Synergy Pharmaceuticals Inc (NASDAQ: SGYP)
Synergy Pharmaceuticals is having a rough time in the market as of late. In fact, the stock’s price has been falling on a nearly daily basis. However, one of Warren Buffet’s biggest lessons is to buy when fear is high, and there’s a strong argument at the moment that while SGYP is weak, it represents some serious horsepower in terms of opportunity.
The SGYP Opportunity Lies In Trulance
When Synergy Pharmaceuticals received FDA approval for Trulance, the stock went wild. However, since then, excitement has died down a bit, and so too has the stock price. This is normal when it comes to first time FDA approvals in these small biotech companies, and historically, it actually represents a strong opportunity.
You see, at the moment, investors are in the wait-and-see mode that they were in shortly after Gilead Sciences got their first FDA approval. Of course, we all know where the company is today! The truth is that if SGYP does what it needs to do with Trulance, it will put itself on a beeline toward major success, and that will send the price skyrocketing.
Analysts Are Betting On Opportunity
Just yesterday, an analyst weighed in on SGYP, betting that the current weakness represents a strong opportunity. That analyst was Timothy Chiang of BTIG. In his note, he reiterated a Buy rating with an $11 price target, pointing to Trulance as the primary reason for his bullish opinion. Here’s what he had to say:
“With the US launch of Trulance (3mg plecanatide, for the treatment of chronic constipation) now officially underway, investor focus now turns to the ramp for trulance in the US market. We continue to believe management is up to the task of successfully launching Trulance via its hybrid sales model (utilizing an experienced contract sales force of ~150 – 200 reps), which is expected to target ~27,000 high-prescribing physicians. While we believe formulary access for Trulance could take up to 6 months, we think most insurance plans will put Trulance on a Tier 3 co-pay, with the Co. offering its “savings to go” program as an offset. Our channel checks with several local pharmacies in NYC this morning suggest that this program will enable patients to get access to Trulance at a much lower cost (no more than $25 per Rx). Management also recently highlighted at an investor conference earlier today that a nationwide sampling program is underway. In sum, we expect the launch of Trulance to lead to more patients switching from OTC laxatives to Rx treatments, with Trulance leading to an expansion of the overall Rx market.”
The Bottom Line
The bottom line here is that chances are that SGYP has something big with Trulance. Considering their planned marketing of the treatment, chances are that it will quickly fly off of the shelves. With the stock currently trading far lower than it should (in my opinion), now may be the perfect time to consider adding the stock to your portfolio.
What Do You Think?
Where do you think SGYP is headed moving forward? Join the discussion in the comments below!
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