Salix Pharmaceuticals, Ltd. ( SLXP ) posted first
quarter earnings of 56 cents per share, above the Zacks Consensus
Estimate of 55 cents and the year-ago earnings of 42 cents.
Excluding the impact of stock-based compensation expense, the
company reported first quarter earnings of 63 cents per share, up
37% from the year-ago quarter.
First quarter revenues increased 18% to $202.6 million. However,
revenues were below the Zacks Consensus Estimate of $208
Quarter in Detail
Key product Xifaxan (rifaximin) posted sales of $153.3 million,
up 36% from the year-ago period. Prescriptions grew 26% during the
quarter. Growth was driven by Xifaxan 550 mg, which gained FDA
approval in Mar 2010 for hepatic encephalopathy. Strong formulary
coverage and encouraging data should help drive Xifaxan 550 sales
Salix is working on the development of a next generation
rifaximin. The company is working on moving this candidate into a
phase II dose-ranging study in the second quarter of 2013.
Salix is also looking to develop an extended intestinal release
(EIR) version of rifaximin for Crohn's disease. The company and its
partner, Alfa Wassermann, have been meeting with regulatory
agencies across the world to determine the regulatory path for the
The FDA is currently evaluating the endpoints for studies that
will be conducted for the Crohn's disease indication. Salix expects
to reach at an agreement with the FDA on the endpoints and commence
two phase III studies in the second half of 2013.
Salix's purgatives, MoviPrep and OsmoPrep, generated revenues of
$14.1 million, down 37.3% from the year-ago period. Inflammatory
bowel disease products - Colazal/Apriso/Giazo - generated sales of
$18.5 million, up 19.2% from the year-ago period. Apriso accounted
for a major part of inflammatory bowel disease product sales.
Apriso scrips increased 11% during the quarter.
Salix's sales force is promoting Relistor for the treatment of
opioid-induced constipation (OIC) in patients with advanced illness
who are receiving palliative care, when response to laxative
therapy has not been sufficient. Relistor scrips increased 52% from
the prior-year quarter with sales coming in at about $7.6
Salix is also promoting Solesta to physicians as an option to
treat fecal incontinence in adult patients who have failed
conservative therapy. The company is preparing for the launch of
Fulyzaq which will take place once the release specifications are
While research and development expenses increased 13.5% to $30.3
million during the quarter, Salix recorded a 26.3% increase in
selling, general and administrative expenses which came in at $76.3
million. The increase in SG&A spend reflected higher personnel
costs and increased marketing expenses related to Solesta Fulyzaq
and Deflux and higher legal costs.
Salix is conducting a re-treatment study, TARGET 3, with Xifaxan
550 mg for the treatment of irritable bowel syndrome (IBS) with
diarrhea. The company had received a Complete Response Letter (CRL)
from the FDA for its supplemental New Drug Application (sNDA) for
Xifaxan 550 in Mar 2011. With the TARGET 3 study commencing in Feb
2012, Salix could gain approval for the IBS indication in
The delay in Xifaxan 550 mg's approval for the IBS diarrhea
indication is disappointing for Salix. Xifaxan is the company's
primary growth driver.
The timely approval of Xifaxan 550 mg for the IBS diarrhea
indication would have been a major boost for the company -- the IBS
diarrhea indication represents significant commercial
Meanwhile, there continues to be uncertainty regarding the path
forward for the subcutaneous use of Relistor for the treatment of
OIC in adult patients with chronic, non-cancer pain. Salix and
Progenics Pharmaceuticals ( PGNX ) had received a
CRL for their sNDA for Relistor last year for the chronic,
non-cancer pain indication.
Salix had an end of review meeting in Oct 2012 in order to gain
a better understanding of the CRL. Given concerns regarding a risk
associated with the chronic use of new opioid antagonists in
patients taking opioids for chronic pain, the company may be
required to conduct a very large, well-controlled chronic
Salix has submitted an appeal to the FDA. According to Salix,
currently available post-marketing, clinical and preclinical data
could be enough to gain approval. We expect to hear more on the
path forward in 2013.
Salix expects top-line phase III data from two studies on
budesonide foam by the end of this month. The company is looking to
seek FDA approval for budesonide foam for the treatment of moderate
ulcerative proctitis or proctosigmoiditis by late Sep 2013.
Maintains 2013 Guidance
Salix continues to guide towards earnings of $3.37 per share on
product revenues of $920 million in 2013. Going by the current
annualized run rate, Xifaxan, Moviprep/Osmoprep, Apriso, Relistor
and other product sales are expected to be about $572 million, $111
million, $93 million, $44 million and $47 million, respectively.
The company expects SG&A spend of about $267 million in
Second quarter 2013 earnings are expected to be about 78 cents
per share on product revenues of $228 million.
Salix currently carries a Zacks Rank #4 (Sell). Companies that
look better-positioned include Catalyst Pharmaceuticals
Partners Inc. ( CPRX ) and
Santarus, Inc. ( SNTS ). Both are Zacks
Rank #1 (Strong Buy) stocks.CATALYST PHARMA (CPRX): Free Stock Analysis
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