BTIG Sees Today's Selloff in Synergy Pharma (SGYP) as Overdone; Reaffirms at 'Buy'

BTIG affirmed Synergy Pharmaceuticals, Inc. (Nasdaq: SGYP) with a Buy rating and $11 price target following a post-convertible notes offering sell-off today.

Analyst Timothy Chiang commented, This morning, Synergy issued an 8k filing indicating that ~$80 million of its 7.5% Convertible Senior Notes due 2019 had been converted into common shares. We believe this conversion saves the Co. ~$6 million in annual interest costs, with its outstanding convertible debt dropping to ~$79 million.

We view the conversion of the debt to common shares as a positive for the Co. as net annual interest expenses are halved. However, the stock is down ~16% today on this conversion news, which we think is an overreaction. With SGYP shares down ~50% YTD, we believe the potential for the Co.’s lead product, plecanatide (for the treatment of chronic idiopathic constipation and constipation predominant IBS) is largely being ignored.

While we recognize that investors may be concerned with the need for the company to raise additional funds in 2016 to commercialize plecanatide in early 2017, we believe Synergy could be in a position to partner with a larger drug company. We believe the market opportunity in the GI segment is significant with Allergan/Ironwood’s Linzess now annualizing sales at ~$500 million, the analyst noted.

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

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