Synergy Has a Plan for its Plecanatide Phase III Program

Synergy Pharmaceuticals (SGYP) announced – with little detail – a positive outcome from an end-of-Phase-II meeting with the FDA regarding plecanatide, Synergy’s Guanylate Cyclase-C agonist being developed as a treatment for Chronic Idiopathic Constipation (CIC) and Irritable Bowel Syndrome with Constipation (IBS-C).

Synergy’s press release (see it here) is relatively vague. Reading between the lines, it looks like the FDA wants to see two Phase III trials in CIC, which the company will initiate in the fourth quarter of this year, although trial protocol was not discussed in the press release:

At that meeting, agreement was reached on the clinical development plan. A pivotal phase 3 program evaluating the safety and efficacy of plecanatide in CIC patients will be initiated in the fourth quarter of 2013.

Agreement was reached with the FDA on design, duration, size and primary and secondary efficacy endpoints for the pivotal phase 3 studies.

“We are very pleased with the outcome of our end-of-phase 2 meeting with the FDA where clear guidance was provided on clinical safety and efficacy requirements for completion of a registration program for plecanatide in CIC,” said Dr. Gary S. Jacob, President and CEO of Synergy. “A great deal of effort and planning have gone into preparations for our phase 3 development program, and we are now focused on the initiation of pivotal studies in the fourth quarter of this year.

Synergy has not traditionally run conference calls in tandem with quarterly financial updates, therefore it might be awhile before investors have clarification on the Phase III protocol.

While some are speculating that the FDA wants one short-term efficacy study and one long-term safety study, we suspect that the Phase III program will consist of two ~12-week studies testing two doses of plecanatide: a 3 mg dose and a 6 or 9mg dose. Synergy’s recently completed Phase IIb CIC study tested plecanatide at 0.3 mg, 1 mg, and 3 mg. However, a previous 14-day Phase IIa study tested a 9 mg dose in addition to the above, and the currently ongoing Phase IIb study in IBS-C patients also evaluates a 9 mg dose. We expect a population of no more than 1500 between the two trials, more likely around 1200. Ironwood Pharmaceuticals’ (IRWD) tested its recently approved CIC and IBS-C treatment Linzess (linaclotide, another GC-C agonist) in two double-blind, randomized, controlled studies with a combined population of 1270. Both were 12-week studies, and one included an additional 4-week randomized withdrawal period. Remember, plecanatide at 48.6mg still proved safe in an early trial. Testing a higher dose would give the company more ammunition in partnership and acquisition discussions, and with the FDA’s blessing on the Phase III trial protocol, it’s going to be that much easier for SGYP to begin shopping plecanatide around. Of course, this is speculation.

While the announcement on Monday is putting some interest in the name, SGYP still trades well under the $5.50 offering price at which the company sold stock in April. We continue to see this weakness as a buying opportunity for the long-term investor, as plecanatide should present a strong competitor to Ironwood – a $1.4B company. Here’s our full thesis on Synergy. In addition, Ironwood Pharmacueticals (IRWD) is an attractive holding as the company ramps its direct-to-consumer advertising campaign for Linzess; we expect the advertising to show in scripts and sales over the next six months.

In connection with SGYP and IRWD, PropThink has taken a long position.