FDA Approval for Salix Drug

Salix Pharmaceuticals, Ltd. ( SLXP - Analyst Report ) recently said that the FDA has approved the company’s anti-diarrhea drug for HIV/AIDS patients. Fulyzaq (crofelemer) 125 mg delayed-release tablets gained FDA approval for the symptomatic relief of non-infectious diarrhea in HIV/AIDS patients on anti-retroviral therapy (ART). Salix expects to launch the product shortly.

Although Fulyzaq will most likely be a modest contributor to Salix’ pipeline, its approval comes as a positive for Salix. The company’s approval track record over the past few quarters has not been encouraging with the company facing two major regulatory setbacks.

The first of these setbacks came in March 2011 when Salix received a complete response letter (CRL) from the FDA for the non-constipation irritable bowel syndrome with diarrhea (IBS-D) indication for Xifaxan 550. The IBS-D indication represents significant commercial potential and the delay in gaining approval for this indication is a big disappointment. With another study being conducted, approval for the IBS-D indication is not likely to come before the first half of 2014.

More recently, Salix received a CRL for its supplemental new drug application (sNDA) for the use of Relistor in chronic non-cancer pain patients with opioid-induced constipation. Salix conducted an end of review meeting in October in order to gain a better understanding of the CRL. Given concerns regarding a risk associated with the chronic use of new opioid antagonists in patients taking opioids for chronic pain, the company may be required to conduct a very large, well-controlled chronic administration trial. According to Salix, currently available post-marketing, clinical and preclinical data could be enough to gain approval. We expect to hear more on the path forward in 2013.

We currently have a Neutral recommendation on Salix, which carries a Zacks #3 Rank (Hold). While we expect investor focus to remain on regulatory updates, we note that Xifaxan continues to perform well and should keep driving growth. We believe Salix will continue seeking suitable in-licensing opportunities in order to grow revenues.

Meanwhile, some pharma companies that currently look more attractive include Valeant Pharmaceuticals ( VRX - Snapshot Report ) and Ironwood Pharmaceuticals ( IRWD - Snapshot Report ) . Both stocks carry a Zacks #1 Rank (Strong Buy).