Synergy Pharmaceuticals Cleaning Up The Capital Structure For A Deal?

Synergy Pharmaceuticals (NASDAQ: SGYP) announced Friday that it plans to merge with Callisto Pharmaceuticals (NASDAQ: CLSP), which happens to be Synergy’s largest shareholder. SGYP is conducting a Phase II/III with its lead product candidate, Plecanatide, a treatment for chronic constipation and other gastrointestinal (GI) disorders. The GI treatment segment is gaining significant interest in the pharmaceutical industry, and the merger to clean up the company’s capital structure may be a sign that SGYP is readying for a deal, perhaps a large-cap pharmaceutical partnership or an eventual take-out. This news is an incremental positive for SGYP, and could cause the shares to trade up. Upon completion of the merger, which is expected in the fourth quarter, CLSP’s separate corporate existence will cease and SGYP will continue as the surviving corporation. Each share of Callisto common stock will be converted into the right to receive 0.17 of a share of Synergy common stock in a tax free exchange, and the 22,295,000 shares of SGYP owned by Callisto will be canceled. Callisto stockholders will own approximately 38.3% of the combined company, essentially the same as Callisto’s current ownership.


One of the Principals of PropThink, LLC runs an investor relations business of which SGYP is a Client.  SGYP pays a monthly cash retainer to the aforementioned investor relations firm.  PropThink’s editorial team was not aware of this at the time of publishing this article, however as soon as we found out about it we thought it best to notify our readers.  This does not in any way influence our position on SGYP or the above analysis.