Salix CEO takes a hike in latest fallout from inventory snafu

The shake-up at the top of Salix Pharmaceuticals continues. On Monday afternoon, CEO Carolyn Logan became the second C-suite executive to step down in the wake of an inventory snafu disclosed late last year. Logan will retire as of Jan. 30, the company said.

CFO Adam Derbyshire made his exit in November, after Salix ($SLXP) announced that wholesalers had built up huge inventories of several Salix drugs, much bigger than the company had indicated. The supply buildup may have inflated sales figures in the short run--and would certainly take a bite out of sales in 2015, the company said.

At the time, Logan also announced that the board's audit committee would review Salix's books. Specifically, the committee would zero in on "issues related to management's prior characterization of wholesaler inventory levels."

The "issues" were substantial. Wholesaler inventories for its top drug Xifaxan had built up to 9 months' worth, versus the 10 to 12 weeks the company had signaled.

Perhaps more importantly--to investors, anyway--were reports that the inventory problem squelched a takeover. Before agreeing to a buyout by Actavis ($ACT), Allergan ($AGN) had been shopping at Salix and seemed to be nearing a deal. But as The Wall Street Journal reported in November, Allergan stepped back after determining that wholesalers had built up big supplies of those key drugs. At the time, analysts suggested that the Allergan news also raised questions about Salix's abandoned deal for Cosmo Pharmaceuticals ($COPN).

Now, the company says it's planning to hire a top search firm to hunt for Logan's replacement, and in the meantime, Chairman Tom D'Alonzo will take the reins as acting chief executive. William Bertrand Jr., SVP and general counsel, will serve as acting COO.

Meanwhile, shareholders are agitating for a sale, according to media reports. Last month, Reuters sources said that investors want the company to put itself on the block as soon as the inventory problems are resolved. Salix has said that it's working with wholesalers to bring down supply levels of Xifaxan, Apriso and Uceris by the end of 2015.

- see the release from Salix

Special Report: Pharma's top 10 M&A deals of 2013 - Salix/Santarus

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