When an investor looks for a catalyst in the pharma industry to increase the value of a company's stock, it is usually a new drug. Synergy Pharmaceuticals (SGYP) may be one of these companies with its drug-- Placanatide. Considering the drug's lack of side effects and 100% ownership by the company, it could become a great money maker for the company as it enters Phase IIb/III of research.
If I may paint a picture for those of you who may not be familiar with this drug and its potential-
In simple terms, the drug, Plecanatide, activates what is called the GC-C receptors within the lining of the intestinal tract. These result in increased chloride and water in the intestinal tract and both contribute to an increase in bowel movement. Since the drug works strictly within the intestines, the likelihood of unwanted side effects is limited.
It is currently undergoing Phase IIb/III testing for patients with chronic constipation. This will help add to the knowledge base of the drug regarding how safe and affective it is. Not long ago, Ironwood (IRWD) received approval for a similar drug - Linzess. It is also a GC-C agonist like SGYP's Plecanatide. Since the drugs share similarities, this is another step in the right direction for the possibility of SGYP's drug approval.
So now may be a very good time to consider investing in the stock for possible growth. Cantor Fitzgerald, an analyst, recently picked up SGYP as a buy with a price target of $7 and this is the explanation it gave:
We think that the Plecanatide market opportunity, while attractive, should initially be meaningfully smaller than Linzess's, given competitive dynamics and entrenched position of first-mover Linzess, though economics to Synergy are much more attractive since the company owns 100% of Plecanatide rights. If Synergy is acquired by a larger company, we believe that the drug's competitive position could be improved via aggressive direct-to-consumer (DTC) promotion and more attractive pricing than Linzess.
With a gastrointestinal disorder treatment market of $22 billion, prescription sales is the largest part of its market with sales about 85% of the total and growing at a 7% clip yearly. Over the counter drugs make up the remainder of the market so one can see the potential for a drug of Plecanatide's caliber. Ironwood stated that there are over 40 million patients suffering from IBS and CIC, with 10 million currently seeing a doctor for treatment.
Since Synergy is focused primarily on the development of drugs to treat gastrointestinal (GI) disorders and diseases and Plecanatide is the company's most developed candidate, the company has great growth potential. This is especially true for two simple facts that SGYP owns 100% of the drug and the possibility of less side effects (if it continues to hold up in studies) could make it an eventual leader in the market.