Salix Pharmaceuticals, Ltd. (SLXP) announced that its President and Chief Executive Officer (CEO), Carolyn Logan, has decided to step down from her position by the end of January. Carolyn Logan however will remain a consultant to the company.
Things were not looking good for the company lately. Salix has been struggling with inventory issues for some time now. The company’s third quarter results were also adversely affected by inventory issues.
In Nov 2014, shares of the company sunk on inventory issues. At that time the company’s Chief Financial Officer, Adam C. Derbyshire, also resigned (read more: Salix Crashes on Inventory Issues, Lowered Outlook).
However, last month, the company announced that it plans to reduce inventory levels of three of its products – Xifaxan 550, Apriso and Uceris – to approximately three-month levels by the end of 2015, a year ahead of its previous expectation. Per the plan, Salix has most likely sold lesser amounts of these products to its wholesalers in the fourth quarter (read more: Salix Gains on Destocking Initiatives, Gives 2-Year Outlook).
The higher wholesale inventory levels may affect future sales of the company until inventory levels are worked down. The inventory issues have raised concerns about the company’s future performance.
Needless to say, Salix’s search for finding a suitable leader for the company looks difficult at this point of time. The company announced that Tom D’Alonzo, chairman of the board of directors, will be the acting CEO from Jan 30, 2015, until Salix finds a suitable candidate for the post.
We expect investor focus to remain on this issue, going forward.
Salix currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Affymetrix Inc. (AFFX), Incyte Corporation (INCY) and AMAG Pharmaceuticals, Inc. (AMAG). All stocks carry a Zacks Rank #1 (Strong Buy).
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