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UPDATE: Canaccord Genuity Starts Synergy Pharmaceuticals (SGYP) at Buy, PT $11

May 22, 2015 7:41 AM EDT
Get Alerts SGYP Hot Sheet
Price: $0.03 --0%

Rating Summary:
    8 Buy, 3 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 5 | New: 36
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(Updated - May 22, 2015 9:04 AM EDT)

Canaccord Genuity initiated coverage on Synergy Pharmaceuticals (NASDAQ: SGYP) with a Buy rating and a price target of $11.00. Analyst Corey Davis thinks the stock would make an attractive takeout candidate if its Phase 3 trials of Plecanatide -- a molecule similar to Actavis' (NYSE: ACT) Linzess -- are successful.

Davis explained, "We have never been shy about taking swings in front of binary outcomes, and this one qualifies as one of the biggest we've seen in a while. With four Phase 3 trials maturing over the next 12 months in chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C), with what we believe is a high likelihood of success and a large market that Actavis/Ironwood is still developing with Linzess -- all in the context of a reasonable valuation -- we find Synergy an attractive investment opportunity. If successful in Phase 3, we also think Synergy would make an attractive takeout candidate since it owns full worldwide rights on plecanatide."

"Plecanatide is a molecule very similar to Linzess, which was discovered by Ironwood, developed by Forest, and acquired by Actavis. It has been on the market since 2012, is still growing over 80% year-over-year in TRx volume, and is on a $400M annualized run-rate. We think Linzess has $2B peak potential, and perhaps plecanatide has as much -- depending on the strength of the data and who ultimately ends up marketing it. Plecanatide is on the brink of having four large Phase 3 trials readout and, if successful, would have the same two indications as Linzess -- CIC and IBS-C. It would compete headto-head with Linzess, but we feel the market is more than large enough to support two products. The Phase 3s will reveal whether the efficacy is at least as equivalent and whether it truly has less of the diarrhea side effect -- the primary differentiating goal," added the analyst.

For an analyst ratings summary and ratings history on Synergy Pharmaceuticals click here. For more ratings news on Synergy Pharmaceuticals click here.

Shares of Synergy Pharmaceuticals closed at $4.29 yesterday.



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