Synergy Pharmaceuticals Inc (NASDAQ: SGYP) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced that it has entered into a licensing agreement surrounding its lead product, exciting investors and sending the stock on a run for the top. Today, we’ll talk about:
- The licensing agreement;
- what we’re seeing out of SGYP as a result; and
- what we’ll be watching for ahead.
SGYP Announces Licensing Agreement
As mentioned above, Synergy Pharmaceuticals is having an incredibly strong start to the trading session in the pre-market hours as news breaks surrounding a licensing agreement. In a press release issued early this morning, the company announced that it has entered into a licensing agreement with Luoxin Pharmaceuticals Group Co., Ltd., Shandong. Under the terms of the licensing agreement, Luoxin will receive exclusive rights to develop and commercialize TRULANCE® (plecanatide) for the treatment of adults with chronic idiopathic constipation (CIC) and irritable bowel syndrome with constipation (IBS-C) in mainland China, Hong Kong and Macau.
According to the terms of the agreement, SGYP will receive an upfront payment in the amount of $12 million in exchange for the rights mentioned above. Also, the company is eligible to receive payments of up to $56 million in the event of commercial and regulaotry milestones being met. Finally, the agreement outlines tiered royalties that will be received based on aggregate net sales. Finally, Luoxin will lead the development of the treatment in China and will be responsible for all activities and expenses associated with clinical development, regulatory approval and commercialization in China. In a statement, Troy Hamilton, CEO at SGYP, had the following to offer:
Luoxin is a leading pharmaceutical company in China with strong capabilities for successfully delivering TRULANCE to patients in its market… This partnership builds on the Canadian licensing deal we announced for TRULANCE earlier this year and demonstrates our team’s continued execution towards our key business priorities of optimizing the value of TRULANCE, ensuring a strong financial foundation, and continuing to explore all strategic business development opportunities. We look forward to supporting the Luoxin team in their efforts to bring TRULANCE to patients suffering from CIC and IBS-C in China.
The above statement was followed up by Baoqi Liu, Chairman of Luoxin Pharmaceuticals. Here’s what he had to offer:
We are pleased to partner with Synergy to bring this exciting new treatment option to benefit millions of patients suffering from these chronic gastrointestinal conditions in China… Over the years, Luoxin Pharmaceuticals has established a strong product line of proton pump inhibitors to treat gastrointestinal diseases, and we are conducting a Phase III clinical trial on LXI-15028 (CJ-12420), a p-CAB inhibitor licensed in from the Korean pharmaceutical company CJ Healthcare and recently approved by Korean health authorities, which will further enrich our product line in digestive system. We believe TRULANCE® will bring a great amount of value to our arsenal of solutions to fight these conditions. Luoxin Pharmaceuticals adheres to our corporate mission of ‘Delivering Health’, and we look forward to working with Synergy on our mutual goal of making TRULANCE available to as many patients and their health care providers as possible.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Synergy Pharmaceuticals, the news proved to be overwhelmingly positive. After all, this licensing agreement will lead to an immediate payment of $12 million and could become a solid stream of revenue in the future. So, it comes as no surprise to see that excited investors are pushing the stock on a run for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (7:21), HMNY is trading at $1.74 per share after a gain of $0.14 per share or 8.75% thus far today.
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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 story surrounding the push to bring Trulance to China as a result of this agreement. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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