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Auxilium Pharmaceuticals, Inc. Announces Issuance Of $350.0 Million Of 1.50% Convertible Senior Notes Due 2018

CHESTERBROOK, Pa., Jan. 30, 2013 /PRNewswire/ -- Auxilium Pharmaceuticals, Inc. (Nasdaq: AUXL), a specialty biopharmaceutical company ("Auxilium"), today announced the closing of its previously announced offering of 1.50% Convertible Senior Notes due 2018 (the "Convertible Notes"). Auxilium issued $350.0 million aggregate principal amount of Convertible Notes, which included $25.0 million aggregate principal amount of Convertible Notes issued pursuant to the exercise in full by the underwriters of their option to purchase additional Convertible Notes, in an offering (the "Offering") registered under the Securities Act of 1933, as amended (the "Securities Act"). 

(Logo: http://photos.prnewswire.com/prnh/20101202/MM10881LOGO )

The Convertible Notes will pay interest semi-annually at a rate of 1.50% per annum on January 15 and July 15, commencing July 15, 2013. 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. Prior to January 15, 2018, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, will be convertible 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 are general senior unsecured obligations of Auxilium.

The net proceeds from the Offering were approximately $338.7 million after deducting underwriters' discounts and commissions and estimated offering expenses.  Auxilium used approximately $28.5 million of the net proceeds from the Offering to pay the cost of the note hedge transactions described below (after such cost was partially offset by the proceeds from the sale of the warrants, as described below) and intends to use the remainder of the net proceeds from the Offering 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 acted as joint book-running managers for the Offering. Cowen and Company and RBC Capital Markets acted as co-managers for the Offering. The Convertible Notes were offered and sold under Auxilium's shelf registration statement on Form S-3 (Reg. No. 333-186157) filed with the Securities and Exchange Commission (the "SEC") on January 23, 2013.  Auxilium filed a final prospectus supplement setting forth the terms of the Convertible Notes with the SEC on January 25, 2013.  Investors should read the final prospectus supplement 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 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 entered into note hedge transactions with one or more of the underwriters of the Convertible Notes or their respective affiliates and other financial institutions (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 issued 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.

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