Synergy Pharmaceuticals Inc Management Attributes Today’s Stock Weakness to Investor Uncertainty Regarding the Company’s Cash Balance
There’s a new FDA-approved IBS-C medication on the scene. Today, the U.S. regulators green-lighted Synergy Pharmaceuticals Inc’s (NASDAQ:SGYP) TRULANCE 3 mg tablet for the once-daily treatment of IBS-C in adults. This is the second indication for TRULANCE, which is already approved for the treatment of adults with CIC.
However, despite FDA approval, Synergy investors got cold feet, sending shares tumbling as much as 11% in Thursday’s trading session.
Cantor analyst William Tanner commented, “We spoke with management this morning, and they noted that FDA approval of the sNDA for Trulance to treat irritable bowel syndrome with constipation (IBS-C) was consistent with their expectations in terms of dose and labeling […] Management attributes today’s stock weakness to investor uncertainty about SGYP’s cash balance and not any disappointment with the Trulance sNDA approval as a treatment for IBS-C.”
“With two approved indications, they believe Trulance will become increasingly competitive in the commercial market. Essential to the ability to access the next tranche of cash ($100 million) from the existing loan agreement is a cash balance of $128 million as of January 31. For legal reasons, management indicated that they could not provide an update until that time. Expressing confidence they will meet that obligation, we believe actual disclosure of that fact could be a positive catalyst for the stock,” the analyst continued.
As such, Tanner reiterates an Overweight rating on Synergy Pharmaceuticals shares, with a price target of $10, which implies an upside of 305% from current levels. (To watch Tanner’s track record, click here)
This analyst is not the only fan of the small biotech company on Wall Street, as TipRanks analytics exhibit SGYP as a Strong Buy. Based on 5 analysts polled in the last 3 months, 4 rate a Buy on Synergy stock while 1 rates it a Hold. The 12-month average price target stands at $9.25, marking a 274% upside from where the stock is currently trading.