Bloomberg News

Salix Dragon’s Blood Drug for Diarrhea Delayed by FDA

September 05, 2012

Salix Pharmaceuticals Ltd. (SLXP:US), a maker of antibiotics and gastrointestinal drugs, said a decision by U.S. regulators on its new medicine to treat diarrhea in people with HIV has been postponed.

The Food and Drug Administration said it is still reviewing the company’s application to sell crofelemer tablets for patients with the virus that causes AIDS, according to a statement from the Raleigh, North Carolina-based company today. A decision on the treatment, which is derived from the Peruvian Dragon’s Blood tree, had been expected today.

Salix, which got about 69 percent of its $540 million in sales (SLXP:US) last year from the antibiotic Xifaxan, has been dealt setbacks in efforts to broaden its product lineup. The FDA in July rejected the company’s bid for expanded use of the constipation drug Relistor and last year declined to approve Xifaxan for a form of irritable bowel syndrome. Salix has said the U.S. HIV-associated diarrhea market represents a $300 million-a-year opportunity.

“The FDA continues to work collaboratively with Salix” on crofelemer, said Bill Forbes, the company’s chief development officer, in the statement. “By taking no action at this time, the FDA has allowed for the currently ongoing dialogue between Salix and the FDA to continue.”

First Quarter

Salix now expects the FDA to act on the application by the end of the first quarter in 2013, Forbes said. Analysts estimate crofelemer, if approved, may add about $22 million in sales next year and $33 million in 2014, according to the average of seven estimates (SLXP:US) compiled by Bloomberg.

The drug is made from the crimson-colored sap of the Dragon’s Blood tree found in the rainforests of Peru, said G. Michael Freeman, Salix’s associate vice president for investor relations, in a phone interview. Questions about the production and control of the extract have been the “primary topic” of discussions with the FDA, according to the company statement.

That ingredient is “a complex mixture that is the first botanical product to be reviewed by the agency for oral use,” Salix said.

Salix fell 1.8 percent to $43.17 at the close of New York trading. The shares (SLXP:US) have risen 53 percent in the past 12 months.

The FDA extended the original decision date for crofelemer by three months in April to allow regulators more time to review the application. The agency didn’t ask for additional studies, Salix said.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • SLXP
    (Salix Pharmaceuticals Ltd)
    • $159.83 USD
    • -4.40
    • -2.75%
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