Shares of Salix Pharmaceuticals Ltd. (NASDAQ:SLXP) got a boost Tuesday on word that a third phase III trial, TARGET 3, met its primary endpoint with statistical significance. The randomized, double-blind, placebo-controlled study evaluated the efficacy and safety of repeat treatment with Xifaxan (rifaximin) 550 mg three times daily for 14 days in patients with irritable bowel syndrome with diarrhea (IBS-D) who responded to an initial course of the drug under the same dosing schedule for 14 days.

The company's stock gained $16.67, or 13.5 percent, to close at $140.02. Volume was nearly five times the average.

TARGET 3 measured a composite primary endpoint of IBS-related abdominal pain and stool consistency during a four-week treatment-free follow-up period in the repeat treatment phase.

G. Michael Freeman, a spokesman at Raleigh, N.C.-based Salix, said the company was not disclosing additional details prior to an investor day briefing scheduled for July 9.

However, the data – which corroborated findings from the company's confirmatory phase III studies, TARGET 1 and TARGET 2 – suggested Salix should have a clear path to refile its supplemental new drug application (sNDA) for rifaximin to treat IBS-D.

Leerink Partners LLC analyst Jason Gerberry reiterated an "outperform" rating on the stock, noting that he was "incrementally more positive regarding the approval prospects for Xifaxan in diarrhea-predominant IBS" following a recent conversation with Salix officials. Gerberry said the company plans to refile the sNDA for Xifaxan in late August, and he predicted a PDUFA date in the first quarter of 2015.

"Xifaxan is already in the channel and SLXP will be ready to launch immediately upon approval," he wrote in a flash note, projecting $700 million in IBS sales by 2019, based on feedback from a survey of gastrointestinal key opinion leaders. "We believe Xifaxan will get a label for as-needed, chronic intermittent dosing," Gerberry added.

Xifaxan 550-mg tablets currently are approved for traveler's diarrhea and for the orphan indication of reducing the risk of overt hepatic encephalopathy recurrence in patients 18 years or older. (See BioWorld Today, March 26, 2010.)

The gut-selective antibiotic has negligible systemic absorption while providing broad-spectrum activity against both gram-positive and gram-negative pathogens. The drug was used in Italy for more than two decades, and Salix acquired marketing rights in North America from Alfa Wassermann SpA, of Bologna, Italy.

IBS-D would be the company's biggest win for rifaximin. But the space has moved significantly since 2010, when Salix began to pursue the chronic IBS indication. At the time, analysts predicted the company would coast to the finish line with its sNDA and have an early mover advantage on the market for chronic IBS, despite pushback from some physicians reluctant to treat the indication for more than episodic care. (See BioWorld Today, April 5, 2010.)

That outlook changed in 2011, when Salix disclosed 10 days before the drug's March 7 PDUFA date that it expected to receive a complete response letter (CRL) from the FDA in the targeted indications of nonconstipation IBS and IBS-related bloating. The company's shares plunged 24 percent. Corey Davis, then an analyst at Jefferies Group LLC, called the CRL "a huge setback as our earnings forecasts and our valuation had high expectations for the IBS indication." (See BioWorld Today, Feb. 25, 2011.)

Davis predicted at the time that Salix would be required to run an additional phase III trial, pushing approval "to the late 2013/2014 time frame."

TARGET 3 DATA 'A MAJOR DE-RISKING EVENT'

That's exactly what happened, and Salix now faces some aggressive challengers. One of the hottest firms in the chronic IBS market is Furiex Pharmaceuticals Inc., which had a big phase III win with lead compound eluxadoline. When those data were disclosed in February, founding chairman Fred Eshelman predicted the unpartnered locally acting mu opioid receptor agonist and delta opioid receptor antagonist would "stir up some interest of some kind." (See BioWorld Today, Feb. 5, 2014.)

And how. In April, Forest Laboratories Inc. snagged Furiex for $95 per share, or about $1.1 billion in cash, and up to $30 per share in a contingent value right. At the time, Forest was in the middle of a pending merger with Actavis plc, which closed this week. (See BioWorld Today, April 29, 2014.)

Forest considered licensing eluxadoline after the phase II data and began negotiations to acquire the company after the phase III data were disclosed. With Furiex on track to file an NDA by the end of the third quarter, the large specialty pharma has the muscle to market eluxadoline that Furiex lacked.

Lexicon Pharmaceuticals Inc., of The Woodlands, Texas, is another player in IBS-D. In December, the company reported top-line data from an initial phase II study exploring LX1033, an oral inhibitor of tryptophan hydroxylase, indicating that all treatment groups, including placebo, showed significant improvements over time. Differences between placebo and LX1033 in stool consistency, the study's primary endpoint, were not statistically significant.

Additional analysis of the stool consistency data to adjust for early terminations yielded favorable results for the LX1033 500-mg three-times-daily dose group compared to placebo, and some of the findings were associated with statistical significance (p < 0.05). However, Lexicon turned much of its attention this spring to LX4211, a dual inhibitor of sodium glucose transporters 1 and 2, which met the primary endpoint of reducing mealtime insulin use and several secondary endpoints, including improved glycemic control, in a phase II study in type I diabetes. (See BioWorld Today, April 15, 2014.)

Drais Pharmaceuticals Inc., of Bridgewater, N.J., also is conducting a phase II study of ASP-7147, a bombesin BB2 receptor antagonist, in IBS-D. The randomized, multiple-blind, placebo-controlled study is fully enrolled and expected to conclude by year-end. The trial, in which 60 patients are randomized to ASP-7147 or placebo, is studying the effect on daily abdominal pain due to IBS-D, with secondary endpoints of stool consistency and frequency, over a four-week treatment period, according to Cortellis Clinical Trials Intelligence (CTI).

Privately held Drais has a partnership with Astellas Pharma Inc. to develop and commercialize ASP7147 through virtual biotech Seldar Pharma Inc. (See BioWorld Today, Nov. 1, 2012.)

Privately held Tioga Pharmaceuticals Inc., of San Diego, also completed a phase III trial of its oral agent, asimadoline, in IBS-D, according to clinicaltrials.gov but has not disclosed findings. The kappa opioid receptor agonist was granted fast track status by the FDA, and Tioga licensed commercial rights in Japan, South Korea and Taiwan to Ono Pharmaceutical Co. Ltd., of Osaka, which completed its own phase II study of asimadoline in Japan earlier this year, according to Cortellis CTI. (See BioWorld Today, Sept. 9, 2009.)

In general, analysts were unperturbed about the competition. Despite the lack of detail, Piper Jaffray & Co. analyst David Amsellem called the TARGET 3 data "a major de-risking event" for Salix, predicting that "the current body of available data (i.e., success on the first retreatment phase, plus clear success from the TARGET-1 and -2 trials) should be sufficient for FDA approval," particularly in the context of a dearth of treatment options for IBS-D and a relatively clean safety record for Xifaxan. "[We] would not be surprised to see off-label use in IBS-D tick up in the near-term," he added in a note.

And Davis, now at Canaccord Genuity Inc., called Xifaxan "one great drug" that is helping to catapult Salix to year-over-year growth of approximately 20 percent. "In a sector that thrives on growth, most specialty pharma companies have had to 'buy' growth," he wrote. "But since Salix has done it mostly organically, we think longer-term midteens growth is sustainable."