Salix Becomes Next Irritable Bowel Syndrome Treatment Hope (SLXP)
Salix Pharmaceuticals Ltd. (NASDAQ: SLXP) is starting the week off as the biggest biotech and biggest overall winner. That is what happens when your shares jump over 50% on drug study news…
Salix announced the successful outcome of its two TARGET Phase II, randomized, double-blind, placebo-controlled, multi-center trials. These were to evaluate the efficacy and safety of rifaximin in the treatment of patients with non-constipation irritable bowel syndrome. Both studies showed a statistically significant improvement for the primary endpoint and the key secondary endpoint of relief of IBS-related bloating also demonstrated statistical significance of rifaximin versus placebo in each trial.
Where this story gets interesting is that some options traders figured out what was going on. Our friend Joe Kunkle over at OptionsHawk.com posted the following…. Salix Pharma (SLXP) seeing a flurry of bullish risk reversal as one trader sold 5000 October $10 puts to buy 2,500 October $15 calls, while another trader sold 600 October $10 puts to buy 600 October $20 calls as shares trade at $13.44. Shares are pulling back today after breaking out yesterday of a tight range pattern. Rifaximin has been granted priority review by the FDA. The recent approval of its stomach and heartburn drug, Metozolv, should restore investor confidence in the name and hopefully end a streak of FDA setbacks with its products.
Shortly after the opening bell, Salix is up right at 50% at $20.25. This one has also already blown through about 6-X volume as it has traded 2.5 million shares versus an average volume of $about 400,000 shares. The 52-week high was $13.99 before today’s news.
Salix has been public since 2001 and this move up gets it to within striking distance of an all-time high back in 2004 and 2005 when shares were north of $20.00.
JON C. OGG
SEPTEMBER 14, 2009
