Analysts weigh in with a few insights on biopharmaceutical companies Synergy Pharmaceuticals Inc. (NASDAQ:SGYP) and Zogenix, Inc. (NASDAQ:ZGNX), following the release of their quarterly results this week.
Synergy Pharmaceuticals Inc.
Roth Capital analyst Michael Higgins reiterated a Buy rating on Synergy Pharma after the company reported financials that were in-line with consensus and ahead of his own estimates. For 3Q15, Synergy reported a net loss of $26 million and a loss per share of ($0.23). At the end of the quarter, cash and equivalents stood at $142 million.
Looking forward, Higgins will be watching for “plecanatide’s NDA filing in chronic idiopathic constipation (CIC), Ph3 data in IBS-C, open label data in CIC, confirmatory Ph3 data in IBS-C and plecanatide’s PDUFA in CIC, respectively.” Plecanatide is an analog of uroguanylin; a naturally occurring human gastrointestinal peptide that plays an important role in regulating healthy digestive activity. Plecanatide has already completed two phase 3 clinical trials for CIC. It is presently being evaluated in two phase 3 clinical trials for irritable bowel syndrome with constipation (IBS-C). At this stage of development of plecanatide, Higgins believes Synergy faces moderate clinical risk as compared to competitive treatments, namely Linzess (from Ironwood) and Amitzia (from Takeda/Sucompo).
In the context of the overall market for constipation, Higgins says, “We continue to model the Rx constipation market will grow 25% in 2016, down from its ~40% pace in 2015.” He adds, “We continue to look for the Rx constipation market to double from 4Q’15 to YE’18, becoming a $3 billion market.”
Given the expected announcements related to plecanatide, Higgins says, “We believe investor enthusiasm will build in 2016 ahead of these events and we encourage investors to acquire Synergy at current levels.”
In his report, Higgins also talks about the $18.8 million of the company’s notes being converted to 6.0 million shares in the quarter. As a result, Synergy’s debt at the end of the quarter stood at $159 million.
Michael Higgins has an overall success rate of 56% with an average return per recommendation of 9.7%. Out of 4 analysts polled by TipRanks who have recently rated Synergy’s stock, all 4 analysts have rated it as Buy. The average consensus price target for the stock is $14.88, an upside of 145.25% over current levels.
Earlier this week, Zogenix posted Q3 earnings that beat expectations. The company posted quarterly revenues of $9.1 million; higher than the consensus estimates of $5.9 million. Based on this strong performance, Difei Yang of Brean Capital maintained a Buy rating for the stock with a price target of $28.
Yang highlighted that the reason for the strong Q3 performance is an increase in manufacturing revenue due to the increase in shipments of Sumavel DosePro to Endo International Plc. Sumavel DosePro is a needle-free injection for treating acute migraine and cluster headaches.
For the next year, Yang will be looking at various catalysts, including the approval for the Investigational New Drug application, or IND, of ZX008. The pipeline treatment is a low-dose formulation of fenfluramine that can potentially become a transformational treatment for Dravet syndrome; a rare form of epilepsy which begins in infancy. While fenfluramine has had a complicated history with the FDA, Yang is confident that an IND will be approved. Yang is also looking forward to a Phase III clinical trial for ZX008 with a read-out expected in late 2016.
Furthermore, Yang is looking forward to the licensing agreement for Relday in the first half of 2016. Relday is an antipsychotic product for the treatment of schizophrenia. Before moving Relday into phase III testing, the company has strategically decided to engage a global strategic development and commercialization partner. If the deal is successful, Yang expects an incremental upside for the company.
Difei Yang has a success rate of 44% with an average return per recommendation of 2.8%. Based on 12 ratings for Zogenix, Yang has a success rate of 83% for the stock with an average return on stock of 9.6%. Out of 4 analysts polled by TipRanks who have recently rated Zogenix, 3 have rated it as Buy and 1 has rated it as Hold. The average consensus price target for the stock is $25.67, an upside of 89.45% over current levels.