Salix IBS Study, No Upset Stomach Here (SLXP)

Posted in Options, pre-market 
September 14th, 2009

Salix Pharmaceuticals Ltd. (NASDAQ: SLXP) is the biggest gainer seen so far this morning.  With a 50% gain that might be expected.  At 8:33 AM EST we have shares trading up 51% at $20.00+, which is way above its old $13.99 52-week high.  We have also seen 790,000 shares trade hands versus an average volume of over 400,000 shares.

Salix announced successful outcome of two Phase II, randomized, double-blind, placebo-controlled, multi-center trials called TARGET 1 and TARGET 2 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.

  • As our friend Joe Kunkle noted on Friday…. 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. -JOE KUNKLE, OPTIONSHAWK.COM

JON C. OGG

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