Oppenheimer analyst Derek Archila sees some short-term capital rocky waters for Synergy Pharmaceuticals Inc (NASDAQ:SGYP) and awaits more details post-Trulance launch, but continues to root for the biotech firm’s lead chronic idiopathic constipation drug’s prospects, reiterating an Outperform rating on the stock with a $9 price target, which represents a just under 102% increase from where the stock is currently trading. (To watch Archila’s track record click here.)
Archila explains, “We do think it is imperative the company begin to hold earnings calls now that it has launched Trulance as investors will seek to get more color from management on how the launch is progressing and the managed care landscape. We believe investors continue to follow scripts very closely since the launch of Trulance (plecanatide) in late March for […] (CIC).”
When glancing at Symphony data, the analyst notes approximately 11,000 Trulance prescriptions circled in the second quarter. With Symphony notably carrying a roughly 90% prescription capture rate and taking under account gross-to-net discounts around 40%, Archila takes his prior forecast in the ballpark of $3 million to $2.6 million. Even with the forecast cut, the analyst still has more confidence than consensus expectations looking for about $2.1 million. Additionally, the analyst projects SG&A costs of close to $43 million, aligning with consensus forecasts.
Moreover, “We believe the company’s large sampling program […] continues to drive awareness and believe paid scripts should begin to accelerate later this year as physicians and patients both get more experience with the drug,” opines the analyst.
Overall, “For 2Q, investors will again be looking at the company’s operating expenses, in particular the sales and marketing spend as the company likely will need to raise additional capital to support the Trulance launch sometime later this year. While we think SGYP has a variety of options to explore for additional funding, we expect the need for capital to remain an overhang for the stock in the near term,” concludes Archila.
TipRanks analytics demonstrate SGYP as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 5 are bullish on Synergy stock while 1 remains sidelined. With a return potential of 147%, the stock’s consensus target price stands at $10.95.