UPDATE: Synergy Pharma (SGYP) Reports In-Line Q3 EPS, Revenues Miss; Lowers FY18 Revenues Below Consensus & Below Min. Revenue Covenant on Loan Agreement

Synergy Pharma (NASDAQ: SGYP) reported Q3 EPS of ($0.14), in-line with the analyst estimate of ($0.14). Revenue for the quarter came in at $11.11 million versus the consensus estimate of $13.21 million.

Outlook

• On October 25, 2018, Synergy announced that it is seeking to renegotiate its term loan agreement with CRG Servicing LLC (“CRG”) and has forgone drawing down on any additional amounts pursuant to its term loan agreement. To-date the Company has been unable to further amend the agreement with respect to the financial, revenue and minimum liquidity covenants. Synergy is continuing discussions with CRG and has twice received temporary waivers on the minimum market cap covenant, which is set to expire on November 12, 2018 absent further extension. The Company is currently pursuing alternatives that better align with its business, but there is no assurance that the Company can secure CRG’s consent or otherwise achieve a transaction to refinance or otherwise repay CRG on commercially reasonable terms, in which case the Company could default under the term loan agreement and may have to pursue or otherwise accelerate strategic alternatives, including the possibility of seeking bankruptcy protection to protect stakeholder value in the event other options are not reasonably executable. Further updates on alternatives will be provided when available.
• As previously announced, TRULANCE uptake in 2018 has been slower than anticipated due to a highly competitive market access environment and slower than anticipated overall market growth. As a result, based on the Company’s current updated forecasts, Synergy is projecting TRULANCE total net sales for 2018 to be between $42.0 million to $47.0 million, which would be below the minimum revenue covenant of $61.0 million set forth in its term loan agreement with CRG. The Company has continued to evaluate opportunities to reduce cash expenditures to better align with anticipated revenues and available capital. In addition, Synergy has remained committed to the continued evaluation of all strategic opportunities to enhance shareholder value and there is no set timetable for completing this process. Synergy has engaged financial and legal advisors to assist Synergy in evaluating these strategic alternatives. Additional information about the Company\'s strategic review and go-forward plan will be provided at the appropriate time.

GUIDANCE:

Synergy Pharma sees FY2018 revenue of $42-47 million versus consensus of $48.52 million

For earnings history and earnings-related data on Synergy Pharma (SGYP) click here.

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