Increased sales of its ulcerative colitis drug Colazal boosted revenues at Salix Pharmaceuticals (Nasdaq: SLXP) by 63 percent in the third quarter.

But Salix reported a net loss of $4 million, or 18 cents per share, for the third quarter. Cash, cash equivalents and investments were $41.4 million on Sept. 30.

As of 11:30 AM Tuesday, shares of SLXP were trading at $18.46, a drop of 3 cents.

Salix said sales of Colazal generated product revenue of $14.1 million for the third quarter ended Sept. 30, 2003, compared to $8.7 million for the third quarter of 2002. This represents an increase of 63 percent over the prior year period.

For the first nine months of 2003, sales of Colazal were $38.6 million, an increase of 74 percent compared to $22.2 million in sales for the first nine months of 2002.

“This growth trend is continuing as Colazal achieved new highs in weekly total prescriptions consecutively for the first two weeks in October,” said Adam Derbyshire, senior vice president of finance and administration and chief financial officer. “Based upon information currently available, we continue to estimate net Colazal sales will be approximately $53 million in 2003 and $70-73 million in 2004.”

Last week, Salix announced the licensing of commercial rights to Chong Kun Dang (CKD) Pharmaceutical Corp. to sell Colazal in South Korea. As part of the agreement, Salix received a first right of negotiation for all CKD gastrointestinal products available for commercialization in the United States.

“We are excited about this ‘win-win’ opportunity for both companies,” said Carolyn Logan, president and chief executive officer of Salix. “CKD now has access to Colazal and we have the potential to expand our pipeline of gastrointestinal products.”

Salix also reported that cost of sales was $3.3 million for the third quarter and $9.1 million for the first nine months of 2003.

Derbyshire said Salix continues to believe that it will be profitable next year if its new drug, Rifaximin, is approved and launched in 2004 as expected.

“Our infrastructure is essentially in place and consequently, we expect operating expenses — through 2004 to be in line with the level of such expenses for the first nine months of 2003, with allowance for single-digit growth,” he said. “Based upon this factor and guidance for net Colazal sales for 2004, we continue to expect to become profitable in the second half of 2004 excluding any revenue effects of Rifaximin.”