The US Food and Drug Administration (FDA) recently extended its action date for Salix Pharmaceuticals, Ltd.’s (SLXP) New Drug Application for Xifaxan (rifaximin) 550 mg. Salix is looking to get Xifaxan 550 mg approved for the treatment of non-constipation irritable bowel syndrome (IBS) and IBS-related bloating.
The FDA said that it needs additional time to review the company’s NDA and has therefore pushed out the action date by three months. A decision should now be out by March 7, 2011. Salix said that it does not expect the drug to be reviewed by an advisory committee of the FDA.
Earlier, Salix had reported encouraging data on Xifaxan from two pivotal phase III trials for the treatment of non-constipation irritable bowel syndrome (IBS). Two randomized, double-blind, placebo-controlled, multi-center trials, TARGET 1 and TARGET 2, were conducted to evaluate the efficacy and safety of Xifaxan 550 mg.
Patients treated with Xifaxan 550 mg experienced a statistically significant improvement in the primary endpoint compared with placebo. Xifaxan 550 mg also achieved statistical significance in the key secondary endpoint of providing relief from IBS-related bloating.
The approval of Xifaxan 550 mg for the IBS indication would be a major boost for the company. We believe that the IBS indication represents significant commercial opportunity for the company. According to Salix, the IBS market is worth about $2.2 billion.
Xifaxan has become the company’s primary growth driver following the introduction of generic versions of Colazal in December 2007 by three players, including Mylan Inc. (MYL).
Salix has been working on new indications of Xifaxan, which should help in driving long-term growth. Xifaxan 550 mg was launched recently for the reduction of the risk of the recurrence of overt hepatic encephalopathy (HE) in adult patients. The HE indication should have excellent incremental potential. It is estimated that there are about 200,000 patients in the U.S. who suffer from episodic overt HE.
Salix enjoys orphan drug designation for the HE indication, which means that Xifaxan 550 mg should enjoy 7 years of marketing exclusivity. The company estimates that the product may be able to grab $200 million – $300 million of this market.
Neutral on Salix
We currently have a Neutral recommendation on Salix, which is supported by a Zacks #3 rank (short-term “Hold” rating). While we believe the main potential for the company lies in gaining approval for additional indications for Xifaxan, we remain concerned about the possibility of a generic company initiating a patent challenge for Xifaxan.
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