According to the law firm press release, Salix focuses on treatments for digestive system diseases and disorders, including its top-selling antibiotic drug XIFAXAN® (rifaximin) (Xifaxan). Salix primarily sells its drugs through wholesalers, which then sell Salix's drugs to pharmacies.
The complaint claims that Salix and certain executives misled investors about deteriorating demand for Xifaxan and other Salix drugs and about wholesale inventory levels of Salix drugs, which were both much greater and increasing more rapidly than previously claimed. The complaint also claims that, by understating wholesale inventory levels, which are used to estimate accounting allowances for, among other things, product returns and rebates, Salix overstated its reported net revenue and earnings per share.
The truth about demand for Xifaxan and other Salix drugs and the consequences for Salix's business were revealed on November 6 and 7, 2014, when Salix announced that: (1) its longstanding Chief Financial Officer had abruptly resigned; (2) its wholesaler inventory levels were three times greater than previously reported, and its audit committee had retained outside counsel to look into Salix's reporting of wholesaler inventory; and (3) its previously issued revenue guidance for all of 2014 would be reduced by 12.5 percent. In reaction to these disclosures, Salix's stock price fell nearly 34 percent, to close at $91.47 per share on extraordinary trading volume.
On March 23, 2015, the Court issued an Order appointing lead plaintiff and approving lead counsel. Lead Plaintiff filed a consolidated complaint on May 8.
On March 31, 2016, the Court issued an Order denying Defendants' Motions to Dismiss.
The parties entered into a Stipulation of Settlement on March 24, 2017. Preliminary approval was granted April 5. Final approval was granted August 18.