Salix Pharmaceuticals Ltd. (SLXP), which returned to the black in 2011 after three straight years of losses, has a couple of regulatory events coming up. The stock is up nearly 14 percent year-to-date and trades around $54.
For readers who are new to Salix, here's a brief overview of the company and the upcoming events to watch out for...
Salix is a specialty pharmaceutical company that offers innovative gastroenterology treatments. The company's marketed products include, antibiotic Xifaxan, purgatives like MoviPrep, OsmoPrep and Visicol, inflammatory bowel disease drugs like Colazal and Apriso, and other drugs namely, Anusol, Azasan, Diuril, Pepcid, Proctocort and Relistor.
Xifaxan formulated in two dosage strengths - 200 mg indicated for travelers' diarrhea and 550 mg indicated for hepatic encephalopathy, accounts for a major chunk of the company's revenue. In 2011, the drug logged sales of $371.65 million, equivalent to 69% of net product revenue. Xifaxan 550 mg is also being evaluated as a potential treatment for irritable bowel syndrome with diarrhea.
In 2011, the purgatives namely, MoviPrep, OsmoPrep and Visicol, garnered combined sales of $88.74 million, accounting for 16% of net product revenue. The inflammatory bowel disease drugs namely Colazal and Apriso had combined sales of $49.74 million, which made up 9% of net product revenue. Put together, the other drugs Anusol, Azasan, Diuril, Pepcid, Proctocort and Relistor notched up sales of $30.35 million last year, accounting for 6% of net product revenue.
Salix acquired worldwide rights to Relistor from Progenics Pharmaceuticals Inc. (PGNX), excluding Japan, in February 2011.
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.
Sales of Relistor have increased significantly over the years, thanks to promotional efforts of Salix. The global sales of the drug, which were $12.3 million in 2009 and $16.1 million in 2010, rose to $27 million in 2011. In the U.S., Relistor sales totaled $21.5 million in 2011, up sharply from $9.5 million in 2010.
In the first quarter of 2012, Relistor global net sales increased 40% to $12.3 million. In the U.S., quarterly sales of the drug were $11.3 million in 2012 compared to $1.8 million in the year-ago first quarter.
Expanding indications for an approved drug is one sure-fire way to boost its sales, and that is what Salix is doing to drive Relistor sales.
The company has sought FDA approval for Relistor subcutaneous injection for the treatment of opioid induced constipation in patients with chronic pain not caused by cancer.
The FDA was originally scheduled to announce its decision on the expanded indication of Relistor on April 27, 2012 but has been deferred by 3 months to July 27.
The company is also working on an oral formulation of Relistor. Late last year, Salix and Progenics announced positive highly statistically significant results from a phase III trial of oral Relistor in chronic, non-cancer pain patients with opioid-induced constipation.
Under the license agreement signed with Progenics in February 2011 for Relistor, an up-front license fee payment of $60.0 million was made by Salix to Progenics. In addition, Salix is obligated to pay development milestone payments of up to $90.0 million contingent upon achieving specified regulatory approvals and commercialization milestone payments of up to $200.0 million contingent upon achieving specified targets for net sales over the term of the agreement. No milestone payments had been made as of March 31, 2012.
Another drug of Salix under FDA review is Crofelemer for the proposed indication of chronic diarrhea in people living with HIV/AIDS who are on anti retroviral therapy. Salix licensed Crofelemer in 2008 from Napo Pharmaceuticals Inc.
The FDA's decision on Crofelemer will be announced on September 5, 2012, which is a delay of three months from the original decision date of June 5, 2012.
As per the terms of the agreement related to Crofelemer, Salix has made an initial payment of $5.0 million to Napo and will make up to $50.0 million in milestone payments contingent on regulatory approvals and up to $250.0 million in milestone payments contingent on reaching certain sales thresholds. No milestone payments had been made as of March 31, 2012, according to a recent SEC filing by Salix.
Alleging that Salix breached commitments under the collaboration agreement to develop and commercialize Crofelemer by unnecessarily stalling the advancement of the compound, 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.
However, Salix believes that Napo's allegations continue to be without merit and the lawsuit baseless, and is going ahead with its development plan for Crofelemer in line with the existing collaboration agreement.
A quick look at the company's balance sheet...
After incurring losses for three consecutive years, Salix reported a net income of $87.4 million or $1.44 per share on product revenue of $540.5 million in 2011. In the first quarter ended March 31, 2012, the company's net income soared to $9.95 million or $0.15 per share from $278 thousand or $0.03 per share in the year-ago quarter. Product revenue in the first quarter of 2012 was $171 million compared to last year's quarterly product revenue of $105.9 million.
SLXP has thus far hit a 52-week low of $25.64 and a 52-week high of $54.57. The stock gained 3.13% on Friday's to close at $54.44. As the regulatory decision dates near, it will be interesting to watch how the stock price plays out. Stay tuned...
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