Synergy Still Showcases Promising Commercial Trajectory in CIC

Rodman & Renshaw analyst Ram Selvaraju still looks for momentum in Synergy Pharmaceuticals Inc’s (NASDAQ:SGYP) chronic idiopathic constipation (CIC) drug Trulance and continues to be bullish on the glimmering commercial trajectory prospects.

Calling for “further” commercial strides, but also taking under account earnings that meaningfully underperformed his expectations, the analyst reiterates a Buy rating on SGYP while chopping the price target from $18 to $15, which implies a close to 389% increase from where the stock is currently trading. (To watch Selvaraju’s track record, click here)

Selvaraju predicts, “We expect momentum in both new prescriptions as well as refill rates to markedly increase in late 3Q17, once the six-month new product lockouts—in the form of National Drug Code (NDC) blocks—that currently impede untrammeled Trulance™ formulary access expire.”

Moreover, “We note that the launch of Trulance appears to be progressing on multiple fronts, with the company having reached 66% of its targeted prescriber base and over 90% of the high-volume prescribers (deciles 8-10) […] Importantly, about 55% of new Trulance prescriptions filled since launch were coming from new patients not previously on a branded prescription treatment and 45% were patients who converted from other branded prescription treatments,” adds the analyst.

Looking ahead, “We believe that, if Trulance’s sales trajectory continues in line with our forecasts, Synergy should be able to achieve cash flow breakeven status on an operational basis in the second half of 2018 and potentially turn profitable before the end of that year,” Selvaraju concludes, pleased with how the Trulance launch is progressing, even despite some disappointments in the quarterly print.

For the second quarter, the biotech firm posted $2.3 million in revenue, which more or less aligned with the analyst’s expectations of $2.6 million. Synergy’s rough spot this quarter points to higher-than-anticipated SG^A spending hitting $50.7 million, compared to the analyst’s forecast of $36 million, with elevated R&D of $22 million quite above the analyst’s projection of merely $16 million. All of this Selvaraju predicts led to Synergy’s net loss per share of $0.33, “significantly worse” than his estimate looking for a net loss per share of just $0.22.

TipRanks analytics showcase SGYP as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 5 are bullish on Synergy stock while 1 is bearish. With a return potential of 240%, the stock’s consensus target price stands at $10.45.

Gilead’s Not Going to Buy Just Any Company

Leerink analyst Geoff Porges is chiming in with key takeaways from a sidelined stance on Gilead Sciences, Inc. (NASDAQ:GILD) after meeting with the biotech giant’s management team on Wednesday. It was a standard Gilead meeting from Porges’ eyes- one that “inevitably” delved into facets of business development, including the search for a “transformative” acquisition. Yet, Gilead management has had an uphill challenge in pinpointing the right deal.

The challenge seems to be less about simply cost and rather a question of conviction in prospective targets paying off down the line- and whether these companies are game to sell at a price CEO John Mulligan can accept. For now, the GILD CEO does not see “much sense” in buying “something small” just to buy. Rather, the indication appears to be pointing to an objective of acquiring a company that in its present stage of the game already has compelling value “to meet their hurdle for transformative potential.”

Porges notes, “When we queried the company about their confidence in building a late-in-the-game oncology franchise by M&A, Dr. Milligan didn’t disagree with this caution, and suggested that the company ‘might end up doing nothing in oncology’ if the right opportunities don’t present themselves. Another area that remains of interest to Gilead is fibrosis, and the company suggested that they are closely monitoring anti-fibrotic programs, including those with activity in the liver and in other tissues. Although Gilead feels very positive about the three different programs they are advancing in NASH, they remain interested in adding other mechanisms and molecules to this portfolio, particularly anti fibrotics.”

This management meeting ultimately “didn’t materially alter the ability of us, or investors, to infer the nature or scope of the company’s business development ambitions, plans, and next steps,” says Porges.

The analyst rates a Hold rating on GILD with a price target of $74, which represents a close to 2% increase from where the shares last closed. (To watch Porges’ track record, click here)

TipRanks analytics demonstrate GILD as a Strong Buy. Based on 13 analysts polled by TipRanks in the last 3 months, 10 rate a Buy on Gilead stock while 3 maintain a Hold. The 12-month average price target stands at $83.36, marking a nearly 15% upside from where the stock is currently trading.