Synergy Pharmaceuticals (SGYP) Stock Crash Holds an Important Lesson, Says Biotech Spectator
As Bausch Health (BHC) attempts to swallow up bankrupt Synergy Pharmaceuticals (SGYP), Seeking Alpha blogger Biotech Spectator (BS) says Synergy’s beloved Irritable Bowel Syndrome (IBS) drug Trulance is nothing to be stimulated about. The drug is SGYP’s selling point and what BHC says its most excited to acquire and sell.
BS says they were bearish on SGYP long before the company went down – seeing issues with Trulance that were visible if just doing basic research of first-hand sources. BS notes more than 90% of SGYPS’s value “evaporated” just one year after they published a bearish review of the company’s drug. The blogger suggests the reason for this is that Trulance was not a unique addition to this niche pharmaceutical market, as other constipation medications like Linzess already existed and were doing well. Furthermore, BS says Trulance is not the “best-in-class” like its marketing department tried to suggest it was, referencing studies and statistics supporting Trulance is actually less effective than Linzess.
“It is true that the two drugs cannot be directly compared due to the fact they were never included in a single study. However, Dr. Philip Schoenfeld, a renowned expert in this field, used an empirical statistical model to compare the efficacy and safety profiles of the two drugs. He concluded that there is no statistical differences between the two drugs in efficacy and diarrhea, which agrees with my earlier article,” BS asserts.
The blogger also notes SGYP management did not honor their investors. He lists three actions leadership lacked:
- No insider buy-and-hold, which makes it appear that management does not care about shareholders’ value.
- No earnings conference calls for investors
- Misrepresentation – including a “disastrous dilution in November of 2017” which is the exact opposite of what management said investors should expect.
“Believe it or not, some people still think Bausch Health has stole a blockbuster drug and for that reason, even want to be a Bausch Health investor. I don’t know much about Bausch Health but Trulance is surely not a stellar drug for the reason I have discussed above.[…]What’s bothered me is not about mistakes. We all make mistakes. But being stubborn, defiance, self-righteousness are all we should avoid,” the bear explains.
Just a handful of analysts are putting their efforts into reviewing SGYP stock according to TipRanks analytics. Out of four, three are sidelined and one is bullish. The consensus price target of $4.50 shows an unrealistic upside from current levels. (See SGYP’s price targets and analyst ratings on TipRanks)