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California firm terminates drug development agreement with Salix

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A California drug company that filed a lawsuit earlier this year accusing Salix Pharmaceuticals of breaching a collaboration agreement has now terminated that agreement.

San Francsico-based Napo Pharmaceuticals announced last week that it had terminated an agreement with Raleigh-based Salix to develop crofelemer as a treatment for chronic diarrhea in HIV/AIDS patients.

Napo informed Salix of its intent to terminate the agreement on Nov. 4.

In a regulatory filing, Salix said it believes the termination notice is connected to the lawsuit.

"We dispute Napo’s right to terminate our Collaboration Agreement as well as Napo’s related claims that we have breached the Collaboration Agreement," the company wrote. "We believe that neither has any merit."

Salix bought the rights to crofelemer for a $5 million licensing fee and future milestone payments in December 2008.

In Napo's release announcing the termination, the company said Salix has not filed a new drug application with the Food and Drug Administration despite positive Phase 3 results that were announce in Nov. 4.

Napo said it terminated the agreement after it Salix failed to correct what it considered breaches of the agreement.

After Napo filed its lawsuit in May, Salix said it intends to "vigorously defend" itself and continue with the development and commercialization of crofelemer.


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About the blogger

Business reporter David Bracken came to the N&O in 2004. He covers commercial and residential real estate. Contact David at 919-829-4548 or e-mail him.