BioCentury
ARTICLE | Company News

Salix, Cosmo subsidiary to merge

July 10, 2014 1:34 AM UTC

Salix Pharmaceuticals Ltd. (NASDAQ:SLXP) will merge with an Irish subsidiary of partner Cosmo Pharmaceuticals S.p.A. (SIX:COPN) in a stock deal that will give Cosmo about a 20% stake in Salix. Salix will become a subsidiary of the Irish subsidiary, Cosmo Technologies Ltd., which will list on NASDAQ and be led by Salix's management. Salix shareholders will own "slightly less" than 80% of the Irish subsidiary, with Cosmo owning the remainder. Salix shareholders will receive one share of the Irish subsidiary for each Salix share held. Salix said the deal "enhances" its position in the gastrointestinal market and will reduce its effective tax rate from the high 30% range to the low 20% range.

Salix will acquire Cosmo's U.S. patents for three gastrointestinal products -- rifamycin SV MMX ( CB-01-11), methylene blue MMX and Uceris budesonide MMX -- as well as Japanese patents for Uceris and patents for rifamycin SV MMX in several other countries. Following the merger, milestones and royalties due to Cosmo under a prior deal granting Salix U.S. rights to ulcerative colitis drug Uceris will be eliminated. Salix will also gain a right of first negotiation for all products Cosmo or its affiliates plan to develop or commercialize in the U.S. ...