Bausch Health Companies (BHC) announced today it will acquire some assets of Synergy Pharmaceuticals, which is being called the “stalking horse” agreement – and the transaction is going to be worth somewhere around $200 million plus certain assumed liabilities. Synergy filed the petition for bankruptcy and BHC will serve as the “stalking horse bidder” in a court-supervised auction and sale. Synergy Pharmaceuticals (SGYP) stock is down about 53% and BHC stock is up nearly 5%.
The big news has analysts writing up their predictions. Specifically, Mizuho’s analyst Irina Koffler who reiterates a Buy rating on BHC with a price target of $38, which implies about 57% upside from current levels. (To watch Koffler’s track record, click here)
“We had previously contemplated Synergy as a strategic fit for Bausch. Its gastrointestinal segment, Salix, could provide increased support behind Trulance in IBS-C and Chronic Constipation, while using the revenue accretion to expand its own sales organization to grow Xifaxan and its line extensions. Linzess, Trulance’s closest competitor, is projected to attain blockbuster status within a few years, so Trulance has the potential to become a significant contributor to Bausch, if it can continue to grow in this market. We also note that Synergy has rights to commercialize Trulance in all territories except Canada, mainland China, Hong Kong, and Macau, which may create additional value for Bausch in its international markets. This deal gives us more conviction around a 2019 growth story,” Koffler said.
“We now expect increased competitive pressure to Linzess from a larger and more potent sales organization. Ironwood indicated that Trulance struggles primarily due to poor Medicare Part D coverage (but not due to inferior efficacy or safety), which we believe is fixable. Ironwood is working to capture a portion of MiraLax prescriptions, so the overall opportunity may expand further, in our view,” the analyst added.
While SGYP isn’t looking too good, BHC is not doing too bad. TipRanks suggests optimism with some caution baked into expectations when it comes to Wall Street’s majority perspective on the drug maker. Out of 12 analysts polled in the last 3 months, analysts are split between the bulls and the sidelined on BHC: 6 rate a Buy rating, 5 maintain Hold, while only 1 recommends Sell. The consensus price target of $28.33 shows an upside of around 17% from current levels. (See BHC’s price targets and analyst ratings on TipRanks)