Salix Pharmaceuticals Reports 3Q2009 Results

November 9, 2009 4:01 PM EST

METOZOLV(TM) ODT Receives FDA Marketing Approval

XIFAXAN(R) Prescriptions Increase 15% Year-over-Year

Rifaximin Demonstrates Statistical Significance in Two Phase 3 Trials for Non-Constipation Irritable Bowel Syndrome

Rights Acquired for Bioadhesive Technology for Extended Release Rifaximin Product

RALEIGH, N.C.--(BUSINESS WIRE)-- Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) today announced financial and operating results for the third quarter ended September 30, 2009.

Total product revenue was $65.7 million for the third quarter of 2009, a 53 percent increase compared to $42.9 million for the third quarter of 2008. Total product revenue for the first nine months of 2009 was $162.7 million compared to $118.2 million for the first nine months of 2008. XIFAXAN(R) revenue for the third quarter of 2009 was $42.7 million compared to $21.4 million for the third quarter of 2008, and $93.0 million for the first nine months of 2009 compared to $56.1 million for the first nine months of 2008. Our bowel cleansing products MOVIPREP(R) and OSMOPREP(R) generated combined revenue of $16.4 million for the third quarter of 2009, compared to $14.8 million for the third quarter of 2008. Total combined product revenue for these two products was $47.6 million for the first nine months of 2009 and $44.4 million for the first nine months of 2008.

Total cost of products sold was $13.2 million for the third quarter and $34.5 million for the first nine months of 2009. Gross margin on total product revenue was 79.9% for the third quarter of 2009 compared to 81.9% for the third quarter of 2008 and 78.8% for the first nine months of 2009, compared to 81.3% for the first nine months of 2008. The lower gross margins for 2009 relative to the comparable periods for 2008 were due to a change in the product revenue mix. We continue to expect gross margins for the year ending December 31, 2009 to be 79% to 80%. Research and development expenses were $26.1 million for the third quarter of 2009 and $69.6 million for the first nine months of 2009, compared to $14.4 million and $57.3 million, respectively for the prior year periods. Research and development expenses for the third quarter of 2009 include a $5 million up-front payment related to the acquisition of the exclusive U.S. right to Lupin's proprietary bioadhesive technology for use with rifaximin. Selling, general and administrative expenses were $29.6 million for the third quarter of 2009 and $83.6 million for the first nine months of 2009, compared to $23.4 million for the third quarter of 2008 and $67.6 million for the first nine months of 2008. The Company reported a net loss of $7.3 million, or $0.15 per share, fully diluted, for the third quarter of 2009.

Cash and cash equivalents were $69.1 million on September 30, 2009.

Commenting on the performance of the Company, Adam Derbyshire, Executive Vice President and Chief Financial Officer, stated, "We continue to be pleased with the Company's ongoing product revenue growth. Our 53 percent year-over-year revenue growth was driven primarily by the increase in XIFAXAN revenue for the quarter.

"The current annualized run rates, based on dollarizing September monthly prescription data for XIFAXAN, our bowel cleansing products and our "other products" category are approximately $117 million, $85 million and $34 million, respectively. We continue to anticipate that R&D and SG&A expenses for 2009 should be approximately $93 million and $120 million, respectively. This SG&A guidance accounts for METOZOLV(TM) ODT launch expenses primarily associated with the hiring of 64 sales representatives during the third quarter.

"For the fourth quarter of 2009 we anticipate total Company product revenue will be approximately $68 million and should generate a loss of approximately $0.14 per share, fully diluted.

"We continue to believe that 2009 total Company product revenue should be approximately $230 million, representing 29% growth over 2008 revenue, and we should recognize a loss of approximately $0.90 per share, fully diluted, for the year ending December 31, 2009. This guidance incorporates the recognition of METOZOLV ODT revenue based on prescription pull-through."

Carolyn Logan, President and Chief Executive Officer, stated, "The third quarter of 2009 was one of the most exciting and rewarding periods in the Company's history to date. The milestones achieved during the quarter are the result of the dedicated efforts contributed by every employee of the Company. We are committed to building the leading U.S. specialty pharmaceutical company providing innovative products to healthcare professionals to prevent or treat gastrointestinal disorders. We believe the accomplishments over the past several months are only the initial results of our focused efforts over the past several years. We look forward to continued and ongoing growth as we build our business by leveraging our expanding product portfolio, our strong relationships with our customers and our 220-member strong specialty sales force.

"In August the FDA accepted for filing our New Drug Application for rifaximin 550mg tablets for the maintenance of remission of hepatic encephalopathy and also announced that the NDA had been designated for Priority Review. A Priority Review classification is granted to drugs offering major advances in treatment or providing a treatment where no adequate therapy exists. We believe this designation reflects and confirms our belief that rifaximin potentially represents a novel and substantial new therapeutic option for this debilitating condition. The FDA also announced that it will convene an Advisory Committee in late February 2010 to discuss the application. Last week the FDA informed the Company that they are extending the goal date by three months to provide time for a full review. The extended user fee goal date is March 24, 2010.

"On September 4 METOZOLV ODT, our orally disintegrating tablet formulation of metoclopramide, was granted marketing approval by the FDA. We believe METOZOLV ODT again demonstrates our commitment to provide innovative products to meet the unmet GI treatment needs of physicians and patients. Our rapidly-dissolving tablet formulation should give diabetic gastroparesis and refractory GERD patients a new treatment choice that may be more convenient than traditional metoclopramide tablets. We intend to launch METOZOLV ODT to physicians beginning mid-November.

"During the third quarter of 2009, in anticipation of the approval and launch of METOZOLV ODT, we completed the hiring and training of 64 specialty sales representatives. The efforts of these new representatives combined with the ongoing coverage currently provided by our 96 specialty sales representatives should serve to extend our reach and deepen our penetration to targeted physicians.

"On September 14 we announced the successful outcome of our two Phase 3 randomized, double-blind, placebo-controlled, multicenter trials - TARGET 1 and TARGET 2. These trials, with more than 600 patients each, were designed to evaluate the efficacy and safety of rifaximin 550mg tablets in the treatment of patients with non-constipation irritable bowel syndrome (IBS). In each trial, rifaximin-treated patients demonstrated a statistically significant improvement for both the primary endpoint and key secondary endpoint compared to placebo patients. Rifaximin delivered adequate relief of IBS symptoms and relief of IBS-related bloating over a one-month period following the completion of a 14-day course of therapy. The results of these two trials affirm the utility of a gut-selective antibiotic in the treatment of IBS and will serve as the basis for the Company's New Drug Application seeking marketing approval for rifaximin as a treatment option for this widespread condition. The Company continues to target submitting the NDA during the first half of 2010.

"As part of the Company's lifecycle management strategy for rifaximin, we continue to broaden, strengthen and expand the intellectual property portfolio related to this compound. In October we secured the exclusive right in the United States to Lupin's bioadhesive drug delivery technology for use with rifaximin. The two companies entered into an agreement to collaborate in the development and commercialization of a new formulation of rifaximin that combines Lupin's proprietary technology of both bioadhesion as well as extended release characteristics. Additionally, Lupin has agreed to exclusively supply Salix with rifaximin active pharmaceutical ingredient in the United States, and Salix has agreed to make up-front and regulatory milestone payments, as well as royalties on sales of the product. We believe a next-generation rifaximin product incorporating Lupin's drug delivery platform with our gut-targeted antibiotic might prove to provide a number of clinical advantages including patient compliance and patient convenience. Also in October we secured the exclusive right in the United States to Cipla's amorphous rifaximin PCT Patent Application. The acquisition of the rights to Lupin's and Cipla's respective proprietary rights should serve to further protect rifaximin's intellectual property position.

"In recent weeks, two additional patents relating to rifaximin were issued by the U.S. Patent and Trademark Office. One patent provides further protection relating to a previously-issued patent that covers several physical states, or polymorphous forms, of rifaximin. Forms have been filed with the FDA to list the patent in the Orange Book. This patent should provide protection until June 2024. A second patent provides protection for rifaximin relating to treating bloating caused by small intestinal bacterial overgrowth associated with irritable bowel syndrome. The patent will be listed in the Orange Book if and when marketing approval is granted to rifaximin for the treatment of IBS. The patent should provide protection until August 2019.

"The development of crofelemer and budesonide progressed during the third quarter of 2009. In August, we completed the dose selection stage (Stage 1) of the ADVENT trial, our Phase 3 trial of crofelemer for the treatment of chronic diarrhea in people living with HIV, or HIV-associated diarrhea, and initiated the final stage (Stage 2). Stage 2 of ADVENT involves the enrollment of 150 additional patients with HIV-associated diarrhea. Enrollment for Stage 2 is anticipated to be completed in the first half of 2010, and currently we anticipate filing the crofelemer NDA during the second half of 2010. The FDA reviewed and granted the protocol for this trial as a Special Protocol Assessment, or SPA, and granted the crofelemer IND fast track designation.

"In early October we submitted an IND to the FDA to conduct two identically designed Phase 3, multi-center, double-blind, randomized, placebo-controlled studies evaluating the effectiveness and safety of budesonide rectal foam for the treatment of mild to moderate ulcerative proctitis or proctosigmoiditis. The studies are designed to compare 2mg/25mL budesonide foam dosed twice-a-day (BID) for 2 weeks followed by once-a-day (QD) dosing for 4 weeks, versus placebo foam. Each study is targeted to enroll approximately 430 subjects, and currently enrollment is scheduled to begin by the end of 2009."

The Company will host a conference call at 5:00 p.m. ET, on Monday, November 9, 2009. Interested parties can access the conference call by way of web cast or telephone. The live web cast will be available at www.salix.com. A replay of the web cast will be available at the same location. The telephone numbers to access the live conference call are (888) 500-6970 (U.S. and Canada) or (719) 325-2292 (international.) The telephone numbers to access the replay of the call are (888) 203-1112 (U.S. and Canada) or (719) 457-0820 (international.) The access code for the replay is 5047001.

Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina, develops and markets prescription pharmaceutical products for the treatment of gastrointestinal diseases. Salix's strategy is to in-license late-stage or marketed proprietary therapeutic drugs, complete any required development and regulatory submission of these products, and market them through the Company's gastroenterology specialty sales and marketing team.

Salix markets XIFAXAN(R) (rifaximin) tablets 200 mg, OSMOPREP(R) (sodium phosphate monobasic monohydrate, USP and sodium phosphate dibasic anhydrous, USP) Tablets, MOVIPREP(R) (PEG 3350, Sodium Sulfate, Sodium Chloride, Potassium Chloride, Sodium Ascorbate and Ascorbic Acid for Oral Solution), VISICOL(R) (sodium phosphate monobasic monohydrate, USP, and sodium phosphate dibasic anhydrous, USP) Tablets, APRISO(TM) (mesalamine) extended-release capsules 0.375 g, METOZOLV(TM) ODT (metoclopramide HCl), PEPCID(R) (famotidine) for Oral Suspension, Oral Suspension DIURIL(R) (Chlorothiazide), AZASAN(R) (Azathioprine) Tablets, USP, 75/100 mg, ANUSOL-HC(R) 2.5% (Hydrocortisone Cream, USP), ANUSOL-HC(R) 25 mg Suppository (Hydrocortisone Acetate), PROCTOCORT(R) Cream (Hydrocortisone Cream, USP) 1% and PROCTOCORT(R) Suppository (Hydrocortisone Acetate Rectal Suppositories) 30 mg. Crofelemer, budesonide foam and rifaximin for additional indications are under development.

For full prescribing information and important safety information, including BOXED WARNINGS for VISICOL, OSMOPREP and METOZOLV, on Salix products, please visit www.salix.com where the Company promptly posts press releases, SEC filings and other important information or contact the Company at 919 862-1000.

Salix trades on the NASDAQ Global Select Market under the ticker symbol "SLXP".

For more information please visit our web site at www.salix.com . Information on our web site is not incorporated in our SEC filings.

Please Note: The materials provided herein contain projections and other forward-looking statements regarding future events. Such statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others: our need to return to profitability; market acceptance for approved products; the unpredictability of the duration and results of regulatory review of New Drug Applications and Investigational NDAs; the cost, timing and results of clinical trials and other development activities involving pharmaceutical products; generic and other competition; litigation and the possible impairment of, or inability to obtain, intellectual property rights and the costs of obtaining such rights from third parties; revenue recognition and other critical accounting policies and the need to acquire new products. The reader is referred to the documents that the Company files from time to time with the Securities and Exchange Commission.

Salix
Pharmaceuticals,
Ltd.

Condensed
Consolidated
Statements of
Operations

(In thousands,
except per share
data)

                      Three Months Ended            Nine Months Ended

                      September 30,  September 30,  September 30,  September 30,

                      2009           2008           2009           2008

                      (unaudited)    (unaudited)    (unaudited)    (unaudited)

Revenues:

 Net product          $ 65,658       $ 42,872       $ 162,666      $ 118,197
 revenues

Costs and Expenses:

 Cost of products       13,207         7,763          34,523         22,133
 sold

 Amortization of
 product rights and     2,562          2,271          7,565          6,813
 intangible assets

 Research and           26,143         14,442         69,554         57,303
 development

 Selling, general       29,622         23,411         83,632         67,555
 and administrative

 Total costs and        71,534         47,887         195,274        153,804
 expenses

 Income (loss) from     (5,876   )     (5,015   )     (32,608 )      (35,607 )
 operations

 Interest and other
 income (expense),      (1,417   )     (541     )     (4,062  )      69
 net

 Income (loss)
 before provision       (7,293   )     (5,556   )     (36,670 )      (35,538 )
 for income tax

 Provision for          (22      )     112            72             (992    )
 income tax

Net income (loss)     $ (7,315   )   $ (5,444   )   $ (36,598 )    $ (36,530 )

Net income (loss)     $ (0.15    )   $ (0.11    )   $ (0.76   )    $ (0.76   )
per share, basic

Net income (loss)     $ (0.15    )   $ (0.11    )   $ (0.76   )    $ (0.76   )
per share, diluted

Weighted average
shares outstanding,     48,878         48,040         48,410         47,842
basic

Weighted average
shares outstanding,     48,878         48,040         48,410         47,842
diluted

Salix
Pharmaceuticals,
Ltd.

Condensed
Consolidated Balance
Sheets

(In thousands)

                      September 30,  December 31,

                      2009           2008

                      (unaudited)    (audited)

Assets

 Cash and cash        $ 69,102       $ 120,153
 equivalents

 Accounts               75,458         40,461
 receivable, net

 Inventory, net         22,326         17,311

 Other assets           223,781        222,559

Total Assets          $ 390,667      $ 400,484

Liabilities and
Stockholders' Equity

 Accounts payable
 and other            $ 153,252      $ 135,083
 liabilities

 Total liabilities      153,252        135,083

 Common stock           49             48

 Additional             426,309        417,698
 paid-in-capital

 Accumulated deficit    (188,943 )     (152,345 )

 Total stockholders'    237,415        265,401
 equity

Total Liabilities
and Stockholders'     $ 390,667      $ 400,484
Equity

    Source: Salix Pharmaceuticals, Ltd.

Related Categories

Press Releases

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?