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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission file number: 000-23265
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SALIX PHARMACEUTICALS, LTD.
(Exact name of Registrant as specified in its charter)
British Virgin Islands 94-3267443
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8540 Colonnade Center Drive, Suite 501
Raleigh, North Carolina 27615
(Address of principal executive offices, including zip code)
(919) 862-1000
(Registrant's telephone number, including area code)
--------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_]
The number of shares of the Registrant's Common Stock outstanding as of
November 9, 2001 was 16,685,222.
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SALIX PHARMACEUTICALS, LTD.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
- ------- --------------------- --------
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2001
(unaudited) and December 31, 2000 (audited).............................. 1
Condensed Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2001 and 2000 (unaudited).................... 2
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2001 and 2000 (unaudited).................... 3
Notes to Condensed Consolidated Financial Statements...................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .................................................... 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 9
PART II. OTHER INFORMATION
- -------- -----------------
Item 6. Exhibits and Reports on Form 8-K............................................... 9
Signatures. ............................................................................... 10
PART I. FINANCIAL INFORMATION.
Item 1. Condensed Consolidated Financial Statements
SALIX PHARMACEUTICALS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Expressed in U.S. Dollars)
September 30, 2001 December 31, 2000
------------------ -----------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 32,408 $ 13,244
Accounts receivable, net 3,089 6,156
Inventory 5,219 2,819
Prepaids and other current assets 1,460 3,208
------------------ -----------------
Total current assets 42,176 25,427
Property and equipment, net 957 208
Other assets --- 126
------------------ -----------------
Total assets $ 43,133 $ 25,761
================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 6,107 $ 4,532
Deferred revenue 4,324 8,487
------------------ -----------------
Total current liabilities 10,431 13,019
Commitments --- ---
Shareholders' equity:
Preferred stock, issuable in series, no par value;
5,000,000 shares authorized; none outstanding --- ---
Common stock, no par value; 40,000,000 shares authorized;
16,646,930 shares issued and outstanding at September
30, 2001 and 13,562,771 shares issued and outstanding at
December 31, 2000 73,349 41,128
Accumulated deficit (40,647) (28,386)
------------------ -----------------
Total shareholders' equity 32,702 12,742
------------------ -----------------
Total liabilities and shareholders' equity $ 43,133 $ 25,761
================== =================
The accompanying notes are an integral part of these financial statements.
1
SALIX PHARMACEUTICALS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
(Expressed in U.S. Dollars)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
restated restated
Revenues:
Product revenue $ 2,834 $ 299 $ 10,287 $ 852
Revenue from collaborative agreements 2,589 5,740 5,788 6,860
---------- --------- ---------- ---------
Total revenues 5,423 6,039 16,075 7,712
Costs and expenses:
Cost of products sold $ 676 $ 284 $ 2,542 $ 819
License fees and costs related to collaborative
agreements 1,857 3,210 4,012 3,563
Research and development 1,561 1,161 4,452 2,485
Selling, general and administrative 6,564 1,239 17,726 2,785
---------- --------- ---------- ---------
Total cost and expenses 10,658 5,894 28,732 9,652
Income (loss) from operations (5,235) 145 (12,657) (1,940)
Interest, and other income (expense), net 180 75 396 113
---------- --------- ---------- ---------
Net loss before tax $ (5,055) $ 220 $ (12,261) $ (1,827)
Income tax --- --- --- 9
---------- --------- ---------- ---------
Net loss $ (5,055) $ 220 $ (12,261) $ (1,836)
========== ========= ========== =========
Net income (loss) per share, basic $ (0.30) $ 0.02 $ (0.82) $ (0.17)
========== ========= ========== =========
Net income (loss) per share, diluted $ (0.30) $ 0.02 $ (0.82) $ (0.17)
========== ========= ========== =========
Shares used in computing net income (loss) per share, basic 16,612 11,223 15,040 10,948
========== ========= ========== =========
Net effect of dilutive stock options based on treasury stock
method using average market price --- 651 --- ---
---------- --------- ---------- ---------
Shares used in computing net income (loss) per share, diluted 16,612 11,874 15,040 10,948
========== ========= ========== =========
The accompanying notes are an integral part of these financial statements.
2
SALIX PHARMACEUTICALS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
(Expressed in U.S. Dollars)
Nine months ended
September 30,
2001 2000
---- ----
restated
Cash flows from operating activities
Net loss $ (12,261) $ (1,836)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 144 95
Loss on disposal of equipment 21 13
Changes in assets and liabilities:
Accounts receivable, inventory and other assets 2,541 (5,339)
Accounts payable and other current liabilities 1,575 1,605
Deferred revenue (4,163) 9,833
---------- ----------
Net cash provided by (used in) operating activities (12,143) 4,371
Cash flows from investing activities
Purchases of property and equipment (918) (145)
Sale of property and equipment 4 ---
---------- ----------
Net cash used in investing activities (914) (145)
Cash flows from financing activities
Proceeds from issuance of common stock 32,221 383
---------- ----------
Net cash provided by financing activities 32,221 383
Net increase in cash and cash equivalents 19,164 4,609
Cash and cash equivalents at beginning of period 13,244 2,402
---------- ----------
Cash and cash equivalents at end of period $ 32,408 $ 7,011
========== ==========
The accompanying notes are an integral part of these financial statements.
3
SALIX PHARMACEUTICALS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
1. Organization and Basis of Presentation
The Company was incorporated in the British Virgin Islands in December
1993 as Salix Holdings, Ltd. In March 1998, the Company changed its name to
Salix Pharmaceuticals, Ltd. Prior to December 1993, the business of the
Company was conducted by Salix Pharmaceuticals, Inc., a California
corporation, incorporated in 1989, and Glycyx Pharmaceuticals, Ltd., a
Bermuda corporation, each of which is now a subsidiary of Salix
Pharmaceuticals, Ltd. Unless the context otherwise requires, references in
this report to Salix and the Company refer to Salix Pharmaceuticals, Ltd.,
and its wholly owned subsidiaries, Salix Pharmaceuticals, Inc. and Glycyx
Pharmaceuticals, Ltd.
The condensed consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated. All amounts
are denominated in United States dollars. Unless otherwise indicated, all
references to "dollars" or "$" refer to United States dollars.
The accompanying unaudited condensed consolidated financial statements
include all adjustments (consisting only of normal recurring items) which,
in the opinion of management, are necessary for a fair presentation of
financial position, results of operations and cash flows. These financial
statements should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations included
elsewhere in this Report and with the audited financial statements for the
fiscal year ended December 31, 2000 included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000 filed with the
Securities and Exchange Commission. The results of operations for interim
periods are not necessarily indicative of results to be expected for a full
year or any future period.
These statements have been prepared in accordance with accounting
principles generally accepted in the United States. The application of
these principles conforms in all material respects with financial
statements prepared using accounting principles generally accepted in
Canada. The Company's common stock is currently traded on the Nasdaq
National Market under the symbol "SLXP".
2. Commitments
At September 30, 2001, the Company had binding purchase order
commitments for inventory purchases aggregating approximately $6.4 million.
3. Inventory
Inventory at September 30, 2001 consisted of $3.8 million of raw
materials and $1.4 million of finished goods. Inventory at December 31,
2000 consisted of $2.8 million of raw materials and $0.02 million of
finished goods.
4. Revenue Recognition
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. SAB 101 requires companies to recognize certain up-
front non-refundable fees over the term of the related agreement unless the
fee is in exchange for products delivered or services performed that
represent the culmination of a separate earnings process. 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
4
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.
Due to the uniqueness of each of its licensing arrangements, Salix
analyzes each element of each contract, including milestone payments, to
determine the appropriate revenue recognition. In accordance with SAB 101,
Salix recognizes revenue upon achievement of contractual milestones only
when and to the extent Salix concludes that a separate earnings process has
been culminated or the milestone is representative of the level of effort
and progress toward completion of a long-term contract.
5. Research and Development
Research and development costs, both internal and externally
contracted, are expensed as incurred. These costs include direct
expenditures for goods and services, as well as indirect expenditures such
as salaries, administrative expenses and various allocated costs.
6. Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", is effective for fiscal
years beginning after June 15, 2000. SFAS 133 establishes reporting
standards for derivative instruments, including derivative instruments
embedded in other contracts, and for hedging activities. SFAS 133 requires
that an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair
value. The Company adopted SFAS 133 for its fiscal year ending December 31,
2001. The adoption of this pronouncement did not have a material impact on
the Company's results of operations or financial position.
In July 2001, the Financial Accounting Standards Board issued SFAS
No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 requires that all business combinations be
accounted for under the purchase method only and that certain acquired
intangible assets in a business combination be recognized as assets apart
from goodwill. SFAS No. 142 requires that ratable amortization of goodwill
be replaced with periodic tests of the goodwill's impairment and that
intangible assets other than goodwill be amortized over their useful lives.
SFAS No. 141 is effective for all business combinations initiated after
June 30, 2001 and for all business combinations accounted for by the
purchase method for which the date of acquisition is after June 30, 2001.
The provisions of SFAS No. 142 will be effective for fiscal years beginning
after December 15, 2001, and will thus be adopted by the Company, as
required, in fiscal year 2002. The Company does not expect the adoption of
SFAS No. 141 and SFAS No.142 to have a material impact on the Company's
results of operations or financial position.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Cautionary Statement" under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report. The following
discussion should be read in conjunction with the Company's Condensed
Consolidated Financial Statements and notes thereto included elsewhere in this
report.
Overview
Salix Pharmaceuticals, Ltd. is a specialty pharmaceutical company focused
on the needs of physicians specializing in gastroenterology. In late 2000, the
Company established a 30-member direct sales force to promote its products to
this specialist audience. During 2001, the Company expanded its direct sales
force to approximately 60 members to better capitalize on the near-term
opportunity of COLAZAL(TM). Our global strategy is to identify and acquire
products that have near-term commercial potential and apply our regulatory,
product development and sales and marketing expertise to commercialize these
products. The Company selects products that it believes serve a gastrointestinal
disease in need of new treatments, have the potential for rapid regulatory
approval, and are marketable to this small group of specialized physicians. The
Company believes this strategy will reduce the expense, time and risk normally
associated with pharmaceutical development. The Company believes that its first
two products, balsalazide disodium, marketed in the United States under the
brand name COLAZAL, and rifaximin, currently under development for the treatment
of infectious diarrhea, demonstrate the Company's ability to execute this
strategy.
The Company licensed its first product, balsalazide disodium, from Biorex
Laboratories Limited in exchange for participation in future milestone revenues,
royalties and profits. In May 2000, the Company signed an agreement with Shire
Pharmaceuticals Group plc under which Shire purchased from Salix the exclusive
rights to balsalazide as a treatment for ulcerative colitis for Austria,
Belgium, Denmark, Finland, France, Germany, Iceland, Republic of Ireland,
Luxembourg, Norway, The Netherlands, Switzerland, Sweden and the United Kingdom.
Under the agreement, Shire agreed to pay Salix up to a total of approximately
$24 million in cash and Shire stock, including
5
approximately $12.1 million in up-front fees and up to $12 million upon the
achievement of milestones. In accordance with the Company's license arrangement
with Biorex Laboratories, Salix will share a portion of these payments,
including all of the Shire stock, with Biorex. In May 2000, Shire paid the
Company $9.6 million of cash and $2.5 million by way of the issuance of 160,546
Shire shares. In August 2000, Shire paid the Company $4.4 million in connection
with the transfer to Shire of the United Kingdom Product License for
balsalazide. On July 18, 2000, the U.S. Food and Drug Administration, or FDA,
approved COLAZAL for marketing in the United States for the treatment of mildly
to moderately active ulcerative colitis. In August 2001, the Company acquired
from Biorex Laboratories the exclusive right and license to develop, manufacture
and commercialize balsalazide in Japan, Korea and Taiwan (the only territories
previously excluded from the license to the Company). Under the new agreement,
Biorex will participate in any future payments, milestone revenues and royalties
paid to the Company related to balsalazide in Japan, Korea and Taiwan.
The Company's second product, rifaximin, is currently under development.
The Company obtained the rights to develop, make, use and sell rifaximin in the
United States and Canada from Alfa Wassermann S.p.A. in exchange for future
royalties and milestone payments. Alfa Wassermann has also agreed to supply
Salix with active pharmaceutical ingredient rifaximin at a fixed price. The
Company intends to pursue development of rifaximin for infections of the
gastrointestinal tract. A second Phase III trial for the treatment of infectious
diarrhea in travelers was completed during the fourth quarter of 2000. The
Company intends to submit a New Drug Application, or NDA, for the treatment of
infectious diarrhea in December 2001. The Company believes there are
opportunities to develop rifaximin for other indications, including antibiotic-
associated colitis, hepatic encephalopathy, diverticulitis, small bowel
overgrowth and irritable bowel syndrome. In February 1998, the Company received
Orphan Drug Designation from the FDA for rifaximin to treat hepatic
encephalopathy, allowing for priority review and seven years of market
exclusivity. If regulatory approvals are obtained, the Company intends to market
rifaximin in the United States through its own direct sales force.
The Company has generated limited revenues to date from the sales of its
products. The Company expects both sales revenues and operating expenses to
increase as the Company continues its launch of COLAZAL in the United States
through its specialized sales force and continues product development and
clinical programs for rifaximin. As of September 30, 2001, the Company had
accumulated losses of approximately $40.6 million.
Results of Operations
Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000
Product revenues for the three-month and nine-month periods ended September
30, 2001 were $2.8 million and $10.3 million, respectively. During the three-
month and nine-month periods ended September 30, 2000, the Company recorded
product revenue of $0.3 million and $0.9 million, respectively. Higher product
revenues for the three-month and nine-month periods ended September 30, 2001 are
the result of U.S. sales of COLAZAL.
Revenues from collaborative agreements were $2.6 million and $5.8 million
for the three-month and nine-month periods ended September 30, 2001,
respectively, compared to $5.7 million and $6.9 million in the corresponding
three-month and nine-month periods in 2000. This was primarily the result of the
recognition in 2001 of revenue under our agreement with Shire under which Shire
purchased from Salix the intellectual property related to balsalazide for
Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Republic of
Ireland, Luxembourg, Norway, the Netherlands, Switzerland and the United
Kingdom. Under the agreement, Shire paid the Company a first payment of $11.7
million in the second quarter of 2000. 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 has been deferred and is now
being recognized as revenue ratably through the end of 2001. Accordingly, the
Condensed Consolidated Financial Statements for the three-month and nine-month
periods ended September 30, 2000 are restated to reflect the effect of the
adoption of SAB 101.
Cost and expenses for the three-month and nine-month periods ended
September 30, 2001 were $10.7 million and $28.7 million, respectively, compared
to $5.9 million and $9.7 million for the corresponding prior year periods.
Higher operating expenses were due primarily to costs associated with the
expansion of the Company's commercialization infrastructure, deployment of the
sales force, and the marketing campaign for COLAZAL.
6
Cost of products sold for the three-month and nine-month periods ended
September 30, 2001 were $0.7 million and $2.5 million, respectively, compared
with $0.3 million and $0.8 million in the corresponding three-month and nine-
month periods in 2000. Gross margins for the three-month and nine-month periods
ended September 30, 2001 were $2.2 million and $7.7 million, respectively,
compared to $0.02 million and $0.03 million in the corresponding three-month and
nine-month periods of 2000. Gross margins were 76% and 75%, respectively, for
the three-month and nine-month periods ended September 30, 2001.
Cost of revenue from collaborative agreements for the three-month and nine-
month periods ended September 30, 2001 were $1.9 million and $4.0 million
respectively, compared with $3.2 million and $3.6 million in the corresponding
three-month and nine-month periods in 2000.
Research and development expenses were $1.6 million and $4.5 million for
the three-month and nine-month periods ended September 30, 2001, respectively,
compared to $1.2 and $2.5 million for the comparable periods in 2000. Our only
current major research and development project is rifaximin. The increase in
research and development expenses for the three-month and nine-month periods
ended September 30, 2001 was due primarily to costs associated with the
preparation of the NDA for rifaximin and initiation of a Phase III trial for
rifaximin as a treatment for hepatic encephalopathy. Through September 30, 2001,
Salix had incurred research and development expenditures of approximately $11.4
million for balsalazide and $8.0 million for rifaximin. Due to the risks and
uncertainties of the drug development and regulatory approval process, research
and development expenditures are difficult to forecast and subject to unexpected
increases. Those risks and uncertainties aside, we expect our research and
development expenditures to increase as additional indications for balsalazide
and rifaximin are pursued and new products are in-licensed.
Selling, general and administrative expenses were $6.6 million and $17.7
million for the three-month and nine-month periods ended September 30, 2001,
respectively, compared to $1.2 million and $2.8 million in the corresponding
three-month and nine-month periods in 2000. This increase was primarily due to
the expansion of the Company's commercialization infrastructure, deployment of
the sales force, and the marketing campaign for COLAZAL.
Interest income was $0.2 million and $0.4 million for the three-month and
nine-month periods ended September 30, 2001, respectively, compared to $0.08
million and $0.1 million in the corresponding three-month and nine-month periods
in 2000. Increased interest income for the three-month and nine-month periods
ended September 30, 2001 compared to the same prior year periods was mainly
attributable to larger average cash balances as a result of our receipt of
payments under the agreement with Shire and cash received in the Company's
private placements in November 2000 and May 2001.
The Company recorded a net loss of $5.1 million for the three months ended
September 30, 2001, compared with a net profit of $0.2 million in the
corresponding three-month period in the prior year. The Company recorded a net
loss of $12.3 million for the nine-month period ended September 30, 2001,
compared with a net loss of $1.8 million in the corresponding nine-month period
in the prior year.
Liquidity and Capital Resources
Since inception, the Company has financed its operations principally
through reimbursement payments, license fees and milestone revenues under
collaborative research and licensing agreements, and sales of equity and
convertible debt securities.
As of September 30, 2001, the Company had approximately $32.4 million in
cash and cash equivalents. As of December 31, 2000, the Company had
approximately $13.2 million in cash and cash equivalents. The increase of $19.2
million was due primarily to the completion of a private placement in May 2001
with net proceeds of approximately $28.4 million.
To date, the Company has not experienced any material accounts receivable
collection issues. However, based on a review of specific customer balances,
industry experience and the current economic environment, the
7
Company is currently reserving 1% of the outstanding accounts receivable balance
as an allowance for uncollectable accounts.
During the first quarter of 2001, the Company entered into a $7.0 million
working capital line of credit. As of September 30, 2001, the Company had no
long-term obligations outstanding.
The Company has sustained continuing operating losses and had an
accumulated deficit of $40.6 million as of September 30, 2001. The Company
expects to incur substantial and increasing operating losses until product
revenues reach a sufficient level to support ongoing operations. The Company
believes its current cash and investment balances should be sufficient to
satisfy the cash requirements of the Company for the foreseeable future.
However, the Company's actual cash requirements might vary materially from those
now planned because of a number of factors, including market acceptance of
COLAZAL, the results of research and development activities, FDA and foreign
regulatory processes, establishment of and change in relationships with
licensors and distributors, technological advances by the Company and other
pharmaceutical companies, the terms of the Company's collaborative arrangements,
and the status of competitive products. The Company might also enter into
additional collaborative arrangements that could provide the Company with
additional funding in the form of equity, debt, licensing, milestone and/or
royalty payments. There can be no assurance that the Company will be able to
enter into such arrangements or raise any additional funds on terms favorable to
the Company.
Cautionary Statement
The Company operates in a highly competitive environment that involves a
number of risks, some of which are beyond the Company's control. The following
statement highlights some of these risks.
Statements contained in "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" which are not historical facts are or
might constitute forward-looking statements under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Although the Company
believes the expectations reflected in such forward-looking statements are based
on reasonable assumptions, its expectations might not be attained. Forward-
looking statements involve known and unknown risks that could cause the
Company's actual results to differ materially from expected results. Factors
that could cause actual results to differ materially from the Company's
expectations include, among others: the Company's limited sales and marketing
experience; the timing of customer purchases; the Company's ability to manage
growth; the high cost and uncertainty of the research, clinical trials and other
development activities involving pharmaceutical products; the unpredictability
of the duration and results of regulatory review of New Drug Applications and
Investigational NDAs; the Company's dependence on its two pharmaceutical
products, balsalazide and rifaximin, and the uncertainty of market acceptance of
those products; the possible impairment of, or inability to obtain, intellectual
property rights and the costs of obtaining such rights from third parties;
intense competition; and other risk factors detailed from time to time in the
Company's SEC filings. The Company does not undertake any obligation to release
publicly any revisions to these statements to reflect later events or
circumstances or to reflect the occurrence of unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's purchases of raw materials and its product sales to its
European distribution partners are denominated in Pounds Sterling and Belgian
Francs. Translation into the Company's reporting currency, the United States
dollar, has not historically had a material impact on the Company's financial
position. Additionally, the Company's net assets denominated in currencies other
than the functional currency have not exposed the Company to material risk
associated with fluctuations in currency rates. Given these facts, the Company
has not considered it necessary to use foreign currency contracts or other
derivative instruments to manage changes in currency rates.
Due to the nature and maturity of the Company's short-term investments, the
Company does not believe those investments present significant market risk.
8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.30* License Agreement between Biorex Laboratories Limited and
Glycyx Pharmaceuticals, Ltd. dated August 22, 2001.
10.31 Form of Employment Agreement for executive officers.
*Confidential treatment requested.
(b) Reports on Form 8-K
The Company filed a Form 8-K with the United States Securities and
Exchange Commission on July 31, 2001 to file a press release announcing
operating results for the quarter ended June 30, 2001 would be reported
before the market opened on Wednesday, August 1, 2001.
The Company filed a Form 8-K with the United States Securities and
Exchange Commission on August 1, 2001 to file a press release announcing
operating results for the quarter ended June 30, 2001.
The Company filed a Form 8-K with the United States Securities and
Exchange Commission on August 30, 2001 to file a press release announcing
that the Company had acquired the exclusive rights and license to develop,
manufacture and commercialize balsalazide in Japan, Korea and Taiwan.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SALIX PHARMACEUTICALS, LTD.
Date: November 14, 2001 By: /s/ Robert P. Ruscher
---------------------------------------
Robert P. Ruscher, President and
Chief Executive Officer
Date: November 14, 2001 By: /s/ Adam C. Derbyshire
---------------------------------------
Adam C. Derbyshire, Vice President,
Finance & Administration, Chief
Financial Officer and Corporate
Secretary
10