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Volume has been steadily on the rise for shares of Synergy Pharmaceuticals (NASDAQ:SGYP), and as a result, the share price has been inching higher as well. SGYP closed on Monday having traded just about double the daily norm after a mid-day volume spike that led to a closing price a couple of percentage points higher than the open. The strong-volumed trend continued into Tuesday's trading, another day where SGYP shares registered a gain of a few percentage points.

Synergy shares reached highs earlier this year of over seven dollars, based mainly on the company's billion dollar potential, but also due to an approval delay experienced by Ironwood Pharmaceuticals (NASDAQ:IRWD)-- Synergy's chief competitor-- that provided Synergy a full quarter's worth of time to play 'catch up' in bringing its product to market.

Synergy is developing Plecanatide for the treatment of chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C), the same indications that Ironwood's Linaclotide is targeted to treat, but Plecanatide has demonstrated a superior side effect profile thus far in trials and is expected to quickly eat away at market share, if eventually approved by the U.S. FDA.

As recently highlighted, Plecanatide is positioned to take advantage of a highly lucrative and growing market and could also capitalize on the fact that chronic constipation is a hugely unmet medical need for children, given that there are few consistent treatments currently available on the market that have been approved for pediatric use. Speculation also has it that Synergy is a prime buyout or partnership candidate.

Given Plecanatide's potential on the market, it's possible -- if not probable -- that Synergy shares could quickly trend higher and approach the market cap of Ironwood, which today stands at well over a billion dollars. Considering the fact that Ironwood has already signed a partner, Forest Laboratories, Inc. (NYSE:FRX), with whom the company will have to share Linaclotide revenue, Synergy -- while still holding 100% of its product rights -- may be highly undervalued right now. This week's rising volume and price trend may be another indication that investors are taking notice.

There's cash in the bank now thanks to a stock offering earlier this year and a key catalyst pending with the expected late-2012 release of Plecanatide trial results. Shares have had a tough time straying too much higher than the $4.50 price since the offering, but it looks like a foundation is being built in that range -- and when these relatively lightly-traded biotech and small pharma stocks move, they can move fast. One to keep on the radar, especially with volume creeping in.

Disclosure: Long SGYP.