Salix reaches $100M settlement over patent litigation

Salix Pharmaceuticals announced Monday that it has reached a $100 million settlement with Par Pharmaceuticals over patent litigation filed by the University of Missouri and Santarus, the San Diego-based speciality drug company that Salix acquired earlier this year.

Under the agreement, Par agrees not to sell or commercialize generic versions of Zegerid capsules or powder, and will make a one-time payment of $100 million into an escrow account. These funds will be allocated between Santarus and Missouri under the terms of their 2001 licensing agreement. Zegerid is a heartburn treatment.

Par also agreed not to initiate or assist in any future challenge to the validity of certain patents that are owned by the University of Missouri and licensed exclusively to Santarus.

Salix also announced late last week that it has expanded its 2009 licensing agreement for its best-selling drug Xifaxan, also known as Rifaximin.

Under the amended agreement with the Indian pharmaceutical company Cipla, Salix will continue to have exclusive rights to Xifaxan in the U.S., Canada and Mexico while also adding certain patent rights in the European Union, Japan, Australia, New Zealand and South Korea.

Salix is required to make an upfront payment to Cipla, as well as milestone payments and royalty payments on net sales covered by the patents licensed to Salix.

Xifaxan is approved to treats travelers' diarrhea and a rare liver condition in the U.S.

Salix is now seeking approval from the Food and Drug Administration to use Xifaxan to treat irritable bowel syndrome. The Raleigh company announced late last week that teh FDA is expected to rule on its new drug application by Feb. 28, 2015.

Salix earned $646 million in revenue from sales of Xifaxan last year, a 25 percent increase over the previous year. The drug accounted for nearly 70 percent of Salix’s total annual revenue in 2013.

If Xifaxan is approved to treat IBS, it could generate incremental sales of $628 million in 2018, according to Sterne Agee analyst Shibani Malhotra.