Synergy's Safety Profile Should Boost Trulance Uptake, Takeover Prospects Remain Favorable

Rodman & Renshaw reiterated its Buy rating on Synergy Pharmaceuticals Inc SGYP, saying the company’s “best-in-class” safety profile should boost the commercial launch of Trulance for the treatment of chronic idiopathic constipation (CIC).

Trulance

“Discontinuation rates were low among patients given both drug and placebo (4 percent vs. 2 percent, respectively) and the most common discontinuation-causing event was diarrhea (2 percent for Trulance vs. 0.5 percent in placebo),” analyst Raghuram Selvaraju wrote in a note.

Meanwhile, Synergy is slated to kick off the Trulance launch campaign within the next couple of weeks, and will launch with a wholesale acquisition cost (WAC) of $353.48, effectively at parity with Linzess.

Selvaraju expects 2017 revenue of $53.6 million and $362 million in Trulance sales in 2018. The analyst also projects Synergy could turn sustainably profitable in early 2018.

Related Link: Takeda's Speculative Interest In Synergy Soothes Stomach Pains; Canaccord Says Buy

The analyst also pointed out that investors should note that Trulance could be approved for treatment of IBS-C by the end of 2017 or early in 2018, assuming sNDA submission later this month and a statutory 10-month review period.

M&A Activity Backdrop

On the M&A front, Selvaraju the acquisition prospects for Synergy remain favorable and named Takeda Pharmaceutical Co Ltd (ADR) TKPYY, AstraZeneca plc (ADR) AZN, Novartis AG (ADR) NVS and Shire PLC (ADR) SHPG as potential suitors.

“From our perspective, Synergy fits the bill of a favorable target in having: (1) positive safety and efficacy data from large, well-controlled clinical trials; (2) an approved drug with a validated mechanism of action; and (3) a significant customer base,” Selvaraju highlighted.

The analyst noted that the recent Johnson & Johnson (JNJ)’s acquisition of the Swiss biotech firm Actelion for $30 billion suggests that Synergy could be acquired at a favorable price.

Selvaraju added that Synergy could fetch a favorable price in the event of a takeover, “given the paucity of acquisition targets for large-cap pharmaceutical firms that possess the characteristics Synergy currently displays.”

At last check, shares of Synergy had fallen 3.06 percent to $5.51. Selvaraju has a price target of $18.