RedHill signs laxative licensing deal with Salix

Salix will pay up to $12 million, plus royalties for RHB-106.

The share price of RedHill Biopharma Ltd. (Nasdaq: RDHL); TASE: RDHL) is up sharply on the TASE and in premarket trading on Nasdaq today, after it signed an exclusive worldwide licensing agreement with Salix Pharmaceuticals Ltd. (Nasdaq: SLXP). The agreement is for RedHill's RHB-106 encapsulated formulation for bowel preparation and rights to other purgative developments for $7 million, plus $5 million in milestone payments.

Salix will also pay RedHill tiered royalties on net sales, ranging from low single-digit up to low double-digits. In the deal, the parties also agreed on potential strategic collaboration on other Salix products in specific territories.

RHB-106 is intended for the preparation and cleansing of the gastrointestinal tract prior to the performance of abdominal procedures, including diagnostic tests, such as colonoscopy, barium enema or virtual colonoscopy, as well as surgical interventions, such as laparotomy.

"The licensing transaction with Salix is an important milestone for RedHill and yet another validation of our business model," said RedHill CEO Dror Ben-Asher. "This is the first licensing deal derived from RedHill's late clinical-stage pipeline, and we are confident that Salix, a leading company in the gastrointestinal field with a proven track record in drug development and commercialization, is the right partner."

"Salix is pleased to enter this strategic collaboration with RedHill and to secure what we believe could be the first prescription encapsulated bowel prep product," stated Salix president and CEO Carolyn Logan. "Many patients find the taste and palatability of current bowel prep products to be unacceptable. We believe the availability of a tasteless solid oral formulation bowel prep, if approved by the FDA, could potentially go a long way in helping to increase patient compliance and to ease patient burden associated with bowel cleansing prior to various medically important abdominal procedures."

RedHill's share price rose 14.5% following the announcement on the TASE to NIS 5.20, and 4.7% in premarket trading on Nasdaq to $13.55, giving a market cap of $83 million.

Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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