EXHIBIT 99.1
Wednesday August 1, 7:14 am Eastern Time
Press Release
Salix Pharmaceuticals Reports Second Quarter 2001 Financial Results
RALEIGH, N.C.--(BW HealthWire)--August 1, 2001--Salix Pharmaceuticals, Ltd.
(Nasdaq:SLXP - news) today announced operating results for the second quarter of
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2001.
The Company reported a net loss of $3.3 million, or $0.22 per share, for the
second quarter of 2001. This compares to a net loss of $1.4 million, or $0.12
per share, for the second quarter of 2000. Product revenues for the second
quarter of 2001 were $4.2 million. Product revenues for the first six months of
2001 were $7.5 million. Product revenues were derived from sales of COLAZAL(TM),
the Company's new first-line therapy for the treatment of mildly to moderately
active ulcerative colitis. Cost of sales was $1.1 million and $1.9 million in
the second quarter and first six months of 2001, respectively. Gross margin was
74% and 75%, respectively, for the same periods.
Operating expenses were $7.1 million for the second quarter of 2001, compared to
$1.7 million for the prior year period. Operating expenses were $14.1 million
for the first six months of 2001, compared to $2.9 million for the prior year
period. Selling, general and administrative expenses were $5.6 million for the
second quarter of 2001, compared to $0.9 million for the second quarter of 2000.
Higher operating and selling, general and administrative expenses for 2001 were
due primarily to costs associated with the deployment of the Company's sales
force and the marketing campaign for COLAZAL. Research and development expenses
were $1.5 million for the second quarter of 2001, compared to $0.8 million for
the second quarter of 2000. Higher research and development expenses for the
second quarter were primarily due to costs associated with the preparation of
the New Drug Application for rifaximin and the initiation of a Phase III trial
for rifaximin as a potential treatment for hepatic encephalopathy.
Other revenues and expenses for the period were primarily related to the
recognition of deferred revenues associated with the payment received during the
second quarter of 2000 from Shire Pharmaceuticals Group plc for the sale of
intellectual property in European countries related to balsalazide disodium. As
a result of this transaction, the Company recognized deferred revenue of $1.4
million and expense related to this deferred revenue of $0.7 million during the
second quarter of 2001.
Cash, cash equivalents and investments were $34.4 million on June 30, 2001.
During the second quarter of 2001, the Company completed a private placement
with net proceeds of approximately $28 million.
Commenting on the quarter, Robert Ruscher, President and Chief Executive
Officer, Salix Pharmaceuticals, stated, "The second quarter of 2001 proved to
be both challenging and successful. Total COLAZAL prescriptions increased 244%
during the second quarter compared to the first quarter of 2001. At the end of
June, COLAZAL had captured a 2.1% share of total branded oral 5-ASA
prescriptions and a 3.2% share of new
prescriptions for the period. Feedback from patients and physicians has been
very positive. Initial feedback, from approximately 100 patients, in an ongoing
clinical experience program indicates that 90% of patients who initiated therapy
with COLAZAL experienced their first symptom-free day within two weeks or less,
and 100% of the physicians treating these patients are pleased or very pleased
with COLAZAL. In short, our experience with COLAZAL over the first six months of
its launch has given us confidence that the product will be a significant drug
in the treatment of ulcerative colitis. That being said, during the second
quarter, the sales trend of COLAZAL did not grow as fast as we had anticipated.
We are taking steps to address the challenges presented by the marketplace, such
as sales territory size, chain drug distribution, isolated managed care issues
and physician prescribing habits. As announced earlier in the quarter, work is
underway to expand our sales force to 55 to 60 sales representatives. Our goal
is to have these additional sales representatives trained and in the field
calling on physicians by October 2001. We believe that this expanded sales force
should significantly improve our coverage of the gastroenterology marketplace
and allow us to better capitalize on the opportunity represented by COLAZAL.
Given COLAZAL prescriptions to date, we have determined that it is necessary to
reset our expectations for 2001. Based upon information currently available, we
estimate that net COLAZAL sales for 2001 will be between $12 and $15 million.
Accordingly, we expect a net loss ranging from $17 to $19 million, or $1.10 to
$1.24 per share, for 2001.
Progress was made during the quarter in the development of rifaximin, the
Company's broad-spectrum, site-targeted antibiotic. In May, we announced results
of a Phase III trial in which rifaximin demonstrated significantly superior
efficacy versus placebo in treating infectious diarrhea. The findings of this
trial, plus the findings of a previously completed head-to-head trial comparing
rifaximin and ciprofloxacin for the treatment of infectious diarrhea, will serve
as the basis for a New Drug Application that we intend to submit in December
2001. Additionally, during the second quarter we initiated a Phase III trial of
rifaximin for the treatment of hepatic encephalopathy."
The Company will host a conference call at 8:30 a.m. EDT on August 1, 2001 to
discuss the subjects of this press release. Interested parties may access the
conference call by way of webcast or telephone. The live webcast will be
available at http://www.salixpharm.com. To access the live webcast, log on to
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the Company's web site at the address listed above and go to the investor
information section. The webcast will be archived on the Company's web site
through August 8.
The telephone numbers to access the conference call are (800) 301-1961 (U.S. and
Canada) or (719) 457-2692 (international.) A replay of the call will be
available from 1:00 p.m. EDT, August 1 through August 8. The telephone numbers
to access the replay of the call are (888) 203-1112 (U.S. and Canada) or (719)
457-0820 (international.) The access code for the replay is 788979.
Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina, develops
and markets prescription pharmaceutical products for the treatment of
gastrointestinal diseases. Salix's strategy is to in-license proprietary
therapeutic drugs that have an existing database of positive, late-stage
clinical data; complete the development and regulatory submission of these
products; and market them through the Company's
gastroenterology specialty sales force. Salix's lead product is COLAZAL(TM), an
anti-inflammatory drug approved for the treatment of mildly to moderately active
ulcerative colitis. The Company launched the product in the U.S. through its
specialty sales force in January 2001. Salix's follow-on product candidate is
rifaximin, currently in development for the potential treatment of infections of
the lower gastrointestinal tract. The Company currently intends to submit an NDA
for rifaximin for the treatment of infectious diarrhea to the U.S. FDA in late
2001.
Salix trades on the Nasdaq National Market under the ticker symbol "SLXP."
For more information please contact the Company at 919-862-1000 or visit our web
site at www.salixpharm.com.
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Please Note:
This press release contains forward-looking statements regarding future events.
These statements are just predictions and are subject to risks and uncertainties
that could cause the actual events or results to differ materially. These risks
and uncertainties include the uncertainty of market acceptance of COLAZAL and
rifaximin, our limited sales and marketing experience, timing of customer
purchases, our ability to manage growth, risks of clinical trials and regulatory
review, and the need to acquire new products. The reader is referred to the
documents that the Company files from time to time with the Securities and
Exchange Commission.
Salix Pharmaceuticals, Ltd.
Condensed Consolidated Statement of Operations
Unaudited
(In thousands, except per share data)
Three Month Ended Six Months Ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
Restated Restated
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Product Revenues and Costs:
Product Sales $ 4,163 $ 173 $ 7,453 $ 553
Cost of Sales 1,080 222 1,866 535
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Gross Margin 3,083 (49) 5,587 18
Operating Expenses:
Research and Development 1,456 754 2,891 1,324
Selling, General
and Administrative 5,604 902 11,162 1,546
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Total Operating Expenses 7,060 1,656 14,053 2,870
Loss from operations (3,977) (1,705) (8,466) (2,852)
Other Revenues and
Expenses:
Other Revenue 1,824 653 3,199 1,120
Other Expense 1,302 353 2,193 375
Interest Income/(Expense), net 146 40 254 60
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Net loss before tax (3,309) (1,365) (7,206) (2,047)
Income tax - 9 - 9
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Net loss $ (3,309) $ (1,374) $ (7,206) $ (2,056)
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Net loss per share $ (0.22) $ (0.12) $(0.51) $ (0.19)
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Weighted average
shares outstanding 14,766 11,007 14,242 10,809
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In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements," which among
other guidance clarifies certain conditions to be met in order to recognize
revenue. In the fourth quarter of 2000, Salix implemented SAB 101. As a result
of the adoption of SAB 101, $8.7 million of the $11.7 million initial payment
received and recognized in full during the second quarter of 2000 from Shire
Pharmaceuticals Group plc has been deferred and is now being recognized as
revenue through the end of 2001.
Salix Pharmaceuticals, Ltd.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2001 2000
(unaudited) (audited)
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Assets
Cash and Cash Equivalents $ 34,433 $ 13,244
Accounts Receivable 6,341 6,156
Inventory 6,161 2,819
Other Assets 2,766 3,542
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Total Assets $ 49,701 $ 25,761
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Liabilities & Stockholders' Equity
Accounts Payable and Other
Current Liabilities $ 6,808 $ 4,532
Deferred Revenue 5,580 8,487
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Total Current Liabilities 12,388 13,019
Common Stock 72,905 41,128
Accumulated Deficit (35,592) (28,386)
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Total Stockholders' Equity 37,313 12,742
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Total Liabilities & Equity $ 49,701 $ 25,761
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Contact:
Salix Pharmaceuticals, Raleigh
Adam C. Derbyshire or Mike Freeman, 919/862-1000