Salix Pharmaceuticals, Ltd.
) posted fourth quarter earnings of $1.18 per share, well above the
Zacks Consensus Estimate of 97 cents and the year-ago earnings of
63 cents. Fourth quarter revenues, which increased 31% to $155.2
million, exceeded the Zacks Consensus Estimate of $152 million.
Full-year earnings came in at $2.82 per share, well above the
year ago earnings of 75 cents and the Zacks Consensus Estimate of
$2.30 per share. Full-year revenues increased 60% to $540.5
million, above the Zacks Consensus Estimate of $537 million.
Revenues also exceeded the company's guidance of $535 million.
Quarter in Detail
Salix's fourth quarter performance was driven by its key product
Xifaxan, which posted sales of $107.2 million, up 29% from the
year-ago period. Prescriptions grew 34% during the quarter. Growth
was driven by the launch of Xifaxan 550 mg, which gained US Food
and Drug Administration (FDA) approval in March 2010 for hepatic
encephalopathy. Strong formulary coverage and encouraging data
should help drive Xifaxan 550 sales further.
Salix is working on the development of a next generation
rifaximin. The company is working on moving its next generation
rifaximin candidate(s) into clinical studies by year end.
Salix's bowel cleansing franchise, consisting of MoviPrep and
OsmoPrep, generated revenues of $21.3 million. Apriso scrips
increased 41% during the quarter with sales coming in at $11.3
Salix's sales force is also promoting Relistor for the treatment
of opioid-induced constipation in patients with advanced illness
who are receiving palliative care, when response to laxative
therapy has not been sufficient to physicians. Relistor sales came
in at about $8.5 million. Scrips grew 18% sequentially.
While research and development expenses increased 61.9% to $19.1
million during the quarter, Salix recorded a 37.6% increase in
selling, general and administrative expenses which came in at $54.2
Mixed Guidance for 2012
Salix expects to deliver product revenue of $735 million in
2012, representing year-over-year growth of 36%. Earnings are
expected to come in at $2.45 per share. Revenue guidance includes
Xifaxan sales of $422 million (up from $371.7 million in 2011),
bowel cleansing product revenues of approximately $101 million,
Apriso revenues of $70 million, Relistor US revenues of $19 million
and other product sales of $12 million.
Expenses are expected to increase significantly in 2012. While
the company expects R&D spend of $136 million (up from $104.4
million in 2011), SG&A spend is expected to be $253 million (up
from $187 million in 2011).
While revenue guidance was above the Zacks Consensus Estimate of
$697 million, earnings guidance was well below the Zacks Consensus
Estimate of $2.63 per share.
Salix expects first quarter earnings of 52 cents per share on
revenues of approximately $170 million. First quarter guidance was
also mixed with the Zacks Consensus Revenue and Earnings Estimates
standing at $159 million and 60 cents per share, respectively.
Salix intends to launch Solesta (the treatment of fecal
incontinence) and Deflux (the treatment of vesicoureteral reflux),
both of which became a part of the company's portfolio following
the Oceana acquisition, in late March 2012. While the company's
specialty sales forces will promote Solesta to gastroenterologists
and colorectal surgeons, Salix's institutional sales force will
Salix suffered a huge regulatory setback in March 2011 when it
received a Complete Response Letter (
) for its supplemental New Drug Application (sNDA) for Xifaxan
(rifaximin) 550 mg. Salix is looking to get Xifaxan 550 mg approved
for the treatment of non-constipation irritable bowel syndrome
(non-C IBS) and IBS-related bloating.
Per the requirements of the FDA, Salix initiated a re-treatment
study in Feb. 2012. There could well be a 2-year delay in gaining
approval for the IBS indication.
The delay in Xifaxan 550 mg's approval for the IBS indication is
disappointing for Salix. Xifaxan is the company's primary growth
The timely approval of Xifaxan 550 mg for the IBS indication
would have been a major boost for the company -- the IBS indication
represents significant commercial opportunity.
Salix filed a sNDA) in late August seeking approval for the use
of Relistor in non-cancer pain patients with opioid-induced
constipation. A response should be out by April 27, 2012. Moreover,
Salix has plans to bring an oral formulation of Relistor to market.
The company presented positive phase III data (the treatment of
opioid-induced constipation in chronic, non-cancer pain) and
expects to file for FDA approval in the third quarter of 2012.
Meanwhile, a response on the NDA for crofelemer (control and
symptomatic relief of diarrhea in HIV/AIDS patients on
anti-retroviral therapy) should be out by June 5, 2012.
The company intends to commence an exploratory clinical study
with Lumacan in 2013. Lumacan has the potential to be used for the
early detection and diagnosis of colon cancer.
Salix expects to achieve $1 billion in sales in 2013, provided
it gains approval for Relistor for OIC in chronic, non-cancer
Combined peak annual sales of candidates like Xifaxan for IBS,
Relistor (subcutaneous injection and oral Relistor for chronic,
non-cancer pain), crofelemer, budesonide foam and Lumacan are
estimated to total $4 billion.
Outperform on Salix
We currently have an Outperform recommendation on Salix, which
carries a Zacks #2 Rank (short-term "Buy" rating).
SALIX PHARM-LTD (
): Free Stock Analysis Report
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