Salix Pharmaceuticals Reports 4Q2009 And FY2009 Results
March 09, 2010
30% Increase in Year–over–Year Product Revenue
XIFAXAN® 550 mg for Hepatic Encephalopathy
NDA Submitted
FDA Action Date March 24, 2010
FDA Gastrointestinal Drugs Advisory Committee Recommends Approval
XIFAXAN® 550 mg for Non–Constipation Irritable Bowel
Syndrome
Two Phase 3 Trials Demonstrate Statistical Significance
Successful December 2009 Pre–NDA Meeting with GI Division
NDA Submission Targeted for June 2010
APRISO™ and METOZOLV™ ODT Launched ™
Rifaximin Intellectual Property Position Strengthened
RALEIGH, NC, March 09, 2010 – Salix Pharmaceuticals, Ltd.
(NASDAQ:SLXP) today announced
financial and operating results for the fourth quarter and
full year ended December 31, 2009.
Total product revenue was $70.2 million for the fourth quarter of 2009, a
16 percent increase compared to $60.6 million for the fourth quarter of
2008.
Total product revenue for full year 2009 was $232.9 million compared to
$178.8 million for the full year 2008, a year–over–year increase
of 30 percent. XIFAXAN® revenue for the fourth quarter of
2009 was $24.9 million compared to $23.8 million for the fourth quarter
of 2008. XIFAXAN revenue increased 48 percent year–over–year, with full
year 2009 revenue of $117.9 million compared to full year 2008
revenue of $79.9 million. Our key bowel cleansing products MOVIPREP®
and OSMOPREP® generated combined revenue of $30.4
million for the fourth quarter of 2009, compared to $19.8 million for
the fourth quarter of 2008 – a year–over–year increase of
54 percent. Total combined product revenue for these two products was
$78.1 million for the full year 2009 and $64.2 million for the full year
2008
– a year–over–year increase of 22 percent.
Total cost of products sold was $17.5 million for the fourth quarter and
$52.0 million for the full year 2009. Gross margin on total product
revenue was
75.1% for the fourth quarter of 2009 compared to 75.9% for the fourth
quarter of 2008; and 77.7% for the full year 2009, compared to 79.5% the
full
year 2008. The lower gross margins for 2009 relative to the comparable
periods for 2008 were primarily due to a change in the product revenue
mix.
Research and development expenses were $19.9 million for the fourth
quarter of 2009 and $89.5 million for the full year 2009, compared to
$26.4 million and $83.7 million, respectively, for the prior year
periods. Selling, general and administrative expenses were $36.4
million for the fourth quarter
of 2009 and $120.0 million for the full year 2009, compared to $27.5
million for the fourth quarter of 2008 and $95.1 million for the full
year
2008. The Company reported a net loss of $7.0 million, or $0.13 per
share, fully diluted, for the fourth quarter of 2009. The net loss for
the full year was $43.6 million, or $0.88 per share, fully diluted. The
loss of $0.88 per share for the year is in line with previously stated
guidance of
a loss of approximately $0.90 per share.
In December 2009 the Company raised $128.4 million by means of an
offering of common stock. This funding should facilitate our ability to
more effectively
pursue strategic objectives. Cash and cash equivalents were $192.5
million on December 31, 2009.
Commenting on the performance of the Company, Adam Derbyshire, Executive
Vice President and Chief Financial Officer, stated, "We continue to be
pleased
with the Company's ongoing product revenue growth. Significant
increases in revenue for both XIFAXAN and our bowel cleansers resulted
in a 30 percent
year–over–year increase in total product revenue for 2009, in line with
previously stated revenue guidance. We believe several factors
should contribute to an increase in product revenue over the coming
years, namely the continued growth of our currently marketed products –
including APRISO™ and METOZOLV™ ODT, our two
products launched in 2009; the launch of new product candidates
currently
in late–stage development; the expanded contribution of rifaximin if
additional indications are approved and the further expansion of our
product portfolio via development activities, licensing and
acquisitions.
"We believe 2010 total Company product revenue, assuming a timely
approval of XIFAXAN 550 mg for hepatic encephalopathy, will be
approximately $334 million,
and that we will be able to generate approximately $0.04 in earnings per
share, fully diluted, for the full year ending December 31, 2010. This
2010 revenue guidance represents 43 percent growth over 2009 revenue.
The current annualized run rates, based on dollarizing the latest
prescription
data for XIFAXAN, our bowel cleansing product line, APRISO and our
"other products" are approximately $125 million, $84 million, $19
million and
$35 million, respectively.
"Salix continues to be committed to building on its core business and
leveraging its leadership position in gastroenterology to create the
leading U.S.
specialty pharmaceutical company providing innovative products to
healthcare professionals to prevent or treat gastrointestinal disorders.
To that
end, during 2009 the Company invested 38 percent of revenue in research
and development efforts, including the submission of our NDA for XIFAXAN
550
mg for hepatic encephalopathy, the completion of our Phase 3 trials of
XIFAXAN 550 mg for irritable bowel syndrome and the initiation of
late–stage
trials for crofelemer and budesonide foam. During 2010 we intend to
continue our research and development efforts, specifically the
submission
of NDAs for XIFAXAN 550 mg for irritable bowel syndrome and crofelemer
for HIV–associated diarrhea and the ongoing development of budesonide
foam. We anticipate investment in these projects and other research and
development activities should require approximately $100 million, or 30
percent of anticipated 2010 revenue. During 2009 selling, general and
administrative expenses totaled 52 percent of revenue as the continuing
growth of our business and broadening of our product portfolio
necessitated the expansion of our sales effort with the addition of a
64–member sales force
to complement the ongoing efforts of our existing 96–member sales force.
Selling, general and administrative expenses in 2010, including the
launch of XIFAXAN 550 mg for hepatic encephalopathy, should be
approximately $153 million, or 46 percent of anticipated 2010 revenue.
"Based on the full year 2010 guidance provided above, for the first
quarter of 2010 we anticipate total Company product revenue should be
approximately
$40 million and should generate a loss of approximately $0.50 per share,
fully diluted. This first quarter 2010 guidance incorporates the
impact of
the XIFAXAN 550 mg business on the XIFAXAN 200 mg business, if XIFAXAN
550 mg is approved in a timely manner."
Carolyn Logan, President and Chief Executive Officer, stated, "2009 was
one of the most exciting and rewarding years in the Company's history to
date as
we continued to achieve success in both the commercial and product
development areas of our business. Prescription demand for XIFAXAN grew
18 percent
and 14 percent for the fourth quarter and full year 2009, respectively,
compared to the corresponding periods of 2008. December was a record
month
for XIFAXAN with 45,000 prescriptions written totaling 2.3 million
tablets. XIFAXAN has generated 21 consecutive quarters of growth since
its launch in 2004. Prescription demand for MOVIPREP and OSMOPREP,
combined, grew 11 percent and 19 percent, respectively, for the fourth
quarter and full
year 2009 compared to the corresponding periods of 2008
"During 2009 we expanded our commercial portfolio with the launch of
APRISO in March and the launch of METOZOLV ODT in November. APRISO is
the first and
only once–daily 5–ASA, or mesalamine, product to offer both once–a–day
dosing for the indication of maintenance of remission
as well as being the only mesalamine product to combine delivery in the
form of delayed and extended release for the successful management of
ulcerative
colitis. The ulcerative colitis market is transitioning from a
multi–dose per day market to a once–a–day market, and we believe APRISO,
with its unique Intellicor™ delivery system, should compete
very effectively in this changing ulcerative colitis market
in the years to come. We continue to believe peak year U.S. sales of
APRISO should exceed $100 million. METOZOLV ODT is the first available
treatment
for both diabetic gastroparesis and symptomatic documented GERD that
offers the similar safety and efficacy of metoclopramide with the added
convenience of an orally disintegrating tablet formulation. We believe
METOZOLV ODT again demonstrates our commitment to provide innovative
products as well as formulations to meet the unmet treatment needs of
physicians and patients. We believe peak year U.S. sales of METOZOLV
ODT should exceed $50
million.
"We expanded our commercial operations during 2009 as our current
business continues to grow and as we prepare for additional growth by
means of the introduction
of anticipated new products and indications. We now have two specialty
sales forces, our 96–member Integra sales force and our 64–member
Futura sales force, and we believe our expanded sales capability should
position the Company to take full advantage of the opportunities
being generated by our expanding product portfolio.
"The Company made significant advancements in its late–stage product
development efforts during 2009. We achieved numerous milestones in the
development
of XIFAXAN 550 mg for the treatment of both hepatic encephalopathy and
irritable bowel syndrome. In June positive results of our Phase 3 study
of XIFAXAN 550 mg in the treatment of hepatic encephalopathy (HE) were
presented at Digestive Disease Week. The data from this 299–patient,
multinational, randomized, double–blind, placebo–controlled trial
demonstrated that XIFAXAN 550 mg significantly reduced the risk of
HE–related hospitalizations in patients with previous episodes of HE and
showed a highly significant reduction in the risk of breakthrough HE
during the six–month study. We submitted the NDA for this indication to
the FDA on June 24, 2009, and the FDA granted Priority Review for our
application. On February 23, 2010 the Gastrointestinal Drugs Advisory
Committee of the FDA reviewed the NDA and recommended by a vote of 14 to
4 in favor of the approval of the NDA. The FDA has issued an action
date of March 24, 2010 for the XIFAXAN 550 mg HE NDA, and we look
forward with great
anticipation to the timely review of the NDA. There are reported to be
approximately 200,000 patients in the United States with overt HE. If
approved,
XIFAXAN 550 mg will be the first new option for the management of HE in
over 30 years. XIFAXAN has been granted Orphan Drug designation in HE.
We believe this designation will provide seven years of marketing
exclusivity in the United States if XIFAXAN 550 mg gains approval from
the FDA for HE.
"On September 14 we announced the successful outcome of our two Phase 3
randomized, double–blind, placebo–controlled, 600–patient, multicenter
trials – TARGET 1 and TARGET 2 – designed to evaluate the efficacy and
safety of XIFAXAN 550 mg tablets in the treatment of patients
with non–constipation irritable bowel syndrome (IBS). In each trial,
XIFAXAN 550 mg–treated patients demonstrated a statistically
significant improvement for both the primary endpoint and key secondary
endpoint compared to placebo–treated patients. XIFAXAN 550 mg delivered
adequate relief of IBS symptoms and relief of IBS–related bloating over a
one–month period following the completion of a 14–day
course of therapy. The results of these two trials affirm the utility
of a gut–selective antibiotic in the treatment of IBS. In December 2009
we held a pre–NDA meeting with the GI Division of the FDA to discuss
the submission of our NDA based on the successful outcome of these two
trials. We continue to target a June 2010 submission of a New Drug
Application seeking marketing approval for XIFAXAN 550 mg as a treatment
for non–constipation
IBS.
"We also are pleased to report that Dr. Mark Pimentel, Lead Investigator
for TARGET 1 and TARGET 2, has been selected to present the results of
these trials
at a Plenary Session of Digestive Disease Week (DDW) 2010 on May 3,
2010. We anticipate a high level of interest regarding both our IBS and
HE
Phase 3 results at the upcoming DDW meeting and look forward to the
opportunity DDW should provide for scientific exchange regarding the
results.
"As part of the Company's lifecycle management strategy for rifaximin,
during 2009 we continued to broaden, strengthen and expand the
intellectual property
portfolio related to this compound. Further strengthening our patent
estate, two additional patents relating to rifaximin were issued by the
U.S.
Patent and Trademark Office during 2009. One patent provides further
protection relating to a previously–issued patent that covers several
physical states, or polymorphous forms, of rifaximin. This patent has
been listed in the Orange Book and should provide protection until June
2024.
The other patent provides protection for rifaximin relating to treating
bloating caused by small intestinal bacterial overgrowth associated
with
irritable bowel syndrome. The patent should be listed in the Orange
Book if and when marketing approval is granted to rifaximin for the
treatment of IBS. The patent should provide protection until August
2019.
"During the year we secured the exclusive right in the United States to
Lupin's bioadhesive drug delivery technology for use with rifaximin. In
October
we secured the exclusive right in the United States to Cipla's amorphous
rifaximin PCT Patent Application. The acquisition of the rights to
Lupin's
and Cipla's proprietary rights should serve to further protect
rifaximin's intellectual property position.
"The development of crofelemer and budesonide foam progressed during
2009. In August, we completed the dose selection stage (Stage 1) of the
ADVENT trial,
our Phase 3 trial of crofelemer for the treatment of chronic diarrhea in
people living with HIV, or HIV–associated diarrhea, and initiated
the final stage (Stage 2). Stage 2 of ADVENT involves the enrollment of
150 additional patients with HIV–associated diarrhea. Enrollment for
Stage 2 is anticipated to be completed in the first half of 2010, and
currently we anticipate filing the crofelemer NDA during the second half
of
2010. The FDA reviewed and granted the protocol for this trial as a
Special Protocol Assessment, or SPA, and granted the crofelemer IND fast
track
designation.
"In early October we submitted an IND to the FDA to conduct two
identically designed Phase 3, multi–center, double–blind, randomized,
placebo–controlled
studies evaluating the effectiveness and safety of budesonide rectal
foam for the treatment of mild to moderate ulcerative proctitis
or proctosigmoiditis. The studies are designed to compare 2mg/25mL
budesonide foam dosed twice–a–day (BID) for 2 weeks followed by
once–a–day (QD) dosing for 4 weeks, versus placebo foam. Each study is
targeted to enroll approximately 430 subjects. We initiated enrollment
in late December 2009 and are targeting to enroll 75 percent of the
subjects by the end of 2010.
"We look forward to continued growth and expansion during 2010 and
beyond. We plan to continue to execute our business strategy by
in–licensing late–stage and marketed products, developing the products
in our pipeline and ensuring that our marketed products are provided
with the attention
and support required to achieve success."
The Company will host a conference call at 5:00 p.m. ET, on Tuesday,
March 9, 2010. Interested parties can access the conference call by way
of web cast
or telephone. The live web cast will be available at www.salix.com.
A replay of the web cast will be available at the same location. The
telephone numbers to access the live conference call are (888) 293–6979
(U.S. and Canada) or (719) 325–2320 (international.) The telephone
numbers to access the replay of the call are (888) 203–1112
(U.S. and Canada) or (719) 457–0820 (international.) The access code
for the replay is 1412391.
Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina,
develops and markets prescription pharmaceutical products for the
treatment of gastrointestinal
diseases. Salix's strategy is to in–license late–stage or marketed
proprietary therapeutic drugs, complete any required
development and regulatory submission of these products, and market them
through the Company's gastroenterology specialty sales and marketing
team.
Salix markets XIFAXAN® (rifaximin) tablets 200 mg, MOVIPREP®
(PEG 3350, Sodium Sulfate, Sodium Chloride, Potassium Chloride,
Sodium Ascorbate and Ascorbic Acid for Oral Solution), OSMOPREP®
(sodium phosphate monobasic monohydrate, USP and sodium phosphate
dibasic anhydrous, USP) Tablets, VISICOL® (sodium phosphate
monobasic monohydrate, USP, and sodium phosphate dibasic anhydrous, USP)
Tablets, APRISO™ (mesalamine) extended–release capsules 0.375
g, METOZOLV™ ODT (metoclopramide HCl), PEPCID®
(famotidine) for Oral Suspension, Oral Suspension DIURIL®
(Chlorothiazide), AZASAN® (Azathioprine)
Tablets, USP, 75/100 mg, ANUSOL–HC® 2.5% (Hydrocortisone
Cream, USP), ANUSOL–HC® 25 mg Suppository (Hydrocortisone
Acetate), PROCTOCORT® Cream (Hydrocortisone Cream, USP) 1%
and PROCTOCORT® Suppository (Hydrocortisone Acetate
Rectal Suppositories) 30 mg. Crofelemer, budesonide foam and rifaximin
for additional indications are under development.
For full prescribing information and important safety information,
including BOXED WARNINGS for VISICOL, OSMOPREP and METOZOLV, on Salix
products, please
visit www.salix.com where the Company
promptly posts press releases,
SEC filings and other important information or contact the Company at
919 862–1000.
Salix trades on the NASDAQ Global Select Market under the ticker symbol
"SLXP".
For more information please visit our web site at www.salix.com . Information on our web
site is not incorporated in
our SEC filings.
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Please Note: The materials provided herein contain projections and
other forward–looking statements regarding future events. Such
statements are
just predictions and are subject to risks and uncertainties that could
cause the actual events or results to differ materially. These risks
and uncertainties
include, among others: our need to return to profitability; market
acceptance for approved products; the unpredictability of the duration
and results of regulatory review of New Drug Applications and
Investigational NDAs; the cost, timing and results of clinical trials
and other development
activities involving pharmaceutical products; generic and other
competition; litigation and the possible impairment of, or inability to
obtain,
intellectual property rights and the costs of obtaining such rights from
third parties; revenue recognition and other critical accounting
policies
and the need to acquire new products. The reader is referred to the
documents that the Company files from time to time with the Securities
and Exchange Commission.