Salix PharmaSalix Pharmaceuticals Inc. said it is licensing drug delivery technology from Lupin Ltd. of India.

Salix said it plans to use Lupin's bioadhesive technology in a new version of its bowel drug Xifaxan, or rifaximin. Salix will pay Lupin $5 million upfront and will make milestone payments as the drug advances through clinical development, as well as royalties on potential sales. Lupin will also supply the active ingredient in the drug to Salix.

Rifaximin is used to treat traveler's diarrhea, and Salix recently completed a successful late-stage trial of the drug in non-constipation irritable bowel syndrome. In a note to clients, BMO Capital Markets analyst Robert Hazlett said sales of rifaximin could improve if Salix develops a long-lasting version.