Salix Pharma Withdraws Q4, 2014 Outlook On Accelerated Inventory Reduction Plan

(RTTNews) - Pharmaceutical products and medical devices company Salix Pharmaceuticals Ltd. (SLXP) on Tuesday withdrew its previously-issued financial guidance for the fourth quarter as well as fiscal 2014, citing its decision to accelerate the reduction of wholesaler inventory levels and sell minimal amounts of Xifaxan 550, Apriso and Uceris during the fourth quarter.

Carolyn Logan, President and Chief Executive Officer of Salix. "As part of this effort, we are working with our wholesale partners to more aggressively work down their inventories. While this effort will impact Salix's revenue in the fourth quarter of 2014 and the full year 2015, we believe this one-time reduction over a defined period of five quarters is the right decision for the business long-term."

For the fourth quarter, Salix Pharma had earlier forecast adjusted net income of about $1.16 per share, on projected total net product revenues of about $325.0 million.

For fiscal 2014, Salix Pharma had previously forecast adjusted earnings of about $5.20 per share on total net product revenues of about $1.4 billion.

Salix Pharma said it is working with its principal pharmaceutical wholesalers to accelerate the reduction of wholesaler inventory levels of Xifaxan 550, Apriso and Uceris to the company's target of about three months by the end of 2015 - one year earlier than previously announced.

In order to effect this plan, Salix Pharma plans to sell to its wholesalers only minimal amounts of the three products during the fourth quarter of 2014. The company continues to expect that its distribution services agreements or DSAs with its principal wholesalers will be finalized and become effective in the first quarter of 2015.

Based on the accelerated inventory reduction plan, Salix Pharma issued preliminary guidance for fiscal years 2015 and 2016.

For fiscal 2015, Salix Pharma forecasts earnings per share of about $3.10 to $4.10 and total net product revenue between $1.25 billion to $1.35 billion. On average, analysts polled by Thomson Reuters expect the company to report earnings per share of $4.49 for the year on revenues of $1.51 billion. Analysts' estimates typically exclude special items.

For fiscal 2016, Salix forecasts earnings per share between approximately $8.50 and $9.50 on total net product revenue between about $1.9 billion and $2.0 billion.

Salix Pharma said that on December 15, 2014, the Food and Drug Administration or FDA provided written notice to the company that it has extended the Prescription Drug User Fee Act Action Date for Xifaxan 550 for the treatment of irritable bowel syndrome with diarrhea, or IBS-D, to May 27, 2015.

Expressing confidence that FDA approval for Xifxan 550 for the treatment of IBS-D will be obtained, Salix Pharma affirmed its previously-announced peak year sales estimate for this product of about $2.1 billion. However, the company noted that there is no assurance FDA approval will be obtained in a timely manner or at all.

In November, Salix Pharma reported a net loss for the third quarter of $88.60 million or $1.39 per share, compared to net income of $47.33 million or $0.71 per share in the prior-year quarter. However, net product revenues for the quarter surged 49 percent to $354.72 million from $238.18 million in the same quarter last year, primarily driven by the Santarus acquisition.

SLXP closed Monday's trading at $103.03, down $0.33 or 0.32 percent on a volume of 868,547 shares.