This year could be a long one for executives at Salix Pharmaceuticals, which is being investigated by federal prosecutors for its marketing efforts.

“It’s our understanding  that this inquiry or investigation can go on for quite some time,” Salix (Nasdaq: SLXP) Chief Executive Officer Carolyn Logan warned in a conference call Thursday evening.


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“It’s usually not a short process, as we’ve been told,” she added.

Federal prosecutors have questions about how Salix sells and promotes its drugs, including its top-selling product Xifaxan.

Salix disclosed in a securities filing two weeks ago that it has received a subpoena from the U.S. Attorney’s Office for the Southern District of New York asking for documents regarding three Salix drugs: Xifaxan, Relistor and Apriso.

During a conference call with analysts to discuss earnings and projections that the company will grow sharply to more than $920 million in revenue this year, Logan was asked about the federal probe.

“[O]n the recent subpoena issue, I was just wondering if you guys could maybe provide investors with a framework for thinking about downside risk and maybe some of the promotional activities that were cited in the subpoena,” asked James Dawson of The Buckingham Research Group. 

“We really don’t have much to add other than what is in the 8-K,” Logan replied, referring to the firm’s SEC document.

“The subpoena is requesting documents regarding the company’s sales and promotional practices for Xifaxan, Relistor and Apriso. So, of course, we are fully cooperating. We’re in the process of responding.”

Logan said Salix didn’t expect a short process.

“But we’re just in the very beginning stages of it,” she explained. “So we really don’t have anything to add other than what we said in the 8-K filing. It’s our understanding, though, that this inquiry or investigation can go on for quite some time. It’s usually not a short process, as we’ve been told.”

In its earlier filing, Salix noted that “The Company is in the process of responding to the subpoena and intends to cooperate fully with the subpoena and related government investigation. The Company cannot predict or determine the impact of this inquiry on our financial condition or results of operations.”

Salix Vice President of Investor Relations Michael Freeman told WRAL Tech Wire at the time of the filing that the company had no comment beyond what was stated in the filing.

A search of federal court documents yielded no legal claims in New York citing Salix. Ellen Davis, chief public information officer for the U.S. Attorney’s Office for New York’s Southern District, said that the office does not comment on its investigations.

Salix specializes in drugs that treat gastrointestinal ailments. Xifaxan, the company’s top drug, is an antibiotic with a broad spectrum of activity against a variety of pathogens. The drug first received FDA approval in 2004 to treat traveler’s diarrhea and in 2010 its use was expanded to hepatic encephalopathy, a brain disorder associated with severe liver disease. Salix has been trying to add even more indications for the drug; an attempt to secure approval for irritable bowel syndrome was rejected by the FDA in 2011 and the company is currently conducting more clinical studies in hopes of resubmitting a drug application.

The other drugs that New York prosecutors are interested in learning about, Apriso and Relistor, make up a much smaller part of Salix’s overall revenue.