UPDATE 2-Salix says liver drug shows promise, shares up

(Recasts, adds details, share movement, analyst comment)

Oct 6 (Reuters) - Salix Pharmaceuticals Ltd (SLXP.O) said late-stage trial results showed that rifaximin may be a suitable and well-tolerated drug candidate in treating hepatic encephalopathy, a liver disease, sending its shares up 28 percent.

The specialty pharmaceutical company said in the 299-patient trial, rifaximin was statistically significant in preventing hepatic encephalopathy compared with a dummy drug. Analyst Angela Larson of Susquehanna Financial Group, who has a neutral rating on the company's stock, said rifaximin would contribute to Salix's earnings in a couple of years.

She also said rifaximin, which has already been granted orphan drug status, if approved by the Food and Drug Administration, will provide the company with seven years of marketing exclusivity in the United States.

Rifaximin, which is currently marketed as a treatment for traveler's diarrhoea, is being tested for the treatment of hepatic encephalopathy and has been granted orphan drug status by the FDA -- a status given to therapies being developed for rare conditions.

Hepatic encephalopathy is a disease in which liver damage causes toxic substances to accumulate in the blood and cause damage to the brain, leading to death eventually.

Rifaximin has been used in Italy for 23 years and is approved in 27 countries.

Separately, Salix Pharmaceuticals said rifaximin met its goals in a midstage clinical trial as a treatment for patients with irritable bowel syndrome (IBS).

Shares of Salix, which focuses on treating gastrointestinal diseases, were up $1.06 at $6.74 in afternoon trade on Nasdaq. They rose as much as 28 percent to a high of $7.29 earlier in the session. (Reporting by Anuradha Ramanathan, Vidya L Nathan in Bangalore; Editing by Deepak Kannan, Jarshad Kakkrakandy)