Time To Buy Synergy Pharma, Roth Capital Says

• The share price of Synergy Pharmaceuticals Inc SGYP has appreciated by 88.35 percent over the last six months, from a low of $3.44 on May 5.
• Roth Capital’s Michael Higgins has reinitiated coverage of the company with a Buy rating and price target of $9.50.
• Higgins mentioned that the company has two late-stage candidates for the treatment of gastrointestinal disorders, of which one has successfully completed Phase 3 trials in constipation.

Analyst Michael Higgins explained that Synergy Pharma’s plecanatide demonstrated “impressive” rate of diarrhea, especially compared to the approved constipation medication, Linzess.

Higgins expects plecanatide to be launched in 2017, “with the most impressive clinical profile in a category that’s growing 39 percent and on track to become a $3 billion market in 2018.”

The company is progressing on track to filing an NDA in early 2016, with the FDA’s higher efficacy bar having been achieved in the Phase 3 trial.

In addition, Higgins believes that concerns regarding future pricing, especially related to price increases in the constipation segment, are overdone.

Synergy Pharma also has another late-stage asset, dolcanatide, which is a next-gen uroguanylin analog for opioid-induced constipation and and mild-to-moderate ulcerative colitis. Positive Phase 2 data has already been released for the former indication, while Phase 2 data for the latter is expected by year-end 2015.

“Synergy is well capitalized, with sufficient capital to reach 2017, when we believe plecanatide will be launched,” Higgins added.