H.C. Wainwright analyst Ram Selvaraju is out today with some cautious commentary on Synergy Pharmaceuticals Inc (NASDAQ:SGYP), as the drug maker recently provided more details regarding the launch of its constipation treatment Trulance and disclosed planned activities in support of commercialization.
Selvaraju wrote, “We believe that the ramp for Trulance is likely to be meaningfully slower than we originally anticipated; furthermore, Synergy management have indicated that direct-to-consumer (DTC) advertising is likely to be part of the promotional strategy, which could increase total marketing expenses significantly. Accordingly, therefore, we we are modulating our expectations for 2017 revenues from sales of Trulance™ to $17.5M from $27.7M, while our 2018 sales projection is now $85.4M vs. the prior $172.5M. We have removed all contributions from Synergy’s pipeline from our valuation assessment, based on our assumption that Synergy is unlikely to undertake significant R&D initiatives in the near future.”
“On the other hand, we would point out to investors that the $300M in capital access via the debt facility should provide Synergy with sufficient funding to reach cash flow breakeven status—which could be attained in 2019, in our view—meaningfully reducing the risk of any near-term dilutive equity financing. In anticipation of further commercial progress with Trulance,” the analyst continued.
As such, Selvaraju slashed his price target for SGYP to $8.00 (from $15.00), while reiterating a Buy rating on the stock. (To watch Selvaraju’s track record, click here)
Out of the 6 analysts polled in the past 3 months, 5 rate Synergy Pharmaceuticals stock a Buy, while 1 rates the stock a Sell. With a return potential of 225%, the stock’s consensus target price stands at $8.58.