This Tuesday, Synergy Pharmaceuticals (SGYP) will release the full data set from its recently completed trial for lead candidate plecanatide at the annual Digestive Disease Week (DDW) medical conference in Orlando, Florida. The study evaluated the compound in patients with Chronic Idiopathic Constipation (CIC), and after initial top-line results were reported and the company strengthened its balance sheet with a $85M (net) capital raise, SGYP became a focus for PropThink. Considering plecanatide’s sizeable commercial opportunity in both CIC and irritable bowel syndrome with constipation (IBS-C), and that the compound is the only drug in its class still available to pharmaceutical companies for partnering — or purchase — we believe that SGYP has significant room to run. Analysts agree, with 12-month price targets for the stock averaging $15.75. Following the announcement and pricing of the capital raise that sent SGYP down sharply in mid-April, PropThink called the stock’s weakness an opportunity to own this this drug developer given its discounted price, strong mid-stage clinical data, and high likelihood for plecanatide’s regulatory approval. Synergy released top-line data from the Phase IIb/III study in January and recently revealed the abstract for next week’s late-breaking oral presentation, titled “Plecanatide, a Novel Guanylate-Cyclase C (GCC) Receptor Agonist, is Efficacious and Safe in Patients with Chronic Idiopathic Constipation (CIC): Results from a 951 Patient, 12 Week, Multi-Center Trial”.
Although no one is expecting major surprises, the DDW presentation is important for the company not only because the full efficacy, safety, tolerability benefits, and dose response data for the drug will be presented, but also because industry participants such as physicians and pharma business development executives will be presented with the drug’s high-value proposition. Synergy will present the data on Tuesday May 21 at 10:00 AM ET, and PropThink will be covering the event and gauging industry enthusiasm on the drug candidate, particularly as it compares to head-to-head competitor Linzess (linaclotide), which is sold by Forest Labs (FRX) and Ironwood Pharmaceuticals (IRWD). Thus far, the data for plecanatide have been quite favorable next to Linzess, with significantly less diarrhea-related side effects.
Read PropThink’s April article for more details, but we believe that not only will this event put more eyes on SGYP as the medical and investment communities digest the products’ potential in a large venue, but also analyst coverage from the two major investment banks that raised capital for the company should surface soon after the full data set has been presented. These initiations could be catalyzing events for the stock.
Following PropThink’s article in April, SGYP rallied 22% and has since begun setting up a symmetrical triangle formation. The events this week may cause an early breakout of this continuation pattern, and note that a break above the $5.50 level (previous resistance and SGYP’s 50 day moving average) could cause the stock to fill a previous gap all the way to $6.00.
In addition, PropThink plans to drop in on presentations from Ironwood Pharmaceuticals (IRWD) and Nektar Therapeutics (NKTR). Ironwood is presenting two oral sessions and a number of posters on Linzess at DDW, all of which have read-through for plecanatide given that the two products have the same mechanism of action. Perhaps most interesting will be Ironwood’s research on the health and economic outcomes associated with CIC and IBS-C, Synergy’s two targeted indications. Presumably, this presentation will demonstrate the large market potential for CIC and IBS-C therapies, and that the two GCC agonists address costly medical conditions.
Nektar Therapeutics (NKTR) has also piqued our interest, and full results from the company’s two efficacy studies for Naxolegol, Nektar’s drug candidate for Opioid-Induced Constipation, will be presented at DDW(KODIAC-04 and -05 studies). The KODIAC trials generated a stir in the biotech community when released in November of 2012 after Nektar unlocked and relocked the trial database for reasons yet unclear. More details will be telling of the drug’s clinical promise. With numerous products in its drug pipeline, NKTR is also on our radar screen.
In connection with SGYP, PropThink has taken a long position.
