EXHIBIT 10.37

SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

This Separation of Employment Agreement and General Release (this “Agreement”)
is being entered into by and between Auxilium Pharmaceuticals, Inc. (hereinafter
“Auxilium” or the “Company”), and Edward F. Kessig (hereinafter “Mr. Kessig”).

WHEREAS, Mr. Kessig and Auxilium are parties to that certain Amended and
Restated Employment Agreement having an effective date of November 1, 2011
(hereinafter, the “Employment Agreement”);

WHEREAS, Mr. Kessig and the Company have mutually agreed that Mr. Kessig will
resign from the Company and cease to serve as the Senior Vice President of Sales
of the Company;

WHEREAS, as a result of such resignation Mr. Kessig’s employment with Auxilium
will end on February 3, 2012 (the “Termination Date”); and

WHEREAS, both Auxilium and Mr. Kessig desire to enter into this Agreement to
fully resolve all questions of expenses compensation, entitlement to benefits,
and any and all other claims, whether known or unknown, which Mr. Kessig may
have relating to his employment and his resignation of employment with the
Company.

NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement and intending to be legally bound and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1. Effective as of the Termination Date, Mr. Kessig will cease to serve as the
Senior Vice President of Sales of the Company.

2. Subject in all respects to this Agreement becoming effective and enforceable
in accordance with paragraph 11 hereof Auxilium shall provide payments described
in (a) and (b) below, less appropriate withholdings taxes and deductions, and
the benefit described in (e) below. In addition, regardless of whether this
Agreement becomes effective and enforceable in accordance with paragraph 11
hereof, Mr. Kessig shall be entitled to the other benefits described in (c) and
(d) below.

(a) Payment in the gross amount of $412,777.50. This amount will be paid in 12
equal monthly installments commencing within 60 days following the Termination
Date.

(b) Payment of an amount equal to $112,065.95, which is a bonus for fiscal year
2011 performance under the Company’s 2011 bonus plan. Such amount, less
applicable withholding taxes, shall be paid to Mr. Kessig at the same time as
such bonus is paid to other executives of the Company who participate in the
2011 bonus plan.

(c) Provided Executive timely elects COBRA continuation coverage, reimbursement
of the monthly COBRA medical insurance cost (less any required employee payments
calculated as if Executive had continued to be an employee) during the 12 month
period following the Termination Date for Mr. Kessig, and his spouse and (if
applicable) dependents. The COBRA health care continuation period shall run
concurrently with the foregoing period.

--------------------------------------------------------------------------------

(d) Mr. Kessig will also be compensated for two earned, but unused, vacation
time through the Termination Date, in an amount equal to $2,331.84.

(e) In accordance with the terms of the applicable grant agreements pursuant to
which they were granted and the Company’s 2004 Equity Compensation Plan,
Mr. Kessig has until September 30, 2012, to exercise all outstanding options
that have vested as of the Termination Date. Outstanding options and restricted
stock units that have not vested as of the Termination Date will be forfeited.
Information regarding the vested options will be provided under separate cover.

3. Payment of an amount equal to $25,261.66, which equals 30 days of salary, in
lieu of the Company’s obligation to provide notice of termination pursuant to
Section 2.1 of the Employment Agreement, which amount will be reduced by any
applicable tax withholdings and normal deductions and will be paid to Mr. Kessig
on the Company’s next regular pay cycle date after the Termination Date.

4. Mr. Kessig agrees to submit final travel and expense reports to Human
Resources by February 15, 2012, and to cooperate with the immediate return of
all Company property, as applicable; provided that Mr. Kessig may retain his
Company purchased iPhone, iPad and laptop computer so long as Mr. Kessig
cooperates with the Company to remove all Company-related information from such
devices.

5. MR. KESSIG, FOR HIMSELF AND HIS RESPECTIVE ADMINISTRATORS, EXECUTORS, AGENTS,
BENEFICIARIES AND ASSIGNS, HEREBY WAIVES, RELEASES AND FOREVER DISCHARGES
AUXILIUM PHARMACEUTICALS, INC. (AS DEFINED BELOW) OF AND FROM ANY AND ALL CLAIMS
(AS DEFINED BELOW). Mr. Kessig further agrees that should any other person,
organization or entity file a lawsuit or arbitration to assert any such Claim,
he will not seek any personal relief in such an action. This General Release of
Claims provision (hereafter “Release”) covers all Claims arising from the
beginning of time up to and including the effective date of this Agreement.

Exclusions: Notwithstanding any other provision of this Release, the following
are not barred by the Release: (a) Claims relating to the validity of this
Agreement; (b) Claims by either party to enforce this Agreement; and (c) Claims
which legally may not be waived. In addition, this Release does not bar
Mr. Kessig’s right to file an administrative charge with the Equal Employment
Opportunity Commission (“EEOC”) and/or to participate in an investigation by the
EEOC, although the Release does bar Mr. Kessig’s right to recover any personal
relief if he or any person, organization, or entity asserts a charge on his
behalf, including in a subsequent lawsuit or arbitration.

The following provisions further explain this Release:

(a) Definition of “Claims”. Except as stated above, “Claims” includes without
limitation all actions or demands of any kind that Mr. Kessig now has or may
have or claim to have in the future. More specifically, Claims include rights,
causes of action, damages, penalties, losses, attorneys’ fees, costs, expenses,
obligations, agreements, judgments and all other liabilities of any kind or
description whatsoever, either in law or in equity, whether known or unknown,
suspected or unsuspected.

The nature of Claims covered by this Release includes without limitation all
actions or demands in any way based on Mr. Kessig’s employment with the Company,
the terms and

 

2

--------------------------------------------------------------------------------

conditions of such employment or Mr. Kessig’s separation from employment. More
specifically, all of the following are among the types of Claims which, to the
extent permitted by law, are waived and barred by this Release:

•   Contract Claims (whether express or implied);

•   Tort Claims, such as for tortious interference, defamation or emotional
distress;

•   Claims under federal, state and municipal laws, regulations, ordinance or
court decisions of any kind;

•   Claims of discrimination, harassment or retaliation, whether based on race,
color, religion, gender, sex, age, sexual orientation, handicap and/or
disability, national origin, whistleblowing or any other legally protected
class;

Ÿ   Claims under the AGE DISCRIMINATION IN EMPLOYMENT ACT, Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act and similar state
and local laws, all as amended;

•   Claims under the Employee Retirement Income Security Act, the Occupational
Safety and Health Act, all as amended, and similar state and local laws;

•   Claims for wrongful discharge; and

•   Claims for attorney’s fees, litigation expenses and/or costs. The foregoing
list is intended to be illustrative and not exhaustive.

(b) Definition of “Auxilium Pharmaceuticals, Inc.” “Auxilium Pharmaceuticals,
Inc.” includes without limitation Auxilium Pharmaceuticals, Inc. and its
respective past, present and future parents, affiliates, subsidiaries,
divisions, predecessors, successors, assigns, employee benefit plans and trusts.
It also includes all past, present and future managers, directors, officers,
partners, agents, employees, attorneys, representatives, consultants,
associates, fiduciaries, plan sponsors, administrators and trustees of each of
the foregoing.

6. Mr. Kessig expressly acknowledges that:

(a) He remains bound by Sections 4, 5, 6, and 7 of the Employment Agreement,
which remain in full force and effect and whose remaining in full force and
effect is reasonably and properly required for the protection of the Company’s
business; and, in keeping with the foregoing, Mr. Kessig explicitly and
specifically acknowledges that among his obligations thereunder, he may not
directly or indirectly solicit or recruit any employee of Auxilium to work for a
third party other than Auxilium (excluding newspaper or similar print or
electronic solicitations of general circulation);

(b) The provisions of Section 8 of the Employment Agreement remain in full force
and effect;

 

3

--------------------------------------------------------------------------------

(c) Auxilium’s obligation to provide him with the benefits set forth in
paragraph 2 above are contingent upon his ongoing compliance with Sections 4, 5,
6, and 7 of the Employment Agreement;

(d) He will not disparage the personal or professional reputation of Auxilium,
its directors, officers, or employees. Auxilium agrees that its officers and
directors will not disparage the personal or professional reputation of
Mr. Kessig. Nothing in this section is intended to prohibit or restrict
Mr. Kessig or Auxilium, its officers and directors from making any disclosure of
information required by law or participating in an otherwise legally protected
activity, such as an investigation or proceeding by a federal regulatory or law
enforcement agency or legislative body;

(e) He agrees to cooperate with Auxilium with respect to any legal issue
regarding any matter of which he had knowledge during his employment with
Auxilium. His cooperation includes appearance at depositions, assistance in
responding to discovery demands, preparation for trials, and appearance at
trial. Auxilium will reimburse Mr. Kessig for all reasonable expenses incurred
by him in providing such assistance; and

(f) After the Termination Date, Auxilium will not have any obligation to provide
Mr. Kessig at any time in the future with any payments, benefits or
considerations other than those recited in subsections (a) through (d) of
paragraph 2 above and any vested benefits to which Mr. Kessig may be entitled
under the terms of Auxilium’s benefit plans.

7. Unless otherwise compelled by law or to the extent that any information
contained herein is publicly disclosed by Auxilium in its filings with the
Securities and Exchange Commission, Mr. Kessig further agrees that the existence
of this Agreement, the terms of this Agreement and the amount of any payments
under this Agreement are all confidential information, and shall not be
intentionally disclosed, discussed or otherwise published under any
circumstances, except only that Mr. Kessig may reveal the terms and amount of
settlement to his attorney for the purpose of obtaining legal advice and
representation, to his accountant for the purpose of filing government tax
returns, or pursuant to subpoena or court order. Mr. Kessig may also reveal the
financial and other terms of this Agreement to his spouse, provided, however
that Mr. Kessig will remain liable for any disclosure of such information to any
third party by his spouse. Auxilium’s obligation to provide his with the
benefits set forth in paragraph 2 above is contingent upon his ongoing
compliance with this paragraph 7.

8. By entering into this Agreement, the Company does not admit and expressly
denies that it has violated any contract, rule or law, including but not limited
to, any federal, state and local statute or law relating to employment or
employment discrimination.

9. Mr. Kessig understands and acknowledges that by signing this Agreement and
accepting the terms contained herein he is receiving benefits that he would not
otherwise be entitled to. Mr. Kessig acknowledges that he is receiving these
payments and benefits in exchange for entering into this Agreement and complying
with all the provisions of this Agreement.

10. Mr. Kessig acknowledges that he has been advised in writing by Auxilium to
consult with an attorney before signing this Agreement.

 

4

--------------------------------------------------------------------------------

11. Mr. Kessig acknowledges that he has been provided with a period of at least
21 calendar days to consider the terms of this offer from the date this
Agreement first was presented to him on February 3, 2012. Mr. Kessig agrees that
any changes to this offer, whether material or immaterial, will not restart the
running of the foregoing consideration period.

Mr. Kessig agrees to notify Auxilium of his acceptance of this Agreement by
delivering a signed copy to the Company, addressed to Jennifer Armstrong.
Mr. Kessig understands that he may take the entire 21-day period to consider
this Agreement. If Mr. Kessig does not notify Auxilium of his acceptance of this
Agreement by delivering a signed copy to the Company, addressed to Jennifer
Armstrong, Mr. Kessig shall have no further right to receive the payments
recited in subsections (a) and (b) of paragraph 2 above.

By signing and returning this Agreement, Mr. Kessig acknowledges that the
consideration period afforded him a reasonable period of time to consider fully
each and every term of this Agreement, including the General Release of Claims
set forth in paragraph 4 above, and that he has given the terms full and
complete consideration.

12. If Mr. Kessig notifies Auxilium of his acceptance of this Agreement by
delivering a signed copy to the Company addressed to Jennifer Armstrong as
described above, Mr. Kessig may revoke this Agreement for a period of seven
days. This Agreement shall not become effective or enforceable until the seven
day revocation period has ended. For revocation to be effective, it must be
delivered to Jennifer Armstrong, Auxilium Pharmaceuticals, Inc., 40 Valley
Stream Parkway, Malvern, PA 19355 within the seven-day revocation period.

13. Mr. Kessig, intending to be legally bound, certifies and warrants that he
has read carefully this Agreement and has executed it voluntarily and with full
knowledge and understanding of its significance, meaning and binding effect.
Mr. Kessig further declares he is competent to understand the content and effect
of this Agreement and that his decision to enter into this Agreement has not
been influenced in any way by fraud, duress, coercion, mistake or misleading
information.

14. This Agreement will take effect on the first business day following the
expiration of the revocation period specified in paragraph 11 hereof, provided
that Mr. Kessig chooses not to revoke it.

15. Mr. Kessig agrees that he may not assign his rights or obligations under
this Agreement or the Employment Agreement. Mr. Kessig further agrees that
Auxilium may assign this Agreement to a successor or assignee in connection with
a merger, consolidation or sale or transfer of assets.

16. If any provision of this Agreement is held to be illegal, void, or
unenforceable, such provision shall be of no force or effect. However, the
illegality or unenforceability of such provision shall have no effect upon, and
shall not impair the legality or enforceability of, any other provision of this
Agreement; provided, however, that upon any finding by a court of competent
jurisdiction that the release provided for by paragraph 4 above is illegal, void
or unenforceable, Mr. Kessig shall, at Auxilium’s request, execute promptly a
release and/or promise of comparable scope that is legal and enforceable. If
such a release is not executed by Mr. Kessig, he shall promptly return to
Auxilium any payments made pursuant to paragraphs 2(a) or (b) above.

 

5

--------------------------------------------------------------------------------

17. The construction, interpretation and performance of this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania, without regard to
conflict of laws principles.

18. This Agreement supersedes any and all prior agreements or understandings
between Mr. Kessig and Auxilium, except those provisions of the Employment
Agreement identified above. Mr. Kessig represents and acknowledges that in
executing this Agreement he has not relied upon any representation or statement
not set forth herein made by the Auxilium Pharmaceuticals, Inc. (as defined in
paragraph 4(b) hereof) with regard to the subject matter of this Agreement. Any
modification of this Agreement must be made in writing and signed by all
parties.

[Signature Page Follows]

 

6

--------------------------------------------------------------------------------

As evidenced by their signatures below, the parties intend to be legally bound
by this Agreement.

 

/s/ Edward F. Kessig

Edward F. Kessig

 

DATE: 2/12/2012

 

Auxilium Pharmaceuticals, Inc. BY:   /s/ Adrian Adams NAME:   Adrian Adams
TITLE:   CEO and President DATE:   2/14/2012

 

7