Another Delay for Salix Candidate

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The US Food and Drug Administration (:FDA) recently informed Salix Pharmaceuticals, Ltd. (SLXP) that it is still reviewing the company’s new drug application (:NDA) for crofelemer (125 mg). Salix is looking to get crofelemer approved for the symptomatic relief of diarrhea in HIV/AIDS patients on anti-retroviral therapy (ART).

We note that earlier this year, the FDA had extended the review period for crofelemer by three months to September 5, 2012.

Salix said that the agency is working with the company to complete the review process. The main focus is currently on the production and control of the active pharmaceutical ingredient for crofelemer so as to ensure that the manufacturing and product quality requirements of the Food, Drug & Cosmetic Act are met.

Salix now expects a final response from the FDA regarding the crofelemer NDA in the first quarter of 2013.

Meanwhile, Salix and Progenics Pharmaceuticals (PGNX) suffered a setback in late July 2012 in their label expansion efforts for Relistor. Relistor is a subcutaneous injection approved for the treatment of opioid-induced constipation (OIC) in patients with advanced illness who are receiving palliative care, when response to laxative therapy has not been sufficient.

Salix was looking to gain approval for the subcutaneous use of Relistor for the treatment of OIC in adult patients with chronic, non-cancer pain. However, the company received a complete response letter (CRL) from the FDA in late July for this indication.

While the FDA has asked for additional data, we have low visibility on whether the company will be required to conduct additional studies. Salix is seeking an End-of-Review meeting with the Division of Gastroenterology and Inborn Errors Products in order to get a better understanding of the CRL.

Meanwhile, Salix has plans to bring an oral formulation of Relistor to market. The company presented positive phase III data and could file for FDA approval by September 2012.

We currently have a Neutral recommendation on Salix, which carries a Zacks #3 Rank (short-term Hold rating). Xifaxan continues to perform well and should keep driving growth. We believe Salix will continue seeking suitable in-licensing opportunities in order to grow revenues.

While pleased with the company’s second quarter performance, we were disappointed to see the FDA issue a CRL for Salix’s sNDA for Relistor. We currently have low visibility on the FDA’s requirements for this candidate and prefer to remain on the sidelines until the company's meeting with the FDA regarding the CRL.

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