Synergy Pharmaceuticals Inc (SGYP): Analyst Makes Bullish Case for Robust Value in Trulance Asset

Canaccord forecasts DTC marketing could be big for SGYP's Trulance next year, in footsteps of rival Linzess.


Synergy Pharmaceuticals Inc (NASDAQ:SGYP) shares are falling 6% after yesterday’s third quarter update, but Canaccord analyst John Newman simply sees victory.

“Recent formulary wins [are] notable,” the analyst argues, eyeing exciting value for chronic idiopathic constipation (CIC) drug Trulance, whose wins will only serve to sustain more gains down the line.

As such, the analyst reiterates a Buy rating on SGYP stock with a $13 price target, which represents a just under 363% increase from current levels. (To watch Newman’s track record, click here)

Selvaraju highlights, “SGYP is expecting most remaining new-to-market (NTM) blocks to be lifted in 1H18, which would give Trulance more favorable access across commercial, Medicare Part D and Managed Medicaid plans. In 3Q17, more than 25K Rx were filled (+105% over 2Q17), totaling ~38K Rx since launch in March. The Rx volume is driven by over 7000 physicians (+87% over 2Q17), and 50% of the volume came from patients who were new to branded treatment and 42% was from conversions, consistent with what we have seen in previous quarter. Overall, the Rx volume growth is within our expectation and the pattern continues to suggest strong value proposition for Trulance given the high portion of therapeutic conversions in the Rx volume. In addition, the formulary wins should help continue to support Trulance‚Äôs growth trajectory.”

Moving forward, direct-to-consumer advertising could yield a “meaningful positive impact” next year in bolstering awareness of Trulance, which could help the biotech player “level the competition field to some extent.” With a PDUFA date with destiny set for the 24th of January for an IBS-C sNDA, the analyst has soaring “confidence” that Synergy will get the nod, then leading to a more advantageous Trulance adoption curve.

Most on Wall Street are backing this biotech stock, with TipRanks analytics exhibiting SGYP as a Buy. Out of 5 analysts polled by TipRanks in the last 3 months, 4 are bullish on Synergy stock while 1 is less. With a return potential of 178%, the stock’s consensus target price stands at $7.90.