Canaccord analyst John Newman is out today with a favorable research report on Synergy Pharmaceuticals Inc (NASDAQ:SGYP) after the firm’s competition, Phase 3 Linzess studies appear to have a diarrhea discontinuation rate that is quite possibly more than has been reported.
The Phase 3 Linzess trials in chronic idiopathic constipation (CIC) and even prospectively in irritable bowel syndrome with constipation (IBS-C) have enabled a treatment break of a three-day period for patients who experience an adverse event.
To the analyst, this indicates a far better than initially anticipated discontinuation rate for SGYP’s pipeline drug plecanatide. Particularly as Newman highlights, “Importantly, there were no treatment interruptions allowed for any of the Phase 3 plecanatide studies.” Therefore, Newman reiterates a Buy rating on shares of SGYP with a $13 price target, which represents a 115% increase from where the stock is currently trading.
The analyst underscores, “Linzess discontinuation due to diarrhea was 3.2% (145 ug) and 2.8% (290 ug) in the Phase 3 CIC study, vs. 1.1% for plecanatide. However, 7.1% of AEs reported for the 290ug Linzess dose in the Phase 3 CIC study led to treatment interruption, suggesting the discontinuation rate would have been much higher if treatment interruption had not been allowed.”
Though the Phase 3 Linzess extension trial did allow for treatment interruption as well as reduced dosage, the diarrhea rate reported still reached almost 30%.
Ultimately, “We maintain our BUY rating and $13 PT for Synergy based on our expectation of FDA approval for plecanatide in CIC on January 29, and a highly differentiated safety profile for plecanatide vs Linzess based on a much lower rate of diarrhea. We do not expect FDA to request the Phase 3 IBS-C data in order to determine approval on January 29,” Newman surmises.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, John Newman is ranked #4,217 out of 4,291 analysts. Newman has a 29% success rate and forfeits 15.5% in his yearly returns. However, when suggesting SGYP, Newman realizes 26.9% 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 are bullish on Synergy stock and 1 remains sidelined. With a return potential of nearly 76%, the stock’s consensus target price stands at $10.60.
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