UPDATE 2-Auxilium hand drug meets all goals in key trials

(Adds analyst comment, updates share move)

By Bill Berkrot

NEW YORK, June 3 (Reuters) - A drug for a debilitating hand condition being developed by Auxilium Pharmaceuticals Inc (AUXL.O: Quote, Profile, Research, Stock Buzz) was highly effective in a pair of pivotal clinical trials, and the company said on Tuesday that it plans to seek U.S. approval of the treatment in early 2009.

Auxilium shares, which have doubled over the past 12 months on investor expectations for the drug, initially fell after the company also reported a small incidence of tendon injuries. The shares later reversed course and rose about 4 percent.

Auxilium said its experimental drug Xiaflex for Dupuytren's contracture met the primary goal and all 26 secondary goals of the phase 3 studies.

"We hit every single one of them at very substantial statistical significance," Auxilium Chief Executive Armando Anido said in an interview.

"We believe this is company transforming product," added Anido, who said Xiaflex could become a "greater than $1 billion a year opportunity."

Dupuytren's contracture is a hand deformity in which the connective tissue under the skin of the palm contracts and toughens eventually pulling fingers into a bent position from which they can no longer straighten. It can make simple maneuvers such as retrieving objects from a pocket, putting on gloves or holding tools or sporting equipment very difficult.

"The data should support approval and paint a clinical profile of a product that should become an attractive first-line option for the 140,000 U.S. patients who seek treatment each year," Cowen and Co analyst Leland Gershell wrote in a research note.