Salix Pharmaceuticals, Ltd. (SLXP) received positive news yesterday when the U.S. Food and Drug Administration (FDA) granted marketing approval for Metozolv ODT (metoclopramide HCl) 5mg and 10mg orally disintegrating tablets. Metozolv ODT received approval for the relief of symptoms in adults associated with acute and recurrent diabetic gastroparesis and for the treatment of short-term therapy (4-12 weeks) for adults with symptomatic documented gastroesophageal reflux disease (GERD) who fail to respond to conventional therapy.

Metozolv ODT’s orally disintegrating formulation should make the product more convenient to use especially in the case of patients who have difficulty swallowing or do not have water available when treatment is needed. According to the company, gastroparesis is estimated to affect up to five million people in the United States, with females being at a higher risk.

Meanwhile, the GERD market is huge — it is estimated that approximately one-third of the U.S. population suffer from GERD. The GERD market is dominated by players like AstraZeneca (AZN), Wyeth (WYE), Johnson & Johnson (JNJ) and Santarus (SNTS) among others.

The approval of Metozolv ODT is a major positive for Salix which has faced several regulatory setbacks in the recent past. The company first faced a setback in 2008 when the FDA did not grant approval to Salix’s tablet formulation of Colazal (1100mg). Then, earlier this year, the company received a complete response letter from the FDA for Metozolv ODT. In addition to issues regarding the application, the agency asked the company to submit a Risk Evaluation and Mitigation Strategy (REMS) for the candidate.

Another candidate, vapreotide acetate, received a disappointing feedback from an FDA advisory panel that voted against approving the product for the treatment of acute esophageal variceal bleeding (EVB).

With the pipeline failing to deliver over the past few quarters, the approval of Metozolv ODT should help restore investor confidence in Salix. Metozolv ODT should be available in November 2009. The company intends to promote the product aggressively and has plans to hire a second sales force of 64 sales representatives for the product. We have a Neutral rating on Salix.

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