Key positions traded by Paulson & Co. in 4Q14 (Part 2 of 11)
Paulson adds a new stake in Salix Pharmaceuticals
Paulson took a large new position in Salix Pharmaceuticals (SLXP) last quarter. The position accounts for 3.45% of Paulson’s fourth-quarter portfolio.
Salix Pharmaceuticals makes up 1.52% of the iShares NASDAQ Biotechnology ETF (IBB).
Overview of Salix Pharmaceuticals
Salix Pharmaceuticals, headquartered in Raleigh, North Carolina, develops and markets prescription pharmaceutical products and medical devices for the prevention and treatment of gastrointestinal diseases.
A recent release notes that Salix is “a gastrointestinal market leader with a portfolio of 22 products, including well known prescription brands Xifaxan, Uceris, Relistor, and Apriso, as well as a near-term pipeline of innovative new assets.”
Salix’s Xifaxan treatment for Irritable Bowel Syndrome competes with products marketed by Bayer, Cumberland Pharmaceuticals, and other generic manufacturers. Its Uceris treatment for ulcerative colitis competes with Johnson & Johnson’s (JNJ) Remicade and AbbVie’s (ABBV) Humira.
Valeant to acquire Salix
Valeant Pharmaceuticals (VRX) recently agreed to acquire Salix Pharmaceuticals for $158 per share in cash, or a total enterprise value of approximately $14.5 billion. A Valeant news release stated, “The combination is expected to yield greater than $500 million in annual cost savings from the cost base of the combined company. Synergies are expected to be achieved within six months of close, primarily from reductions in corporate overhead and R&D rationalization, with the cost to achieve these synergies to be approximately 65%.”
Salix saw shares down last year on inventory and accounting issues
Newswire reports last year noted that Salix has been facing challenges due to inventory problems and management changes. An accounting revision in November also sent shares down. An inventory issue prompted Allergan to back away from the acquisition of Salix Pharmaceuticals.
A statement from Salix in January said, “The Company’s previously issued consolidated financial statements for the full year 2013 and the first three quarters of 2014 require correction of certain errors and should no longer be relied upon.” It added that the errors are related mainly to the timing for recognition of certain revenues, revenue-reducing returns and discounts, and expense items.
The next part of this series will cover the fund’s new position in Talisman Energy.
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