Thoughts On Synergy Pharma's Valuation As Cantor Initiates At Overweight

Cantor Fitzgerald initiated coverage of Synergy Pharmaceuticals Inc SGYP at Overweight with a price target of $11.

Analyst William Tanner estimates second quarter earnings of $1.4 million with a negative $0.25 EPS. Fiscal 2017 earnings are estimated to be $11.3 million.

Opportunities In The Pipeline

The company’s expertise in using guanylate cyclase type receptors to treat GI disorders could be leveraged to lower the risk profile of its drug development programs.

Synergy’s lead drug candidates, plecanatide and dolcanatide, mimic the effects of uroguanylin to restore normal GI function.

Synergy’s first product, Trulance (plecanatide) was approved by the FDA in mid-January to treat adults with chronic idiopathic constipation. The product launched on March 20.

Gastroenterologists Tanner spoke with acknowledged the relative effectiveness of the drug but believe there is room for improvement, particularly pertaining to its side effects.

“We note that opioid-induced constipation is part of a lifecycle management strategy for Trulance,” said Tanner in a note.

Investors should also note opportunities in dolcanatide and a recently filed sNDA for irritable bowel syndrome with constipation indication.

At time of publication, shares of Synergy were up 14.7 percent at $4.16.

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