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What's Next In Line For Salix?

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Diarrhea is a common complication for many people with HIV/AIDS. It is estimated that there are 1.2 million people living with HIV/AIDS in the United States, of which about 338,000 suffer from chronic diarrhea. A new HIV-associated diarrhea drug, which is under FDA review, is Crofelemer, a novel compound extracted from the stem bark latex of Croton lechleri, a medicinal plant found in several South American countries.

Crofelemer was discovered by Napo Pharmaceuticals Inc., and was licensed to Glenmark Pharmaceuticals Ltd. of Mumbai, India in 2005 and to Salix Pharmaceuticals Inc. (SLXP) in 2008.

Salix has an exclusive license to the HIV-associated diarrhea indication for Crofelemer and the additional indications of pediatric diarrhea and acute infectious diarrhea in North America, Europe (excluding Iceland, Liechtenstein, Norway and Switzerland) and Japan, while Glenmark has an exclusive license to market Crofelemer in 140 emerging countries (rest of world, or "ROW" territories) including India for indications related to HIV, use in acute adult and pediatric diarrhea. Salix also has a worldwide license to all other possible human indications, including irritable bowel syndrome, for Crofelemer.

Last December, Salix submitted to the FDA a New Drug Application for Crofelemer for the proposed treatment of HIV-associated diarrhea. The Crofelemer NDA was accepted for review in February of this year, and was given a priority review status with a decision date of June 5, 2012. However, in April, seeking additional time for review, the FDA deferred the decision date by 3 months to September 5, 2012.

Not all is well between Salix and the licensor of Crofelemer, Napo. Alleging that Salix breached commitments under the collaboration agreement by unnecessarily stalling the advancement of Crofelemer, Napo terminated its agreement with Salix last November.

Prior to terminating the agreement, Napo filed a suit against Salix in May of 2011 alleging that Salix failed to commercialize Crofelemer in a timely manner. The lawsuit is in the discovery process - the period during which the two parties involved in the legal spat share information before going to trial.

Salix believes that Napo's allegations are without merit and that the lawsuit is baseless. Therefore the company is going ahead with its development plan for Crofelemer in line with the existing collaboration agreement.

According to research firm GlobalData, the global HIV-associated diarrhea therapeutics market was worth $499.1 million in 2011. Salix is confident that if approved, Crofelemer has the potential to change the treatment paradigm for HIV/AIDS patients suffering from diarrhea.

Last month, Salix was issued a Complete Response Letter by the FDA for its Supplemental New Drug Application for Relistor injection for subcutaneous use for the treatment of opioid-induced constipation in adult patients with chronic, non-cancer pain. The company has been asked to present additional clinical data.

Relistor subcutaneous injection is currently approved in over 55 countries, including the U.S., for opioid-induced constipation in patients with late-stage, advanced illness like cancer, end-stage Chronic Obstructive Pulmonary Disease from emphysema, heart failure, Alzheimer's disease with dementia, HIV/AIDS or other advanced illnesses who are receiving opioids on a continuous basis to help alleviate their pain.

Shares of Salix have thus far hit a 52-week low of $25.64 and a 52-week high of $55.99. The stock closed Friday's trading at $44.90, down 0.27%. It will be interesting to watch how the stock price plays out in the run up to the pending regulatory event.

Will Crofelemer clear the last major regulatory hurdle and reach the finish line? Stay tuned...

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