU trade name for collagenase clostridium histolyticum) for Dupuytren's contracture and Peyronie's disease in Europe and certain Eurasian countries through April 24, 2013. 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 November 7, 2012, Auxilium announced that it has submitted a supplemental Biologics License Application ("sBLA") to the U.S. Food and Drug Administration ("FDA") for XIAFLEX for the potential treatment of Peyronie's disease. Auxilium has requested Priority Review designation for the sBLA and expects to hear back from the FDA regarding that designation within approximately 60 days from the filing date. Under Prescription Drug User Fee Act guidelines, if Priority Review designation is granted for the submission, the FDA's goal for completing the Priority Review is six months from the date of receipt. Adrian Adams, Chief Executive Officer and President of Auxilium, noted in Auxilium's announcement that the sBLA submission "'is a significant regulatory milestone for XIAFLEX and Auxilium and further demonstrates our strong commitment to addressing unmet medical needs by potentially providing patients with the only FDA-approved biologic therapy to treat this devastating disease'". He added that Auxilium believes that "'if approved by the FDA for the treatment of Peyronie's disease, XIAFLEX has the clinical profile to become a potential breakthrough option in a therapeutic area that currently has limited treatment options'".

Also on November 7, 2012, Auxilium and Pfizer announced that they have amended their collaboration agreement for the development, commercialization and supply of XIAPEX for the treatment of Dupuytren's contracture and the potential treatment of Peyronie's disease in the European Union and certain other European and Eurasian countries to include a mutual termination date of April 24, 2013.  After the termination date, rights to commercialize XIAPEX and responsibility for regulatory activities for XIAPEX in these countries will revert to Auxilium. Adrian Adams stated in the announcement that "'Auxilium remains committed to addressing the unmet needs of adult Dupuytren's contracture patients in the EU, and we now have the strategic flexibility to evaluate all of our options for the continuing commercialization of XIAPEX for the treatment of Dupuytren's contracture and for gaining approval for XIAPEX for the treatment of Peyronie's disease in the EU and other specified markets'".

In a September 5, 2012 press release, we announced a safety update following 30 months of post-approval use in the U.S. of XIAFLEX for the treatment of adult Dupuytren's contracture patients with a palpable cord. As reported by Auxilium, after approximately 27,000 injections were administered to approximately 21,000 patients in the U.S., there was no clinically meaningful change in the nature of events expected relative to the clinical trial safety profile.

In an August 27, 2012 press release, we announced the presentation of additional data from the Phase III clinical program of XIAFLEX for the treatment of Peyronie's disease conducted by Auxilium and known as IMPRESS (The Investigation for Maximal Peyronie's Reduction Efficacy and Safety Studies). These data were presented at two oral presentations at the Sexual Medicines Society of North America/International Society for Sexual Medicine Joint Annual Meeting on August 27 and 29, 2012 in Chicago, IL. These data highlighted the psychological severity of Peyronie's disease, which currently has no FDA-approved pharmaceutical therapy and complemented the positive top-line Phase III results from the two IMPRESS clinical trials reported in June 2012.

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 initiated 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.  Auxilium expects topline results in the first half of 2014.

Also in the third quarter of 2012, Auxilium completed enrollment in its cellulite phase Ib, Frozen Shoulder phase IIa and phase IV Dupuytren's retreatment clinical trials.  Auxilium expects top-line data from these XIAFLEX studies in the fourth quarter of 2012, first quarter of 2013 and fourth quarter of 2013, respectively.

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.