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Salix wins drug approval; shares in Raleigh firm jump 10%

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RALEIGH, N.C. – U.S. Food and Drug Administration approval of a new use for a drug from Salix Pharmaceuticals (Nasdaq: SLXP)sent shares of the Raleigh-based firm up more than 10 percent Wednesday night.

Salix and the FDA announced approval of Xifaxan to treat brain function in people afflicted with advanced liver disease. The news came after the markets closed Wednesday.

Buyers drove Salix shares up nearly 10 percent, or $3.33, to $36.85.

The company’s shares had reached a new high of $34.38 earlier in the day before dropping back to $33.52 at the close. Salix shares have quadrupled in value over the past year.

Xifaxan is used to treat traveler’s diarrhea.

According to the FDA, Xifaxan can treat overt hepatic encephalopathy, a brain condition that is caused by increased toxins, including ammonia, in the blood. Ammonia is “thought to play a role in the development” of the brain condition and “Xifaxan works by reducing those levels,” the FDA said.

"The approval of Xifaxan for this new indication provides an additional treatment option for patients with liver disease," said Joyce Korvick, deputy director for safety of FDA's Division of Gastroenterology Products, in a statement. "Hepatic encephalopathy occurs commonly in patients with liver disease, and there are few effective treatments for this serious condition."

The condition, also called HE, occurs frequently in people who suffer from cirrhosis. There are some 600,000 cirrhosis patients in the U.S., according to Salix.

Some 200,000 people suffer from HE in the U.S., Salix noted.

“An episode of overt HE can result in a patient losing cognitive function or even death,” said Bill Forbes, chief development officer at Salix. “These symptoms, in a number of incidences, necessitate a clinic or emergency room visit or hospital admission. We are pleased to bring XIFAXAN 550 mg tablets to market and believe the utilization of this treatment should serve to reduce the recurrence of overt HE as well as the number of hospitalizations associated with this serious condition.”

The FDA granted Xifaxan orphan drug status, which means Salix will receive seven years of marketing exclusivity in the U.S.

Orphan drug status is granted to treatments that are designated for rare diseases.

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