Salix Pharmaceuticals Ltd, Cosmo deal

Salix will merge with an Irish subsidiary of partner Cosmo 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, methylene blue MMX and Uceris budesonide MMX - as well as Japanese patents for Uceris and patents for rifamycin SV MMX in Canada, undisclosed Latin American countries, India, China, Japan and the rest of the Far East, excluding Australia and New Zealand. Salix already has U.S. rights to ulcerative colitis drug Uceris through its January acquisition of Santarus Inc., which partnered with Cosmo in 2008. Following the merger, milestones and royalties due to Cosmo under the 2008 deal will be eliminated. Rifamycin SV MMX - a broad-spectrum, semisynthetic, non-absorbable, oral antibiotic formulated with MMX multi-matrix system technology - is in Phase II testing for diverticulitis and Phase III testing for travelers’ diarrhea, and methylene blue MMX - an oral colon-release formulation of methylene blue delivered using MMX technology - is in Phase III testing to detect colorectal cancer. Uceris is budesonide delivered using MMX technology (see BioCentury, Dec. 22, 2008; Nov. 11, 2008 & Jan. 6, 2014). ...