Salix Pharmaceuticals Ltd. swung to a loss in the fourth quarter
as the drug maker recorded sharply lower revenue amid a push to
clear out inventory ahead of its merger with Valeant
Pharmaceuticals International Inc.
High wholesaler inventory levels had reportedly derailed a
merger with Botox maker Allergan Inc. last year. High inventory
suggests weaker demand for Salix drugs as the drug maker sells more
to wholesalers than the wholesalers sell to pharmacies.
As of Dec. 31, inventories stood at about six months for
top-selling antibiotic Xifaxan and colitis drug Apriso; five months
for diabetes drug Glumetza and about four months for colitis drug
Uceris.
The Raleigh, N.C., drug maker, which focuses on gastrointestinal
disorders, is being bought by Quebec-based Valeant Pharmaceuticals
International Inc. for about $10 billion. The deal is expected to
close in the second quarter, and follows previous failed bids by
Cosmo Pharmaceuticals SpA and Allergan last year, and the departure
of its top two executives.
Xifaxan, an antibiotic approved to treat traveler's diarrhea and
a liver disorder that impairs brain function, is up for Food and
Drug Administration approval for treatment of diarrhea caused by
irritable bowel syndrome.
Salix said it wouldn't offer sales or financial projections
given the pending merger.
In January, the pharmaceutical company said it would amend
results since 2013, citing a series of accounting errors. The
adjustments, it said, would lower profit by 18 cents a share in
2013 and raise it by a penny for the first nine months of 2014.
Overall, Salix reported a loss of $287.6 million, or $4.51 a
share, compared with a year-earlier profit of $40 million, or 58
cents a share, a year earlier. The results include a $160 million
charge from an adjustment in the company's sales projection of its
incontinence treatment Solesta.
Excluding impairment charges and other items, Salix reported a
profit of $2.61 a share, from 70 cents a share a year earlier.
Revenue fell to $13 million from $238 million a year
earlier.
Salix had projected a profit of $1.16 a share on net product
revenue of $325 million but withdrew the projections in December as
it moved to clear inventory.
Shares edged down to $156.77 in recent after-hours trading.
Through Monday's closing the company's stock had risen 45% over
the past 12 months.
Write to Maria Armental at maria.armental@wsj.com
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