Salix Pharmaceuticals, Ltd. (SLXP) and Pharming Group NV’s Ruconest gained FDA approval for the treatment of acute angioedema attacks in adults and adolescents suffering from hereditary angioedema (HAE). This makes Ruconest the first recombinant replacement therapy for C1 inhibitor deficiency to gain FDA approval.
HAE is a rare inherited genetic condition, which according to Salix affects 1 out of 10,000 people to 1 out of 50,000 people. Ruconest has orphan drug designation in the U.S. for the treatment of acute angioedema attacks in patients suffering from HAE. This should allow Ruconest to enjoy seven years of marketing exclusivity in the U.S.
Ruconest can be self-administered by a patient once training is obtained. Due to the unpredictability of HAE attacks, patients remain uncertain about the occurrence of the next attack. This makes it important to have a drug that patients can administer themselves to resolve a sudden attack.
We remind investors that Salix has a license agreement with Pharming for the commercialization of Ruconest in the U.S., Canada and Mexico for HAE. Salix intends to launch Ruconest in the latter part of 2014.
Some other drugs approved for the treatment of HAE are Shire’s (SHPG) Firazyr (for patients aged 18 years and more) and Sanofi’s (SNY) Danocrine.
Meanwhile, Salix is looking to merge with Cosmo Technologies Ltd., a subsidiary of Cosmo Pharmaceuticals. Following the merger, Salix will become a wholly-owned subsidiary of Irish domiciled Cosmo Technologies.
We are positive on the upcoming merger. The change of base will allow the company to enjoy a tax efficient corporate structure, thereby allowing it to obtain lower tax rates on licensing agreements to be signed in the future. Additionally, Cosmo, which has expertise in the field of gastrointestinal diseases such as inflammatory bowel disease, colon infections and diagnostics, will help to strengthen Salix’s position in the market for gastrointestinal disease and disorders. Salix expects this transaction to be modestly accretive to 2016 earnings and boost the bottom line further thereafter.
Salix carries a Zacks Rank #1 (Strong Buy). Another stock looking equally good in the health care sector is Synergy Pharmaceuticals, Inc. (SGYP), carrying a Zacks Rank #1.
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