Why Salix Pharmaceuticals Ltd. Stock Surged

Salix Pharmaceuticals roars higher after delivering positive late-stage results that could expand the prescribed indications for one of its lead drugs. Find out if this move higher is merited.

Jul 1, 2014 at 2:05PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Salix Pharmaceuticals (NASDAQ:SLXP), a globally diversified pharmaceutical company focused primarily on treating gastrointestinal diseases, rocketed higher by as much as 13% after reporting positive late-stage data for rifaximin (known better as Xifaxan) as a repeat treatment for patients with irritable bowel syndrome with diarrhea, or IBS-D.

So what: According to results from the TARGET 3 study where Xifaxan was administered three-times daily for 14 days to patients, "a statistically significant greater proportion of rifaximin treated subjects (as compared to placebo) responded to repeat treatment as assessed by the composite primary endpoint of IBS-related abdominal pain and stool consistency during the 4 week treatment-free follow-up period (Primary Evaluation Period, or PEP) in the Double Blind Repeat Treatment Phase." Xifaxan was also considered well-tolerated and safe in the study which confirmed the efficacy exhibited in TARGET 1 and TARGET 2. Salix believes these results pave the way for a supplemental new drug filing.

In response to this study, research firm Sterne Agee, commented that it should serve as a means to get Xifaxan approved to treat IBS-D and projected Salix's share price could hit $180. That's close to 50% additional upside from yesterday's close.

Now what: In addition to this positive news, Salix also has a big catalyst coming up in two weeks involving the Food and Drug Administration's decision on ruconest, a hereditary angioedema drug that it acquired when it purchased Santarus for $2.6 billion in cash. Chances are probably better than 50-50 that it will be approved as well (at least in my opinion). Things are certainly hitting on all cylinders for Salix. Despite today's run higher, the company's forward P/E still sits at a minuscule 19, which isn't unreasonable considering its annual sales growth estimate over the next five years is near 20%. This is a specialty pharmaceuticals company that very well could continue to rise and I'd have no qualms about you adding it to your watchlist.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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