Salix Pharmaceuticals, Ltd. (SLXP) recently held a pre-NDA meeting with the U.S. Food and Drug Administration (FDA) related to the company’s new drug application (NDA) for rifaximin for the treatment of patients with non-constipation irritable bowel syndrome (non-C IBS). The meeting was conducted to discuss the completion of the company’s non-C IBS development program, the results of two phase III studies (TARGET 1 and TARGET 2), and to reach agreement on the content and format of the company’s NDA for the indication.

TARGET 1 and TARGET 2 were conducted to evaluate the efficacy and safety of rifaximin 550 mg. Results showed that patients treated with rifaximin achieved a statistically significant improvement in the primary endpoint compared to placebo treated patients. Rifaximin also achieved statistical
significance in the key secondary endpoint of providing relief from IBS-related bloating.

Rifaximin has taken over the role of primary growth driver following the introduction of generic versions of Colazal in December 2007 by three generic players including Mylan, Inc. (MYL).

Salix has been working on gaining approval for new indications of rifaximin which should help drive long-term growth at the company. Rifaximin is currently marketed for the treatment of patients 12 years of age and older with travelers diarrhea caused by non-invasive strains of E. coli.

We believe the non-C IBS indication represents huge commercial opportunity for the company. IBS is one of the most common chronic conditions and affects about 15% of adults in the United States. According to the company, the non-constipation IBS market could represent commercial opportunity in the range of approximately $7 billion.

Salix intends to file the NDA for the non-C IBS indication in the first half of 2010. Rifaximin is currently under FDA review for another indication, hepatic encephalopathy (HE) for which it enjoys orphan drug
status. While we believe that the non C-IBS indication represents significant commercial opportunity for the company, the HE indication should also have excellent incremental potential. Apart from the IBS and HE indications, Salix is also studying rifaximin for C. difficile-associated diarrhea and the prevention of traveler’s diarrhea.

We have a Neutral rating on Salix.

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