Salix Pharmaceuticals is officially in rescue mode. Haunted by an inventory snafu and a C-suite shakeup, and under investor pressure to consider a sale, the company has hired investment bank Centerview Partners to help weigh its options.
As Reuters reports, the Raleigh, NC-based company has not formally decided whether to pursue a sale now or wait until it hires a new CEO. But changes are definitely on the horizon as Salix recruits new top managers and works to resolve wholesaler overstocks of its key drugs.
In November, CFO Adam Derbyshire left the company after Salix announced that wholesalers had built up huge inventories of several drugs, including irritable bowel med Xifaxan. The buildup may have inflated recent sales numbers, and it is expected to put a damper on 2015 revenue, Salix said at the time.
CEO Carolyn Logan stepped down earlier this month, opening up another executive post. Salix says it’s hiring a top search firm to find Logan’s replacement, with Chairman Tom D’Alonzo taking the reins as CEO in the meantime. William Bertrand Jr., SVP and general counsel, will serve as acting COO.
Meanwhile, Salix continues to work with wholesalers to cut down inventory levels of Xifaxan 550, Apriso and Uceris. The idea is to resolve the problem by the end of 2015. To make that happen, the company will need to sell “minimal amounts of the drug” in the short term, and that means lower fourth-quarter 2014 and full-year 2015 sales, Salix said last month. The company threw out its Q4 financial projections and said it expects 2015 profit and sales marks of $3.10 to $4.10 in earnings per share and a revenue range of $1.25 billion to $1.35 billion, falling short of analysts’ expectations.
The inventory blip also could have cost Salix a deal with Allergan ($AGN), which at one time was weighing an acquisition of the company. Allergan reportedly gave up on a potential deal for Salix after the high inventory numbers surfaced, opting instead to accept a buyout bid from Actavis.
But sales woes are not the only problems Salix has faced during the past year; the company is recouping from a failed $2.7 billion inversion deal with the Irish division of Cosmo Pharmaceuticals. In October, Salix called it quits on the inversion due to a “changed political environment,” agreeing to fork over a $25 million kill fee to Cosmo.
By Emily Wasserman
