SC 14D9/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14D-9

Solicitation/Recommendation Statement under

Section 14(d)(4) of the Securities Exchange Act of 1934

AMENDMENT NO. 3

SALIX PHARMACEUTICALS, LTD.

(Name of Subject Company)

SALIX PHARMACEUTICALS, LTD.

(Name of Person Filing Statement)

Common Stock, Par Value $0.001 Per Share

(Title of Class of Securities)

795435106

(CUSIP Number of Common Stock)

Robert P. Ruscher

Executive Chairman

Salix Pharmaceuticals, Ltd.

8540 Colonnade Center Drive, Suite 501

Raleigh, North Carolina 27615

(919) 862-1000

(Name, address and telephone number of person authorized to receive notice

and communications on behalf of the person filing statement)

Copy to:

Donald R. Reynolds, Esq.

Alexander M. Donaldson, Esq.

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, North Carolina 27607

(919) 781-4000

¨  Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

This Amendment No. 3 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 initially filed with the Securities and Exchange Commission (the “SEC”) on April 23, 2003 (as subsequently amended, the “Schedule 14D-9”), by Salix Pharmaceuticals, Ltd., a Delaware corporation (“Salix”), relating to the tender offer made by Saule Holdings Inc. (“Saule Holdings”), a wholly owned subsidiary of Axcan Pharma Inc. (“Axcan”), as set forth in a Tender Offer Statement filed by Axcan on Schedule TO, dated April 10, 2003 (as subsequently amended, the “Schedule TO”), to pay $10.50 net to the seller in cash, without interest thereon, for each share of common stock, par value $0.001 per share, of Salix (the “Common Stock”), together with associated rights to purchase Series A Junior Participating Preferred Stock, par value $0.001 per share (the “Rights”, and together with the Common Stock, the “Shares”), upon the terms and subject to the conditions set forth in the Schedule TO. Unless otherwise indicated, all capitalized terms used but not defined herein shall have the meanings ascribed to them in the Schedule 14D-9.

Item 2. Identity and Background of Filing Person.

(b) Tender Offer of the Offeror

The first paragraph of subsection (b) of Item 2 on page 2 is amended by inserting the following sentence at the end of the paragraph:

“On May 20, 2003, Axcan increased the Offer to $10.50 per Share (the “Revised Offer”).”

Item 4. The Solicitation or Recommendation.

(b) Background

The subsection titled “Axcan Hostile Offer” under Item 4(b) on page 9 is amended by adding after the last paragraph of the subsection the following new paragraph:

“On May 20, 2003, Axcan increased the Offer to $10.50 for each Share.”

Item 9. Exhibits.

Item 9 is amended by adding the following exhibits:

Exhibit No.
Exhibit 13.	Letter to the Company’s stockholders dated May 20, 2003. **
Exhibit 14.	Press Release of the Company urging the stockholders to defer action on the increased Axcan offer, issued by the Company on May 20, 2003. **

** Filed herewith.

2

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

SALIX PHARMACEUTICALS, LTD.
By:	/s/    ROBERT P. RUSCHER
	Robert P. Ruscher Executive Chairman

Dated: May 20, 2003

EX-13

EXHIBIT 13

[Salix Letterhead]

May 20, 2003

Dear Fellow Stockholders:

On May 20, 2003, Axcan Pharma Inc. revised its hostile tender offer for Salix common stock to $10.50 per share. Axcan also extended the offer period from May 23 to June 27, 2003. The offer remains subject to the various terms and conditions imposed by Axcan.

The Salix Board of Directors will meet with Salix management and Salix’s financial and legal advisors to evaluate the revised offer. The Board will advise Salix’s stockholders of its response to the offer as soon as practicable.

In the interim, the Board requests that you defer making a determination whether to accept or reject the revised Axcan offer until you have been advised of your Board’s position with respect to the revised offer. It is important to note that on May 20, 2003, the Salix common stock closed at $11.84, which is considerably higher than the revised offer of $10.50.

You should understand that your Board of Directors takes its fiduciary duty to act in the best interests of Salix and its stockholders very seriously and is committed to enhancing stockholder value.

Sincerely,
/s/    ROBERT P. RUSCHER	/s/    CAROLYN J. LOGAN
Robert P. Ruscher Chairman	Carolyn J. Logan President and CEO

EX-14

EXHIBIT 14

FOR IMMEDIATE RELEASE

Contact:
Adam C. Derbyshire	Mike Freeman	Mark R. Vincent
Vice President and Chief Financial Officer	Director, Investor Relations and Corporate Communications	Euro RSCG Life NRP
919-862-1000	919-862-1000	212-845-4239

SALIX PHARMACEUTICALS URGES

STOCKHOLDERS TO DEFER ACTION ON

INCREASED OFFER FROM AXCAN

Raleigh, NC, May 20, 2003 – Salix Pharmaceuticals, Ltd (Nasdaq: SLXP), a developer and marketer of prescription pharmaceutical products for the treatment of gastrointestinal diseases, today announced that Axcan Pharma Inc. has revised its hostile tender offer for Salix common stock to $10.50 per share. The Salix common stock closed at $11.84 on May 20, 2003.

Axcan also extended the offer period from May 23 to June 27, 2003. The offer remains subject to the various terms and conditions imposed by Axcan.

The Salix Board of Directors will meet with Salix management and Salix’s financial and legal advisors to evaluate the revised offer. The Board will advise Salix’s stockholders of its response to the offer as soon as practicable.

In the interim, the Board requests that Salix stockholders defer making a determination whether to accept or reject the revised Axcan offer until they have been advised of the Salix Board’s position with respect to the revised offer.

Salix Pharmaceuticals, Ltd., headquartered in Raleigh, North Carolina, develops and markets prescription pharmaceutical products for the treatment of gastrointestinal diseases. Salix’s strategy is to in-license late-stage or marketed proprietary therapeutic drugs, complete the required development and regulatory submission of these products, and market them through the Company’s 84-member gastroenterology specialty sales and marketing team. Salix’s first marketed product is COLAZAL^®, an anti-inflammatory drug approved for the treatment of mildly to moderately active ulcerative colitis. Rifaximin is currently in development for the potential treatment of infections of the gastrointestinal tract. The Company submitted an NDA for Rifaximin for the treatment of travelers’ diarrhea to the FDA on December 26, 2001. The Company received an approvable letter from the FDA on October 25, 2002 and is currently working with the

FDA to complete the approval process. Salix trades on the Nasdaq National Market under the ticker symbol “SLXP.”

For more information please contact the Company at 919-862-1000 or visit our web site at www.salix.com. Information on our web site is not incorporated in our SEC filings.

###

Please Note: This press release contains forward-looking statements regarding future events. These statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include risks of regulatory review and clinical trials, market acceptance for approved products, management of rapid growth, intellectual property risks, and the need to acquire additional products. The reader is referred to the documents that the Company files from time to time with the Securities and Exchange Commission.