Salix Pharmaceuticals is headed for its scheduled showdown today with a panel of FDA experts who are expected to grill the company on Xifaxan (rifaximin), a drug that is being prepped for the hepatic encephalopathy market. And as usual the analysts were out in front, pondering over the likelihood of a serious regulatory delay or some other snafu.
Wedbush analyst Patricia Bank predicts trouble for Salix, saying that specialists in neurology will want to see a "hard core endpoint" on the drug's ability to treat neurological damage created by liver disease. That's no simple task for a disease like this. And there are concerns that the FDA experts will bore in sharply on potential safety issues as well.
"We now see the potential for an approval delay requiring more safety work to be a very real risk for the stock," says Jefferies analyst Corey Davis.
Even though Salix is given pretty good chances on an eventual approval, the prospect of a significant delay has been enough to cut into its share price. Salix shares dropped Friday as well as Monday as investors got a chance to look over the agency's briefing papers on the drug and got a bad case of pre-panel jitters.