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Salix Pharmaceuticals Reports 2Q2013 Results

Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) today announced financial and operating results for the second quarter ended June 30, 2013 and other business updates.

Total product revenue was $235.4 million for the second quarter of 2013, a 30% increase compared to $181.0 million for the second quarter of 2012. Total product revenue for the first six months of 2013 was $438.0 million, a 24% increase compared to $352.1 million for the first six months of 2012. XIFAXAN ® revenue for the second quarter of 2013 was $150.6 million, a 29% increase compared to $116.7 million for the second quarter of 2012. XIFAXAN revenue for the first six months of 2013 was $303.9 million, a 32% increase compared to $229.6 million for the first six months of 2012. APRISO ® revenue for the second quarter of 2013 was $39.2 million, an 80% increase compared to $21.8 million for the second quarter of 2012. APRISO revenue for the first six months of 2013 was $53.4 million, a 45% increase compared to $36.9 million for the first six months of 2012. The following table provides more detail of net product revenues.
 
In millions Net Product Revenues

Three months ended

June 30, 2013
 

Six months ended

June 30, 2013
 
XIFAXAN $150.6 $303.9
 
APRISO 39.2 53.4
 
RELISTOR 8.5 16.1
 
MOVIPREP/OSMOPREP 20.8 34.8
 
SOLESTA 1.5 2.7
 
DEFLUX 5.9   12.5

Total cost of products sold was $46.5 million for the second quarter of 2013 and $79.6 million for the first six months of 2013, compared to $33.3 million for the second quarter and $67.4 million for the first six months of 2012. Gross margin on total product revenue, excluding $11.2 million and $11.3 million in amortization of product rights and intangible assets for the three-month periods ended June 30, 2013 and 2012, respectively, was 80.3% for the second quarter of 2013 and 81.8% for the first six months of 2013, compared to 81.6% for the second quarter of 2012 and 80.8% for the first six months of 2012. Gross margin fluctuates from quarter to quarter due to product mix. During the second quarter of 2013, higher than anticipated sales of APRISO, combined with APRISO’s lower gross margin, as compared to XIFAXAN, resulted in a decrease in gross margin on total product revenue compared to the first quarter of 2013, with first quarter gross margin of 83.7% compared to second quarter gross margin of 80.3%. Based on the change in product mix as described above, we now believe gross margin on total product revenue for 2013 should be approximately 82%. Research and development expenses were $45.2 million for the second quarter of 2013 and $75.5 million for the first six months of 2013, compared to $27.2 million and $53.9 million, respectively, for the prior year periods. The increase in research and development expenses for the second quarter of 2013 compared to the second quarter of 2012 was due primarily to the payment for worldwide rights to Olon’s intellectual property relating to amorphous rifaximin and costs associated with the XIFAXAN retreatment study. Selling, general and administrative expenses were $80.3 million for the second quarter of 2013 and $156.6 million for the first six months of 2013, compared to $65.3 million and $125.7 million, respectively, for the prior year periods. The increase in selling, general and administrative expenses for the second quarter of 2013 compared to the second quarter of 2012 is due primarily to increased personnel costs, marketing expenses related to the launch of new products and increased legal expenses. The $2.1 million change in acquisition-related contingent consideration during the three-month period ended June 30, 2013 was a result of the reduction of the discount period due to the passage of time.

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