Synergy Pharmaceuticals (SGYP) cleared out a major overhang on Wednesday Oct. 28 – evidenced by the stock’s 15% move higher in the session – with the announcement that the company would sell $175 million in Convertible Senior Notes. On Thursday, the company followed up with news that the $25 million over-allotment option had been exercised in full, bringing gross proceeds from the offering to $200 million (prior to expenses).
Synergy is in the midst of a large phase 3 program for plecanatide, the company’s drug candidate for the treatment of Chronic Constipation (CIC) and Irritable Bowel Syndrome with Constipation (IBS-C), and the $200 million deal should get the company through a potential FDA approval for plecanatide. A potential financing has acted as an overhang for SGYP for most of 2014, with the stock underperforming meaningfully as investors waited on the sidelines for the company to replenish the coffers. SGYP is up 25% this week.
The notes bear interest at 7.50% annually, with first payments due on May 1, 2015, and mature in November of 2019 unless purchased or converted prior. The notes are convertible at $3.11 per share.
Synergy will have results from a phase 2 study of SP-333, a 2nd-gen uroguanylin analog, in patients with opioid-induced constipation by the end of the year; plans to release top-line data from the the first phase 3 CIC trial in the second quarter of 2015; and top-line data from the second study in the third quarter of 2015.
The notes are convertible into 64.3 million shares of common stock, bringing SGYP’s fully diluted share count to 177 million including outstanding warrants and options.
One or more of PropThink’s contributors are long SGYP.
