On June 17, Synergy Pharmaceuticals Inc (NASDAQ:SGYP) announced positive results from the first Phase 3 Trial of plecanatide in patients with chronic idiopathic constipation, or CIC. Shares of the company shot up 68% following the announcement.

The trial tested two doses of plecanatide; 3.0 mg and 6.0 mg. Both doses successfully achieved their primary endpoints with statistical significance. Furthermore, both doses were safe and well-tolerated with diarrhea being the most common side effect. Synergy notes that plecanatide would be the first drug to be approved by the FDA to treat CIC using more stringent regulatory requirements.

Synergy Pharmaceutical CEO Gary S. Jacob, Ph.D, commented, “We are very pleased with these results and how well they confirm earlier plecanatide data observed in the phase 2b/3 trial. These results strengthen our belief that plecanatide has the potential to not only effectively treat constipation but with a durability and tolerability profile that is ideal for chronic use. We look forward to the results of our second pivotal trial in the coming weeks.”

If it receives FDA approval, plecanatide will compete with Allergan’s Linzess, another CIC drug. Irina Rivkind Koffler of Cantor Fitzgerald compared the plecanatide trial to the previous Linzess trial and noted that fewer plecanatide patients discontinued the drug due to diarrhea than Linzess patients. The analyst believes that plecanatide’s efficacy, durability, and tolerability could help “establish plecanatide as a competitive alternative to Linzess, especially if it can be taken more regularly.” 

Irina Rivkind Koffler reiterated a Buy rating on Synergy Pharmaceuticals and raised her price target from $8.50 to $14 on June 17. Following positive Phase 3 data in chronic constipation, the analyst views the stock as “an attractive takeout.” She continues, “We believe that there is scarcity value to de-risked late-stage assets in large primary care markets.” She explains that the effect size of the data should be “sufficient to meet FDA criteria.” Rivkind Koffler concluded, “Data from the second Phase III constipation trial are expected in July, and we expect similarly positive results.”

Irina Rivkind Koffler has rated Synergy Pharmaceuticals 12 times since September 2012, earning a 67% success rate recommending the stock with a +75.9% average return per SGYP recommendation. Overall, Rivkind Koffler has a 66% success rate recommending stocks with a +47% average return per rating.

Separately on June 17, Canaccord Genuity analyst Corey Davis reiterated a Buy rating on Synergy Pharmaceuticals and raised his price target from $11 to $19. Davis called the results “the best positive top-line results [he] could have hoped for” as both doses of the drug met their primary endpoints “with flying colors.” Davis has raised his price target as he consistently does “when drugs become de-risked.” Davis also sees significant potential for plecanatide. He has stated in the past that Linzess has the potential to be a $2 billion drug, and he sees “no reason why plecanatide couldn’t have equal magnitude — in the hands of the RIGHT marketing partner.”

This is Corey Davis’s second time rating Synergy Pharmaceuticals since May 2015. He earned a +78.8% return on his first SGYP rating. Overall, Davis has a 60% success rate recommending stocks with a +19.1% average return per rating.

On average, the top analyst consensus for Synergy Pharmaceuticals on TipRanks is Strong Buy. The average 12-month price target on the stock is $16.50, marking over a 100% potential upside from where the stock is currently trading.