Synergy Pharmaceuticals has been having a tough time in the market recently; and their struggles grew even harder to get through Monday as the company reported earnings. Unfortunately earnings were a miss. Nonetheless, I’m not at all concerned about earnings; and there’s a good reason. Today, we’ll take a look at what SGYP reported, how the market reacted, and I’ll let you know why none of this is concerning for me or other long term bulls.
Synergy Pharmaceuticals Misses Earnings Expectations
As mentioned above, Synergy Pharmaceuticals released its quarterly earnings report on Monday. Unfortunately, the company missed earnings expectations by a wide margin. Analysts expected the company to report a loss of $0.26. However, in the quarter, the company actually reported a loss of $0.34; missing expectations by $0.06 and causing a continuation of the downtrends we’ve seen recently.
How The Market Reacted To The SGYP Report
Any time earnings are a miss, we can expect to see declines; and that’s exactly what we saw. Since the release of the earnings report, SGYP has fallen from Monday’s high of $8.10 per share to it’s current (12:57) level of $7.66. However, like most long term bulls, I’m really not concerned.
Why Bulls Aren’t Concerned
At this stage of development, as with many bulls, I don’t think that investors should be focused on earnings. Instead, we should be paying attention to developments revolving around plecanatide; the company’s experimental drug designed to assist with gastrointestinal conditions. Throughout the last few months, we’ve received data from two Phase 3 studies; both of which proving that plecanatide is not only tolerated well by patients, but effective. As a matter of fact, it has proven to be a stronger option than the current market leader.
As a result of the strong results from both Phase 3 studies. Synergy Pharmaceuticals has announced that the next big move will be working with the FDA to submit a new drug application. When this application is submitted, we can expect it to act as a positive catalyst; sending the value of SGYP up.
Also, considering the strong results of the studies conducted around plecanatide, it’s hard to imagine that it will not receive FDA approval. So, approval is all-but-guaranteed. When Synergy Pharmaceuticals receives approval for plecanatide, we can expect to see even more gains, but that’s not the end of it.
Once the drug is approved, I’m expecting to see it take off in the market. The reality is that all studies have shown that Plecanatide is a better option than the current market leader. Of course we are going to have to see insurers get involved and solid marketing; however, I don’t think that the company is going to have any problems in those areas either.
So, while earnings were indeed a miss, I’m not sure that earnings should be the main focus. The reality is that Plecanatide is likely to send this stock soaring in the long run!
What Do You Think?
Where do you think SGYP is headed and why? Let us know in the comments below!