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Salix Pharmaceuticals, Ltd.’s shares jumped 13.51% after the company announced encouraging data from a phase III study on Xifaxan (rifaximin) 550 mg. The randomized, double-blind, placebo-controlled TARGET 3 study evaluated the efficacy and safety of repeat treatment with Xifaxan 550 mg (three times daily) for 14 days in patients suffering from diarrhea predominant irritable bowel syndrome (IBS-D), who responded to initial treatment with Xifaxan 550 mg.
 
In the study it was observed that the use of Xifaxan 550 mg resulted in a statistically significant In the study, it was observed that the use of Xifaxan 550 mg resulted in a statistically significant higher number of patients responding to treatment compared to placebo. We are positive on the encouraging IBS-D data, which should support the company’s label expansion efforts related to the drug.
 
Salix had received a complete response letter from the FDA for Xifaxan 550 for non-constipation IBS and IBS-related bloating indication in Mar 2011. Encouraging data from the TARGET 3 study increases the chances of the drug getting approval for the indication this time around.
 
We note that several companies including Furiex Pharmaceuticals, Inc. are developing candidates targeting the underserved IBS-D market.
 
We note that Xifaxan 550 mg is already approved for reduction in risk of overt hepatic encephalopathy (HE) recurrence in adults. Apart from that, Xifaxan 200 mg is approved for the treatment of patients 12 years of age and older with travelers’ diarrhea caused by non-invasive strains of E coli. In the first quarter of 2014, Xifaxan posted sales of $114.3 million (prescription growth: 19% year over year) and is one of the key growth drivers at Salix.
 
Salix is also looking to develop a delayed release version of rifaximin for Crohn’s disease. The company plans to initiate a phase III program shortly. Meanwhile, Salix is enrolling patients for a phase II study to evaluate the use of rifaximin soluble solid dispersion formulation for prevention of complications in compensated liver cirrhosis. Enrollment is expected to complete by year end. 
 
Salix is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Horizon Pharma, Inc. and The Medicines Company , both with a Zacks Rank #1 (Strong Buy). 

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