Salix shares continue rising after Lupin deal

Salix Pharmaceuticals shares continue gaining ground following licensing deal with Lupin

• On 12:29 pm EDT, Tuesday October 6, 2009

NEW YORK (AP) -- Shares of Salix Pharmaceuticals Inc. gained ground for a second-straight day on Tuesday, following the company's announcement it is licensing drug delivery technology from Lupin Ltd. of India.

Shares of Salix added 92 cents, or 4 percent, to $23.90 in afternoon trading. The stock earlier reached $23.96, its highest point in five years.

Raleigh, N.C.-based Salix plans on using Lupin's bioadhesive technology in a new version of its bowel drug Xifaxan, or rifaximin. Salix will pay Lupin $5 million upfront, along with future milestone payments and royalties.

Rifaximin is used to treat traveler's diarrhea, and Salix recently completed a successful late-stage trial of the drug in non-constipation irritable bowel syndrome.

"(The) Lupin deal strengthens Xifaxan franchise and reduces generic (competition) risk," said JMP Securities analyst Liisa Bayko, in a note to investors Tuesday.

She reaffirmed a "Market Outperform" rating on the stock and a $29 price target.

"We believe the successful development of a QD (once daily) form of the drug would further strengthen Xifaxan's revenue runway against the threat of future generics," she said.