2 articles pr s'n convaincre :
1/ VFC Stock House
Synergy Pharmaceuticals: A Buying Opportunity Now That Could Pay Off Nicely Later
Posted by Posted by VFC on Aug 06, 2012
Shares of Synergy Pharmaceuticals (SGYP) have slipped over the past couple of weeks and are again trading at levels under the four dollar mark, prices not seen in many months beforehand. With key catalysts pending for this company later in the year and with a product in the late stages of development that could be worth billions over the long run on the open market, SGYP could be trading for quite the relative bargain at the current time. As the year progresses and the significant trial catalyst draws nearer, Synergy could be gearing up for a reversal from the current downtrend.
Also encouraging, Synergy secured a key merger agreement last month with Callisto Pharmaceuticals (CLSP) that wholly boosts the company's short and long term potential. For months investors had been wondering when the SGYP market cap would begin to approach that of competitor Ironwood Pharmaceuticals (IRWD), which sits at well over a billion dollars, since Synergy's Plecanatide has proven thus far in studies to have a superior side effect profile to Ironwood's Linaclotide, which is currently before the FDA for approval review.
The Callisto/Synergy merger opens the door for an equalization in market cap.
Previous to the merger, Callisto had owned roughly forty percent of SGYP shares. Such a heavy investment by one entity often keeps large funds and new heavy investors from taking a stake in a company that is ultimately largely controlled by another entity. That will no longer be the case since the merger spreads Callisto's Synergy holdings throughout the entire Callisto shareholder base, therefore eliminating the forty percent control by one entity. As previously discussed, that opens the door for large funds and institutions to start buying in.
Also of significant note, the SGYP shares being spread across the Callisto shareholder base will be 'locked up' for eighteen months - unless a "Change of Control" even takes place first - which means the shares will not weigh down the SGYP share price in the meantime. The "Change of Control" language also raises the already robust buyout speculation surrounding the company, as the Synergy management team may be already looking for suitors. To speculate further, Synergy may have already been advised that the Callisto holdings may be the roadblock to completing such a deal, hence the need for the merger.
The completion of this merger strengthens the case of SGYP as both a short and long term investment. IRWD's Linaclotide is already before the FDA for approval in the treatment of chronic idiopathic constipation (CIC) and could receive the nod next month - barring any additional decision delays - and such an approval would validate the technology and could also provide a boost to SGYP.
Plecanatide, however, has already proven in trials to have a favorable side-effects profile than Linaclotide, hence the belief that the product could quickly steal market share, once approved. Data from the pending Phase II/III trial later this year are widely expected to roll in positive, based on previous studies, as well as the noted success of Linaclotide, which shares origins and the same mechanism of action with Plecanatide.
Both Linaclotied, and Synergy's competing product Plecanatide, are also being developed to treat constipation-predominant irritable bowel syndrome (IBS-C).
Another positive for Synergy is that the company is still yet to land a major partner or buyer, while Ironwood has already partnered its product with Forest Laboratories, Inc. (FRX). Since IRWD's market cap already sits well north of a billion dollars, the market is valuing Linaclotide at roughly double that, since IRWD is only due to receive a royalty of fifty percent of future sales.
Those facts alone justify the belief that SGYP could start inching towards a much higher valuation with the Callisto deal finalized - especially if the trial results later this year are as positive as they have been previously.
Given the recent developments, pending catalysts and share price retreat, SGYP is one to keep an eye on right now. In just a few months time, it's possible that the current prices will be looked back upon as a bargain.
Disclosure: Long SGYP.
2/Seeking Alpha
Weekly Stock Watch, Week Of August 6
August 5, 2012
Synergy Pharmaceuticals (SGYP): Synergy Pharmaceuticals is yet another company in the biotech/small pharma sector that has seen its share price sink to once-again very attractive levels. This company has numerous key catalysts pending that could quickly reverse the retreating trend, namely the release of decisive trial results later this year that would give reason to believe that the SGYP market cap could quickly approach that of competitor Ironwood Pharmaceuticals (IRWD), which sits at well over a billion dollars.
Ironwood's product, Linaclotide, is already before the FDA for approval in the treatment of chronic idiopathic constipation (CIC) and could receive the nod next month, barring any additional decision delays. Both Linaclotied, and Synergy's competing product Plecanatide, are also being developed to treat constipation-predominant irritable bowel syndrome (IBS-C).
Plecanatide, however, has already proven in trials to have a favorable side-effects profile than Linaclotide, hence the belief that the product could quickly steal market share, once approved. Data from the pending Phase II/III trial later this year are widely expected to roll in positive, based on previous studies, as well as the noted success of Linaclotide, which shares origins and the same mechanism of action with Plecanatide.
Synergy also has the pending potential of landing a major partner or buyer.
Ironwood has already partnered its product with Forest Laboratories, Inc. (FRX), which makes the company's market cap of already well over a billion dollars roughly half of what the market is valuing Linaclotide, since IRWD is only due to receive a royalty of fifty percent of sales.
Assuming Plecanatide's superior side effect profile and the potential of the product to quickly eat away at IRWD's market share, it's conceivable that SGYP should soon start looking to at least match the cap of Ironwood. One impediment to making that happen was the fact that Callisto Pharmaceuticals (CLSP) had owned roughly forty percent of SGYP shares. Such a heavy investment by one entity often keeps large funds and new heavy investors from taking a stake in a company that is ultimately largely controlled by another entity. That will no longer be the case since Callisto and Synergy recently announced a merger that would spread Callisto's Synergy holdings through the entire Callisto shareholder base, therefore eliminating the forty percent control by one entity.
This scenario strengthens the case for SGYP to start being looked at as an attractive investment option for investors of all sizes, especially considering the pending catalysts. Also of significant note, the SGYP shares being spread across the Callisto shareholder base will be 'locked up' for eighteen months - unless a "Change of Control" even takes place first - which means the shares will not weigh down the SGYP share price in the meantime.
The "Change of Control" language also raises the already robust buyout speculation surrounding the company, as the Synergy management team may be already looking for suitors. To speculate further, Synergy may have already been advised that the Callisto holdings may be the roadblock to completing such a deal, hence the need for the merger.
Should a buyout become the endgame, don't expect that before the trial results of later this year. If those results come in as encouraging as expected, then it could be, as they say, "all bets are off" and the bidding will begin.
Worth keeping an eye on this one, and also worth taking advantage of the share price dip, in my opinion.
