Gastrointestinal therapeutics firm Salix Pharmaceuticals (NASDAQ:SLXP) is pressing ahead with a drug candidate to treat diarrhea in AIDS patients despite a deteriorating relationship with its drug partner that has led to a contract dispute and dueling lawsuits.
Raleigh, North Carolina-based Salix today filed a New Drug Application for crofelemer, a filing that comes more than a year after the company reported positive phase 3 clinical trial results. In addition to treating HIV-associated diarrhea, the drug candidate is also indicated for treating pediatric diarrhea and acute infectious diarrhea.
Salix licensed crofelemer in 2008 from San Francisco, California drug developer Napo Pharmaceuticals, an agreement that paid Napo $4.5 million and called for Salix to be responsible for development of the compound. Crofelemer had been granted fast-track status by the U.S. Food and Drug Administration, smoothing the compound’s regulatory path.
Napo filed suit against Salix in May for failing to fulfill the contract. Napo claimed that Salix’s failure to advance the drug breached their contract and claimed it is entitled to damages in excess of $150 million. The company also claims that Salix’s contract breaches give Napo the right to terminate the collaboration agreement.
Salix has filed a motion to dismiss Napo’s suit. Salix has also filed a suit of its own against Napo. The 2008 collaboration between the two companies gave Salix a small equity stake in Napo. Salix, as a Napo shareholder, filed suit in June seeking to inspect Napo’s books “in connection with possible breaches of fiduciary duty and mismanagement by certain members of Napo’s board.”
On Nov. 4, one year after Salix had reported positive phase 3 trial results for crofelemer, Napo terminated the collaboration agreement. Napo’s position is that the termination of the collaboration agreement leaves the company free to find another partner or develop the drug on its own. Salix said in a statement that “Napo’s purported termination of the license is groundless and without merit.”
Under U.S. Food and Drug Administration rules, the agency has 60 days from the date of submission of the NDA to determine if the crofelemer application is complete for a more substantive review.