Salix Pharmaceuticals, Ltd.
) posted first quarter 2014 earnings of 92 cents per share, far
above the Zacks Consensus Estimate of 42 cents and the year-ago
earnings of 53 cents per share. Excluding the impact of stock-based
compensation expense, the company reported first quarter earnings
of $1.05 per share, up 66.7% from the year-ago quarter.
First quarter revenues increased 90% to $384.4 million. Results
were positively impacted by the Santarus acquisition.
Quarter in Detail
Xifaxan (rifaximin) posted sales of $114.3 million, down 25%
from the year-ago period. Xifaxan 550, which gained FDA approval in
Mar 2010 for hepatic encephalopathy, scrips grew 19% from the
Salix reported that Xifaxan 550 sales lagged scrip demand as
wholesalers and drug chains focused on securing Santarus' products
to establish adequate inventories. The company expects Xifaxan 550
sales to be in line with or surpass scrip demand in the second
quarter as inventory levels normalize.
Salix is working on the development of a next generation
rifaximin - rifaximin soluble solid dispersion (SSD). A phase II,
double-blind, placebo-controlled, dose-ranging study was initiated
in Jun 2013 for the prevention of complications of early
decompensated liver cirrhosis. Enrollment is scheduled to complete
by year's end.
Salix is also looking to develop a delayed release version of
rifaximin for Crohn's disease. The phase III program is scheduled
to commence in the second quarter.
Salix's purgatives, MoviPrep and OsmoPrep, generated revenues of
$7.1 million. Apriso sales were just $14.2 million even though
scrips increased 58% during the quarter. Here too sales were
affected as wholesalers and drug chains focused on securing
Santarus' products to establish adequate inventories.
Favorable market dynamics, including the discontinuation of
coverage of two competitive products by a major prescription
benefits manager should boost Apriso's sales going forward.Relistor
sales were $4.9 million. Deflux sales were $ $5.9 million.
Santarus products like Uceris, Glumetza, Zegerid and Cycloset
posted sales of $62.9 million, $130.3 million, $37.6 million and
$10.1 million, respectively.
While research and development expenses increased 74.3% to $52.8
million during the quarter, Salix recorded a 42.6% increase in
selling, general and administrative expenses which came in at
$108.8 million. The inclusion of additional personnel and marketing
costs related to the Santarus acquisition and increased legal
expenses led to higher SG&A spend.
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 results from the TARGET 3 study due
by early July, Salix could gain approval for the IBS indication in
the first quarter of 2015.
Meanwhile, an FDA advisory panel will review Salix and
) supplemental new drug application (sNDA) for Relistor for
opioid-induced constipation (OIC) in patients with chronic pain.
The review, which was initially scheduled for Mar 10-11, 2014, was
postponed by the FDA and will now be held most likely on Jun 11-12.
The FDA will act within 30 days of receiving an opinion from the
panel. Salix and Progenics had received a CRL for their sNDA for
Relistor last year for the chronic, non-cancer pain indication.
A response on Ruconest should be out by Jul 16, 2014. Salix is
seeking FDA approval for Uceris rectal foam for the treatment of
active mild to moderate ulcerative proctitis or proctosigmoiditis -
a response should be out by Sep 15, 2014.
Salix expects 2014 revenues and earnings of $1.6 billion and
$6.33 per share, respectively. The Zacks Consensus Estimate for
revenues and earnings is $1.6 billion and $4.61, respectively.
Going by the current annualized run rate, Xifaxan, Uceris,
Apriso, Glumetza, Zegerid, Moviprep/Osmoprep, Relistor and other
product sales are expected to be about $694 million, $109 million,
$152 million, $224 million, $111 million, $109 million, $42 million
and $80 million, respectively.
Second quarter 2014 earnings are expected to be about $1.63 per
share on product revenues of $395 million.
Salix is a Zacks Rank #3 (Hold) stock. We expect investor focus
to remain on the TARGET results and the advisory panel for
Relistor. Some better-ranked stocks in the health care sector
Alexion Pharmaceuticals, Inc.
Gilead Sciences Inc.
). Both are Zacks Rank #1 (Strong Buy) stocks.
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