Synergy Pharmaceuticals Inc (SGYP) Shares Fall on Back of ‘Sell on the News’ Reaction; Rodman & Renshaw Bullish


Synergy Pharmaceuticals Inc (NASDAQ:SGYP) impressed Rodman & Renshaw analyst Ram Selvaraju with the announcement yesterday evening that the biotech has attained “a milestone few biotechnology companies reach:” winning approval from the FDA for lead drug plecanatide in constipation-predominant irritable bowel syndrome (IBS-C).

Selvaraju expects a launch to follow later this quarter under the trade name Trulance, underscoring the drug also received approval for the treatment of chronic idiopathic constipation (CIC) more than a week in advance of the original PDUFA date scheduled for January 29th.

On back of the “landmark milestone” of the pipeline drug approval, the analyst reiterates a Buy rating on shares of SGYP while boosting the price target from $17 to $18, which represents a 178% increase from current levels.

Selvaraju highlights, “Investors should note that, in addition to the near-term launch of Trulance, Synergy also anticipates filing the supplemental New Drug Application (NDA) for the drug in treatment of constipation-predominant irritable bowel syndrome (IBS-C) later this quarter. Trulance could win approval in the IBS-C indication by the end of this year, in our view, given a roughly 10-month review period. We note that the drug demonstrated solid efficacy and safety across four robustly-designed Phase 3 trials in CIC and IBS-C.”

Moreover, the analyst underscores, “Trulance was evaluated in the largest Phase 3 CIC trials to date, comprising more than 2,600 patients in two randomized, double-blind, placebo-controlled studies […] We note that, in the Linzess Phase 3 CIC trials, diarrhea occurred in 16% of treated subjects vs. 5% of those given a placebo,” adding that whereas severe diarrhea occurred in just 0.6% of patients on Trulance, 2% of subjects taking the rival drug Linzezz experienced the side effect.

“Thus, we believe Trulance could be positioned as a best-in-class drug,” Selvaraju concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Ram Selvaraju is ranked #4,152 out of 4,355 analysts. Selvaraju has a 35% success rate and loses 4.6% in his annual returns. However, when recommending SGYP, Selvaraju gains 41.5% in average profits on the stock.

TipRanks analytics demonstrate SGYP as a Strong Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 5 are bullish on Synergy stock and 1 remains sidelined. With a return potential of nearly 64%, the stock’s consensus target price stands at $10.50.

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