Optomistic Future for Salix Pharmaceuticals Ltd. (SLXP)

Salix Pharmaceuticals Ltd. (NASDAQ: SLXP) posted revenues of $70 million, slightly above Liisa Bayko and Eric Chang of JMP Securities’ estimate and consensus of $68 million. On the bottom line, the company reported a loss per share of $0.13, in-line with JMP’s estimate and consensus of $0.14. Management has approximately $193M in cash, which should last well into the launch of Xifaxan, an antibiotic that fights bacterial infection in the intestines, in 2Q10.

Although management expects to achieve profitability in 2010 with EPS of $0.04, they also expect a 1Q10 quarterly loss per share of $0.50 due to the destocking of the 200mg Xifaxan pills in anticipation for the 550mg pills that will come soon after. Bayko and Chang are not particularly concerned with the loss in 1Q10 as the transition in pill size is both temporary and necessary, and they continue to like shares for the potential $1.3B and $500M in peak sales that we believe Xifaxan can add to the top line in irritable bowel syndrome and hepatic encephalopathy in the long term.

SLXP shares are up 1.8% today to $31.81 per share. It is currently at the highest value it has traded at in the last 52 weeks.