Synergy Pharmaceuticals Inc (NASDAQ:SGYP)
Synergy Pharmaceuticals has become one of the most talked about stocks in the biotechnology sector, and for good reason. The company recently reported earnings, and they were not good to say the least! In fact, the company lost double what analysts were expecting to see. Nonetheless, there has been plenty of positive news surrounding the stock that, for the most part, has outweighed the negative. In fact, I believe that the positive news will ultimately lead to long run gains on the stock. Today, we'll talk about why I see gains in the future for SGYP.
A Major Factor Is Plecanatide
Plecanatide plays a massive role in my bullish opinion with regard to SGYP. The company has been working on the treatment for quite some time, and it is incredibly promising. In fact, recently, Synergy Pharmaceuticals submitted a New Drug Application with the FDA surrounding the treatment. The application was for the indication of Chronic Idiopathic Constipation, also known as CIC.
After watching the trials surrounding the treatment for quite some time now, it has become clear that Plecanatide is a treatment that will make meaningful changes for those suffering with CIC. Because it is like nothing else on the market today, I'm expecting for it to fly through the FDA approval process; which will come to an end in January as the FDA makes its decision.
However, this isn't likely to be the first New Drug Application with the Food and Drug Administration for Plecanatide. In fact, the company is already working on another indication for the treatment. Some time ago, SGYP announced that it was investigating Plecanatide as a treatment for irritable bowel syndrome with constipation, also known as IBS-C. Currently, Synergy Pharmaceuticals in in the midst of two Phase 3 trials looking at this particular indications, and previous phases have led to overwhelmingly positive results. All in all, with Plecanatide, it seems like SGYP has found a flagship product that just keeps on giving!
Possibility Of An Acquisition
While some investors are focused on Plecanatide as a future cash cow for Synergy Pharmaceuticals, others are focusing on the concept of an acquisition, and it makes sense. You see, SGYP announced a while ago that it was looking into strategic options with regard to growth in the company, and selling itself was a real possibility at the time. The reality is that this possibility remains. At the moment, SGYP has a carrot when it comes to negotiations because it currently has an NDA in with the FDA. With overwhelmingly positive clinical trial results to show, the company could demand quite a premium if it does decide to move forward with being acquired. Not to mention, there are several great companies that would benefit greatly from buying Synergy. Allergan (NYSE:AGN_pa) is one of the bigger options that would benefit greatly!
The Bottom Line
While SGYP has been gaining over the past week, I believe that we have just seen the beginning. In the short term, we are likely to see more volatility as investors continue to await positive news. However, if an acquisition is announced, which really could happen at any time, this stock is going to skyrocket. If no acquisition is announced from now to January, I'm expecting for positive news from the United States Food and Drug Administration to send the value of SGYP soaring! All in all, things are looking great for Synergy Pharmaceuticals.
What Do You Think?
Where do you think SGYP is headed moving forward?