Synergy Pharmaceuticals Inc (NASDAQ: SGYP)
Synergy Pharmaceuticals is having a rough start to the trading session today. Unfortunately, the company announced an offering in pre-market hours that concerned investors, leading to sharp declines. However, I have to say, I’m not concerned. Below, we’ll talk about the offering, what we saw from the stock as a result, and what we’ll be watching for with regard to SGYP ahead.
SGYP Falls On Offering News
As is usually the case, our partners at Trade Ideas were the first to inform us of the declines on Synergy Pharmaceuticals. As soon as they did, the CNA Finance team started digging to see what was causing the movement. It didn’t take long to dig up the story. It seems as though the stock is falling as the result of an offering that was announced early this morning.
SGYP announced that it has entered into an agreement to sell $125 million in newly-issued shares. The company intends to use the net proceed from the offering to fund commercialization surrounding TRULACE(TM) (Plecanatide), the company’s newly approved treatment for gastrointestinal conditions. SGYP also said that it may use net proceeds from the offering to fund acquisitions of other companies, products, or technologies. However, no such acquisitions are currently in the works.
How The Stock Reacted To The News
As mentioned above, today isn’t proving to be the best of days for Synergy Pharmaceuticals. Unfortunately, the offering above is scaring off some investors and leading to big declines in the value of the stock in the pre-market. As a result, today isn’t looking so hot at the start. Currently (9:30), SGYP is trading at $6.25 per share after a loss of $0.82 per share (11.60%) thus far today.
Why I’m Not Concerned About The Declines
While no one likes to see declines in stocks, I have to say I’m not concerned when it comes to SGYP. The reality here is that the company recently announced the FDA approval of TRULACE. Not to mention, there’s another New Drug Application that we are waiting on. At the end of the day, I’m sure that no one expected Synergy Pharmaceuticals to go into the commercialization process with the small amount of money they had on hand. That would have been a failed attempt. The company needs money to properly market the treatment, and I’m all for them getting it! Sure, it may take a short while to recover, but in my opinion, the dip is well worth the coming gains.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on SGYP. In particular, we’re interested in learning about the commercialization plans and watching the process unfold. We’re also interested in the IBS-C indication for plecanatide, as yet another approval may be coming down the line some time soon. We’ll be watching the news closely and bringing it to you as it breaks!
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