Synergy Pharmaceuticals (SGYP) Stock: Declines Present A Compelling Opportunity


Synergy Pharmaceuticals Inc (NASDAQ: SGYP) is having a bit of a rough time in the market as of late. In fact, the stock has been declining for several consecutive trading sessions, falling from $3.46 on October 6th to under $3 per share today. While the declines may be a bit scary to some investors, chances are that these declines could potentially represent a massively profitable opportunity. Before we get into the details, a big thank you goes out to our partners at Trade Ideas for being the first to alert us to the gains. At the moment (9:00), SGYP is trading at $2.80 per share after a loss of $0.02 per share (0.71%) thus far today.

SGYP Declines Are An Opportunity

As mentioned above, Synergy Pharmaceuticals has been having a rough time in the market as of late, and while some see this as a fear-triggering concept, the reality is that it’s likely an opportunity for strong long-run gains. One of the biggest lessons that came from Warren Buffett was to buy when fear is high. In this particular case, I’m not the only one that sees the opportunity; H.C. Wainwright sees this as a strong opportunity as well.

In fact, Ram Selvaraju, analyst at H.C. Wainwright, recently had plenty to offer with regard to the company. In his analysis, Selvaraju reiterated the Buy rating on SGYP stock as well as the price target of $8 per share. That price target suggests an upside of 173% from the most recent closing price.

A big part of the reiteration by Selvaraju was the result of findings from a new online questionnaire. The questions and answers highlighted the frustration of patients suffering from constipation-predominant irritable bowel syndrome and the perceptions of healthcare providers who treat these patients.  The questions and answers were presented at the World Congress of Gastroenterology Meeting in Orlando, FL. In a statement, Selvaraju had the following to offer with regard to SGYP:

We believe that these results emphasize the degree to which IBS-C is a highly impactful health issue among sufferers and could point to the potential importance of a drug like Synergy’s TrulanceTM in this condition. We remind investors that the approval decision date for the Trulance supplemental New Drug Application in treatment of IBS-C is January 24, 2018.”

Coming Catalyst

As Selvaraju pointed out, the approval decision for Trulance as a treatment for IBS-C could prove to be a massive catalyst, and chances are that the decision will indeed be an approval. After all, the company has already received approval for Trulance as a treatment for IBS-D. If this approval comes down the line, SGYP will have Trulance approved for both major forms of irritable bowel syndrome.

The Potential Is Massive

At the end of the day, the potential for SGYP to become a massively profitable investment is very high. After all, the company has already received approval for Trulance and will likely receive approval to market it as a treatment for yet another indication. This opens the door to a strong stream of revenue, but that may not be the only key here.

The reality is that the IBS market is a massive one, and one that many big players in the pharma industry are either already players in or want to be players in. With Trulance, SGYP has an incredibly valuable asset that may lead to takeover offers from other companies in the industry – especially if the company does receive FDA approval for the treatment for the IBS-C indication.

So, we’re in a position where one of two things is likely to happen. Either the company will receive approval and begin marketing Trulance for IBS-C, expanding revenues or, the approval could lead to takeover interest, ultimately leading to an acquisition or licensing deal that could propel the stock to the top.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on SGYP. In particular, we’re interested in following the news surrounding the potential approval of the Trulance sNDA and the implications that come along with the catalyst. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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