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Auxilium Pharmaceuticals, Inc. Announces Pricing Of $325.0 Million Of 1.50% Convertible Senior Notes Due 2018

CHESTERBROOK, Pa., Jan. 25, 2013 /PRNewswire/ -- Auxilium Pharmaceuticals, Inc. (Nasdaq: AUXL), a specialty biopharmaceutical company ("Auxilium"), today announced the pricing of $325.0 million aggregate principal amount of 1.50% Convertible Senior Notes due 2018 (the "Convertible Notes"), in an offering (the "Offering") registered under the Securities Act of 1933, as amended (the "Securities Act").  Settlement is scheduled to occur on January 30, 2013. Auxilium has also granted the underwriters of the Convertible Notes a 30-day option to purchase up to an additional $25.0 million aggregate principal amount of the Convertible Notes.

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The Convertible Notes will pay interest semi-annually at a rate of 1.50 percent per annum and have been priced at par. The Convertible Notes are convertible, at the holder's option at an initial conversion rate of 41.3770 shares of Auxilium's common stock per $1,000 principal amount of Convertible Notes, subject to adjustment in certain circumstances. This conversion rate is equal to an initial conversion price of approximately $24.17 per share, an approximately 32.5 percent premium over the $18.24 closing price of Auxilium's common stock on the NASDAQ Global Select Market (the "NASDAQ") on January 24, 2013. Prior to January 15, 2018, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date. Upon conversion, Auxilium will pay or deliver, as the case may be, shares of Auxilium's common stock, cash or a combination thereof at Auxilium's election.

The Convertible Notes will be general senior unsecured obligations of Auxilium.

Auxilium estimates that the net proceeds from the Offering will be approximately $314.5 million (or approximately $338.7 million if the underwriters' option is exercised in full) after deducting underwriters' discounts and commissions and estimated offering expenses.  Auxilium intends to use the net proceeds from the Offering to pay the cost of the note hedge transactions described below (after such cost is partially offset by the proceeds from the sale of the warrants, as described below) and for general corporate purposes, which may include the acquisition (including by merger, purchase, license or otherwise) of businesses, products, product rights or technologies.

Goldman, Sachs & Co. and J.P. Morgan Securities LLC are acting as joint book-running managers for the Offering. Cowen and Company and RBC Capital Markets are acting as co-managers for the Offering. The Convertible Notes will be offered and sold under Auxilium's shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (the "SEC") on January 23, 2013, which was effective upon filing, and a preliminary prospectus supplement setting forth the terms of the Convertible Notes, filed with the SEC on January 23, 2013.  Auxilium intends to file a final prospectus supplement setting forth the terms of the Convertible Notes with the SEC.  Investors should read the prospectus and the final prospectus supplement, when filed with the SEC, and other documents that Auxilium has filed with the SEC for more complete information about Auxilium and the Offering. These documents may be obtained at www.sec.gov. Printed copies of the final prospectus supplement relating to the Offering, when available, may also be obtained by requesting copies from Goldman, Sachs & Co. (Attn: Prospectus Department, 200 West Street, New York, New York 10282, Fax: 212-902-9316 or Email at prospectus-ny@ny.email.gs.com or by calling 1-866-471-2526) or J.P. Morgan Securities LLC (c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or by calling 866-803-9204).

In connection with the Offering, Auxilium has entered into note hedge transactions with one or more of the underwriters of the Convertible Notes or their respective affiliates (the "hedge counterparties"). The note hedge transactions are expected generally to reduce the potential dilution to Auxilium's common stock and/or offset potential cash payments in excess of the principal amount upon any conversion of Convertible Notes in the event that the market value per share of Auxilium's common stock, as measured under the terms of the note hedge transactions, is greater than the strike price of the note hedge transactions (which corresponds to the initial conversion price of the Convertible Notes and is subject to certain adjustments substantially similar to those contained in the Convertible Notes). In addition, in order to partially offset the cost of the note hedge transactions, Auxilium will issue warrants to the hedge counterparties at a higher strike price. The warrants would separately have a dilutive effect to the extent that the market value per share of Auxilium's common stock exceeds the applicable strike price of the warrants. If the underwriters exercise their option to purchase additional Convertible Notes, Auxilium may enter into additional note hedge and warrant transactions.

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