UPDATE 2-US FDA panel backs Auxilium hand disorder drug

* FDA advisers vote 12-0 for Xiaflex to treat Dupuytren’s

* Agency will weigh recommendation, make final decision

* Auxilium shares retreat slightly in after-hours trade (Adds panelist and company comments, byline)

GAITHERSBURG, Md., Sept 16 (Reuters) - U.S. health advisors recommended Auxilium Pharmaceuticals Inc's AUXL.O drug Xiaflex to treat a debilitating disorder that can severely restrict the use of fingers and hands.

A Food and Drug Administration panel of outside experts voted 12-0 on Wednesday in favor of Xiaflex to treat Dupuytren’s disease, in which connective tissue in the hands hardens and contracts.

The injectable drug is “an effective and reasonably safe alterative to surgery, and in some ways may be better than surgery,” said advisory panel chairwoman Dr. Kathleen O’Neil, a pediatric rheumatologist at the University of Oklahoma College of Medicine.

The FDA usually follows the advice of its advisory panels.

Shares of Auxilium fell 11 cents in after-hours trade Wednesday from their $35.86 close on Tuesday. Trading had been halted during Wednesday’s regular session for news pending.

About 7 million to 14 million people in the United States have Dupuytren’s disease, but not all cases are debilitating.

Auxilium President and CEO Armando Anido said about 400,000 patients in the United States and Europe currently seek some kind of surgical treatment, and they would be the company's targeted consumers. Pfizer Inc PFE.N is partnering with Auxilium to seek European approval.

It is not clear when the FDA will make its decision, having already missed its Aug. 28 deadline, Anido said.

Xiaflex is a form of clostridial collagenase that aims to loosen collagen deposits in the hand that can form into hard nodules and tight cords. Treatment for milder cases can involve physical therapy, though many doctors call for careful observation.

Panel members were divided over whether administration of the injections in more severe cases should be limited to surgeons who specialize in the hand or whether it should be more widely available from other doctors.

They also questioned whether patients could face recurrence of the disease over time -- as some patients who undergo surgery experience -- and whether there could be unknown, long-term side effects.

“I’m worried that this, like surgery, will not be the ultimate answer,” said panelist Saul Kaplan, a hand surgeon from Springfield, Virginia.

The company is also studying Xiaflex for the penile disorder Peyronie’s disease and frozen shoulder syndrome. Anido said the company does not expect to seek FDA approval for Peyronie’s disease until at least 2011, and the shoulder indication possibly after that. (Reporting by Susan Heavey; Editing by Tim Dobbyn)