Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Auxilium Pharmaceuticals (Nasdaq: AUXL) rose as much as 12% today after it noted that Xiaflex, its treatment for Dupuytren's contracture (which causes curvature of the fingers due to tendon thickening and shortening), also proved effective in reducing curvature of the penis.

So what: Auxilium's press release noted that the drug was being tested as a treatment for Peyronie's disease in which scar tissue can harden and curve the penis. Thus far, Xiaflex demonstrated positive results with minimal side effects in stage 2 clinical trials. Auxilium states that Xiaflex would be the first biological treatment for Peyronie's disease if approved, and would help treat the 65,000 to 120,000 men diagnosed annually.

Now what: Xiaflex accounted for roughly 20% of Auxilium's sales last year, so any additional revenue streams could be the bump it needs to turn the corner to profitability. The silver lining of rare diseases is they rarely have many, if any, competitors. However, most biotechs will need more than just a handful of drugs to turn profitable due to the small number of patients their drugs will treat. At this point in time, I'd wait on the sidelines until Auxilium can demonstrate it can turn and maintain a profit.

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