Salix Pharmaceuticals Ltd (SLXP) recently announced that it has launched Xifaxan (rifaximin) 550 mg, which received approval from the US Food and Drug Administration (FDA) in March 2010 for the reduction of the risk of the recurrence of overt hepatic encephalopathy (HE) in adult patients.
Salix also launched the Hepatic Encephalopathy Living Program (H.E.L.P.) which is a patient and health care provider support program for HE patients.
The approval and launch of Xifaxan for the HE indication is a major positive for the company. Xifaxan is currently the primary growth driver at Salix following the entry of generic versions of Colazal in December 2007. The HE indication should have excellent incremental potential. It is estimated that there are about 200,000 patients in the US who suffer from episodic overt HE.
Salix enjoys orphan drug designation for 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.
In addition to the HE indication, Salix is working on developing Xifaxan for non-constipation irritable bowel syndrome (IBS). 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. The company intends to file for approval of the IBS indication in June 2010.
We currently have a Neutral recommendation on Salix. 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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