Synergy Pharmaceuticals Inc (NASDAQ:SGYP) has achieved the cash balance required to gain access for more capital- as set by September’s term loan agreement with CRG. The cash balance threshold? $128 million- of which the drug maker has since surpassed on its balance sheet.
BTIG analyst Tim Chiang believes there is “serenity now” for the company, and anticipates “another” $100 million of funding to be issued from CRG soon enough, based on the deal’s terms.
In reaction, the analyst maintains a Buy rating on SGYP stock with a price target of $7, which suggests 250% in return potential from where the stock is currently trading. (To watch Chiang’s track record, click here)
“We remain positive SGYP shares and believe the recent pressure on the equity (we think due to near term financing concerns) will be alleviated,” cheers Chiang.
On a side (and encouraging) note, with Trulance now having a label expansion approval under its belt from the FDA in constipation-predominant IBS and chronic constipation, Synergy’s lead asset has a new competitive edge. This is a drug now ready to stand its own against the likes of Ironwood and Allergan’s Linzess, a drug that the analyst wagers brought to the table around $700 million in sales last year.
Cantor analyst William Tanner likewise weighs in on the “next loan borrowing,” saying “cash is king” for this biotech player.
The analyst already cast his confident prediction in a report last week that Synergy would shoot past its $128 million requirement. With his call proven right, Tanner now anticipates the stock could be primed for “relief” on back of the buzz.
Not surprised, but certainly bullish, the analyst reiterates an Overweight rating on SGYP stock with a $10 price target, which implies a whopping 400% in upside potential from current trading levels. (To watch Tanner’s track record, click here)
Additionally, Tanner recognizes the Trulance power for Synergy: “Although there are requirements related to additional loan tranches, we suspect there are also cures that could allow SGYP to access capital if they are not explicitly met. Even with nearer-term capital needs available, we believe sustained SGYP stock performance will be driven mainly by Trulance market uptake.”
“We thought announcement of the $300 million debt financing in September 2017 would have been a positive for the stock given concern about how the company’s capital requirements would be met. When details of the agreement were disclosed after release of 3Q17 results, it became evident that requirements for access to additional capital might be challenging. Clearly, the November equity offering was important to meeting the $128 million level,” asserts Tanner.
Moving ahead, the analyst acknowledges that Synergy next must meet the requisite to gain access for a third loan borrowing: $50 million.
TipRanks highlights a roaring positive majority on the Street when it comes to Synergy’s opportunity in the biotech-verse. Out of 5 analysts polled in the last 3 months, 4 are bullish on Synergy and only 1 is hedging his bets on the sidelines. With a return potential of nearly 358%, the stock’s consensus target price stands at $9.25.