+ Watch SGYP
on My Watchlist
potential blockbuster drug here
In contrast to Ironwood Pharma, Synergy currently retains 100% of the worldwide rights to its lead asset, "Plecanatide." The fact that Ironwood's market capitalization of $1.68 billion is roughly 4.5x that of Synergy's $370 million and that Ironwood only owns 40% of the revenue stream/earnings picture for Lizness, shouts, this is a buy at this price.Reviewing Synergy's Plecanatide drug vs Ironwood's Linzess/Linaclotide drug you can clearly see that Synergy's drug more closely resembles Uroguanylin - the hormone these drugs are designed to mimic. Top biotech analysts think Synergy's drug will be best in class. Strong possibility SGYP will be acquired by big pharma.
The thesis behind being long Synergy is that their developmental drug plecanatide is an equivalent of Ironwood's approved drug linaclotide (Linzess) which has brought Ironwood a market cap of almost two billion. Given that Synergy has a market cap of 400M and the company has already announced positive phase III data for plecanatide in chronic idiopathic constipation, Synergy looks like a bargain.As always, there are no free lunches. Synergy is weird. For one thing, the company floundered for years as a low float bulletin board stock and was only uplisted to the Nasdaq in December 2011 after a reverse split. In November 2012 the share price rapidly declined from 5 to 3 with no apparent precipitant and then equally rapidly ascended to 5.5. Moves like this without any clear rationale in a low float stock raise the spectre of manipulation. In January 2013 Synergy shareholders voted to approve a merger with their development partner Callisto on terms that seemingly provide Callisto with a premium at the expense of Synergy shareholders, ostensibly to compensate them for a two-year lock-up. I haven't seen any mention of the merger since then.The latest weirdness came with an upgrade and optimistic revenue pronouncements from Cantor Fitzgerald two days ago that inflated the share price from 6.2 to a high of 7.4. The stock was slammed after hours the same day when the company announced a dilutive financing, and the carnage got worse today when the company announced that the new shares would be priced at 5.5. Was it a coinicdence that Cantor's pronouncements spiked the share price right before the dilution? When one sees that Cantor is acting a s a co-manager for the financing, that certainly seems unlikely. But even with Cantor's pump, the company couldn't even sell shares at the closing price on the day before the upgrade. That doesn't seem to bode well for the street's opinion of plecanatide's prospects.There's definitely more to this story than meets the eye, or possibly the nose. Synergy isn't doing well right now when it comes to the smell test. But if they can maintain at least the appearance of having a blockbuster drug in late stage development they've definitely got more upswings in their future.
Manufactures a linaclotide-like drug for IBS without the adverse side effects of IRWD's drug. SGYP's plecanatide is currently in Phase IIb/III testing with promising results. This stock can and will easily become a 5 bagger. I plan to continue to increase my position while under $6 a share.
Who am I to disagree?
The only thing this company is efficient at is burning through cash.
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