Salix Pharmaceuticals, Ltd. (SLXP) recently announced that it has applied for approval of Xifaxan (rifaximin) 550 mg for the treatment of non-constipation irritable bowel syndrome (IBS) and IBS-related bloating.
Salix has applied for priority review status. If granted priority review status, a response from the US Food and Drug Administration (FDA) regarding the approvability of the candidate should be out within six months instead of the usual ten months. A response from the FDA regarding the review status of the application should be out within 60 days.
Earlier, Salix reported encouraging data on Xifaxan from two pivotal phase III trials of rifaximin 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 saw 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.
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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