Jury rules in favor of Salix in lawsuit over diarrhea treatment

Salix Pharmaceuticals announced Tuesday that a jury has ruled in its favor in a lawsuit over Fulyzaq, its treatment for chronic diarrhea in HIV/AIDS patients.

Salix had been sued by San Francisco-based Napo Pharmaceuticals, from which Salix had licensed the drug. Napo claimed Salix intentionally delayed the development of the drug. Salix had always contended that the lawsuit had no merit.

A New York State Supreme Court jury found Salix complied with its contractual obligations and did not breach its licensing agreement with Napo, according to a release issued by Salix.

“We are pleased with the verdict and appreciate the thoughtfulness with which the jury approached this case. Salix takes its contractual obligations to its partners very seriously,” CEO Carolyn Logan said in a statement. “We continue to believe in the future of Fulyzaq (crofelemer) and look forward to continuing our commercialization efforts.”

Salix’s 2008 deal with Napo gave it the rights to commercialize Fulyzaq for treatment of HIV/AIDS patients in North America, Europe and Japan for a $5 million licensing fee and future milestone payments. It also gives Salix a worldwide license to develop the drug for other indications, including irritable bowel syndrome.

Fulyzaq was approved by the Food and Drug Administration in January 2013 for treatment of chronic diarrhea in HIV/AIDS patients.

Salix and some analysts project that Fulyzaq could achieve peak annual sales of $150 million to $200 million. Use of the drug could also later be expanded to treat conditions that affect many more people, a drug development strategy that Salix has successfully employed with its best-selling drug Xifaxan.

Salix shares closed Tuesday at $108.21, down 5 cents.

Staff writer David Bracken