After market-close yesterday, Synergy Pharmaceuticals Inc (NASDAQ:SGYP) released positive second Phase 3 results for plecanatide, the firm’s pipeline daily pill designed to treat irritable bowel syndrome and currently under review by the FDA in the indication of chronic idiopathic constipation (CIC). In reaction, shares have been sent on a 5% rise in pre-market trading today and have Canaccord analyst John Newman bullish on the biotech firm’s prospects heading into the new year.
As such, the analyst reiterates a Buy rating on SGYP with a price target of $13, which represents a close to 162% increase from current levels.
Newman highlights, “Plecanatide showed a 12.4% and 11.7% improvement in the Overall Responder rate vs control in the second Phase 3 IBS-C study, higher than the ~10% rate seen in the first Phase 3 for plecanatide, and comparing well to 13% and 20% for Linzess, a positive, in our view. We note that the Overall Responder Endpoint is an FDA endpoint, and that doctors and patients do not think about the percentage of time they are ‘Overall Responders.’ Rather, we believe the much lower rate of diarrhea and upcoming secondary endpoints for plecanatide will highly differentiate the drug vs. Linzess.”
Considering the pipeline drug continues to exhibit a significantly decreased rate of diarrhea when compared to control as well as competitor Linzess in the second Phase 3 trial, the analyst predicts both physicians coupled with IBS-C patience will subsequently show “high preference” for plecanatide.
“Again, assuming similar efficacy for plecanatide vs. Linzess on secondary endpoints, we continue to believe that a much lower diarrhea rate will result in significant patient and physician preference for plecanatide vs. Linzess and better compliance, resulting in higher revenues per patient for plecanatide vs. Linzess, a critical commercial factor,” Newman surmises.
Looking ahead, the analyst anticipates plecanatide will win FDA approval in CIC come January 29, 2016. Additionally, Newman expects plecanatide will yield positive data for secondary endpoints in IBS-C during the first half of 2017.
According to TipRanks, which measures analysts’ and bloggers’ success rate, John Newman is ranked #4,208 out of 4,289 analysts. Newman has a 28% success rate and faces a loss of 16.4% in his yearly returns. However, when suggesting SGYP, Newman gains 5.0% in average profits on the stock.
TipRanks analytics demonstrate SGYP as a Strong Buy. Out of 5 analysts polled by TipRanks in the last 3 months, 4 rate a Buy on SGYP stock while 1 maintains a Hold. With a return potential of nearly 124%, the stock’s consensus target price stands at $10.60.
You can learn how to set up your own top-notch biotech portfolio here.