Synergy Pharmaceuticals Inc: Low-Dose Linzess Unlikely to Pose Threat, Says Rodman & Renshaw

Yesterday morning, Ironwood (NASDAQ:IRWD) and Allergan (NYSE:AGN) announced that the FDA approved a lower dose (72mcg) of Linzess (linaclotide). The dosage levels approved for Linzess are now 290μg once-daily for constipation-predominant irritable bowel syndrome (IBSC) and 145μg and 72μg once-daily for chronic idiopathic constipation (CIC).

Rodman & Renshaw analyst Ram Selvaraju considers the approval of the 72μg dosage level a non-factor with respect to Synergy Pharmaceuticals Inc (NASDAQ:SGYP) and its lead approved drug Trulance (plecanatide). The analyst sees little to no difference in the safety profile of linaclotide between the 145μg and 72μg doses. Accordingly, the analyst does not believe that the availability of the lower linaclotide dose is likely to constitute a meaningful commercial obstacle to Synergy’s launch of Trulance.

“We believe that Trulance™ should benefit from several significant launch tailwinds, namely: (1) significant awareness among specialist prescribers of the utility of GC-C receptor agonism in treating constipatory disorders; (2) familiarity with the drawback of diarrhea as a potential issue with Linzess®; and (3) a large target market that remains under-treated,” Selvaraju noted.

Selvaraju reiterated a Buy rating on SGYP stock, with a price target of $18, which represents a potential upside of 203% from where the stock is currently trading.

According to TipRanks, analyst Ram Selvaraju has a yearly average return of -5.1% and a 36.5% success rate. Selvaraju has a 24.5% average return when recommending SGYP, and is ranked #4197 out of 4378 analysts.

Out of the 6 analysts polled in the past 12 months, 5 rate Synergy Pharmaceuticals stock a Buy, while 1 rates the stock a Hold. With a return potential of 88%, the stock’s consensus target price stands at $11.17.


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