Basics of Salix Pharmaceuticals
Salix Pharmaceuticals (SLXP) is a specialty pharmaceutical company. It’s dedicated to developing prescription drugs and medical devices used in the treatment of various gastrointestinal, or GI, disorders. Salix has an agreed deal with Valeant (VRX). However, Endo (ENDP) entered the fray with its own proposal. The Salix-Endo proposal is a higher price than Valeant’s proposal, but it’s more uncertain.
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 the colon as a preparation for a colonoscopy
- Relistor – indicated for the treatment of opioid-induced constipation
- Osmoprep – indicated for cleansing the colon as a preparation for a 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 (gastroesophageal reflux disease), 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
Xifaxan is by far Salix’s largest product. It accounted for about 70% of its revenue in 2013. Xifaxan is a big reason for the Salix-Valeant merger transaction. GI products should account for 24% of Valeant’s (VRX) 2015 pro forma revenue.
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).