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The Salix–Valeant merger: Basics of Salix Pharmaceuticals

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Basics of Salix Pharmaceuticals

Salix Pharmaceuticals (SLXP) is a specialty pharmaceutical company dedicated to developing prescription drugs and medical devices used in the treatment of a variety of gastrointestinal disorders.

Salix Pharmaceuticals’s main products are:

  • Xifaxan: indicated for the reduction in risk of overt hepatic encephalopathy
  • Apriso:  indicated for the maintenance of remission of ulcerative colitis, or UC
  • Moviprep:  indicated for cleansing of the colon as a preparation for colonoscopy
  • Relistor:  indicated for the treatment of opioid-induced constipation
  • Osmoprep:  indicated for cleansing of the colon as a preparation for colonoscopy
  • Solesta: indicated for the treatment of fecal incontinence
  • Deflux: indicated for the treatment of vesicoureteral reflux
  • Fulyzaq: indicated for the symptomatic relief of non-infectious diarrhea in adult patients with HIV/AIDS on anti-retroviral therapy
  • Giazo: indicated for the treatment of mildly to moderately active UC
  • Metozolv:  indicated for the treatment of gastroesophageal reflux disease.
  • Azasan:  indicated as an adjunct for the prevention of rejection in renal homotransplantations and to reduce signs and symptoms of severe active rheumatoid arthritis
  • Anusol: indicated for the relief of the inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses
  • Proctocort:  indicated for the relief of the inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses
  • Pepcis: indicated for the short-term treatment of GERD, active duodenal ulcer, active benign gastric ulcer, erosive esophagitis due to GERD, and peptic ulcer disease
  • Diuril: indicated for the treatment of hypertension and also as adjunctive therapy in edema associated with congestive heart failure, cirrhosis of the liver, corticosteroid and estrogen therapy, and kidney disease
  • Colazal:  indicated for the treatment of mildly to moderately active UC

Xifaxin is by far Salix’s largest product, accounting for about 70% of its revenues in 2013. Xifaxin is a big reason for the Salix–Valeant merger transaction. GI products should account for 24% of Valeant’s (VRX) 2015 pro forma revenues.

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Other merger arbitrage resources

Other important merger spreads include the deal between Hospira (HSP) and Pfizer (PFE). For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.

Investors who are interested in trading in the healthcare sector should look at the Health Care Select Sector SPDR Fund (XLV).

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