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I think TEUM was halted. Have not seen any trades in over an hour and there is no bid or ask. What's up?
Lake Street Capital Initiates Pareteum, Turnaround Positive
[Benzinga]
Hannah Genig
BenzingaSeptember 24, 2018
Communications provider Pareteum Corp. (NYSE: TEUM) exhibits well-executed turnaround, underappreciated growth and tremendous share upside.
The Analyst
Lake Street Capital Markets analyst Eric Martinuzzi initiated coverage on Pareteum with a Buy rating and a $5 price target.
The Thesis
In Monday’s note, Martinuzzi outlined the company’s evolution over the past three years, including some highlights such as:
The addition of new Executive Chairman, Hal Turner and the multi-phased turnaround effort in 2015.
In 2016, the company sold ValidSoft, changed names from Elephant Talk to Pareteum, and revolutionized the business structure and focus to a new communications platform as a service. Later that year, the company returned to profitability and hired CEO Vic Bozzo.
2017 featured a new customer base with 26 contracts covering 45 countries, as well as a strengthened management team and 5 percent growth.
In 2018, revenue grew over 60 percent as the company expects to close on the acquisition of Artilium, which will bolster the company’s competitive profile, Martinuzzi said. According to the note, this model assumes the deal closes on Sept. 30.
According to Martinuzzi, one of the potential investment risks surrounding Pareteum stock involves revenue concentration.
“As of Q2’18 two customers (Vodafone and Zain) made up 75% of total revenue. This is down from 97% in Q2’17. While this is a significant exposure, we do not believe either relationship is at risk. We expect the implementation of new accounts in backlog to reduce the risk over time.”
Price Action
Pareteum shares closed up 4.9 percent at $2.97 Monday.
Synergy Pharmaceuticals Strengthens Coverage for TRULANCE® (plecanatide) with Key New Market Access Wins
[Business Wire]
Business WireSeptember 24, 2018
NEW YORK--(BUSINESS WIRE)--
Synergy Pharmaceuticals Inc. (SGYP), a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies, today announced several new formulary wins improving TRULANCE 2018 and 2019 coverage status across major U.S. Commercial, Medicare Part D and Managed Medicaid plans.
“We are excited to announce several new formulary wins for TRULANCE, which we believe demonstrate our ongoing efforts to improve patient access and support future sales growth,” said Troy Hamilton, Chief Executive Officer of Synergy Pharmaceuticals Inc. “We believe the progress we’ve made towards strengthening market access is a result of our continued focus and commitment to optimizing the value of TRULANCE. As it relates to our ongoing strategic review, we continue to work with our outside advisors to identify and pursue opportunities that we believe will maximize the long-term value of Synergy. We will provide additional information on this process as we move forward.”
New 2018 & 2019 TRULANCE Formulary Wins
2018 Express Scripts Medicare Part D Formulary
Express Scripts is now offering all lives covered under its largest Medicare Part D Formulary, Value Formulary, unrestricted access to TRULANCE, effective September 15, 2018.
2018 OptumRx Formularies
OptumRx will soon be offering TRULANCE as an unrestricted preferred agent for their Commercial, Managed Medicaid and Medicare Part D clients, effective October 1, 2018.
Synergy is continuing to work with OptumRx and their largest client, UnitedHealthcare, to improve TRULANCE coverage for both Commercial and Medicare Part D members.
2018 and 2019 UnitedHealthcare Community Plan
Starting October 1, 2018, TRULANCE coverage status will improve from not covered to an unrestricted, preferred agent on the UnitedHealthcare Managed Medicaid formulary.
Effective January 1, 2019, TRULANCE will be one of two unrestricted, preferred agents on the UnitedHealthcare Managed Medicaid formulary.
2019 Express Scripts Commercial Formularies
Express Scripts will add TRULANCE as an unrestricted preferred agent on its 2019 High Performance Formulary, effective January 1, 2019. This coverage win builds on the announcement last month that Express Scripts will add TRULANCE to its 2019 National Preferred Formulary, effective January 1, 2019.
Synergy is continuing to work with Express Scripts and their regional health plan clients to further expand coverage for TRULANCE starting in 2019.
About Synergy Pharmaceuticals
Synergy is a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies. The company has pioneered discovery, research and development efforts around analogs of uroguanylin, a naturally occurring human GI peptide, for the treatment of GI diseases and disorders. Synergy’s proprietary GI platform includes one commercial product TRULANCE® (plecanatide) and a second product candidate - dolcanatide. For more information, please visit www.synergypharma.com.
About Irritable Bowel Syndrome with Constipation (IBS-C)
Irritable bowel syndrome (IBS) is a chronic gastrointestinal disorder characterized by recurrent abdominal pain and associated with two or more of the following: related to defecation, associated with a change in the frequency of stool, or associated with a change in the form (appearance) of the stool. IBS can be subtyped by the predominant stool form: constipation (IBS-C), diarrhea (IBS-D) or mixed (IBS-M). Those within the IBS-C subtype experience hard or lumpy stools more than 25 percent of the time they defecate, and loose or watery stools less than 25 percent of the time. It is estimated that the prevalence of IBS-C in the U.S. adult population is approximately 4 to 5 percent.
About Chronic Idiopathic Constipation (CIC)
CIC affects approximately 14 percent of the global population, disproportionately affecting women and older adults. People with CIC have persistent symptoms of difficult-to-pass and infrequent bowel movements. In addition to physical symptoms including abdominal bloating and discomfort, CIC can adversely affect an individual’s quality of life, including increasing stress levels and anxiety.
About TRULANCE®
TRULANCE® (plecanatide) is a once-daily tablet approved for adults with CIC or IBS-C. With the exception of a single amino acid substitution for greater binding affinity, TRULANCE is structurally identical to uroguanylin, a naturally occurring and endogenous human GI peptide. Uroguanylin activates GC-C receptors in a pH-sensitive manner primarily in the small intestine, stimulating fluid secretion and maintaining stool consistency necessary for regular bowel function.
Indications and Usage
TRULANCE (plecanatide) 3 mg tablets is indicated in adults for the treatment of Chronic Idiopathic Constipation (CIC) and Irritable Bowel Syndrome with Constipation (IBS-C).
IMPORTANT SAFETY INFORMATION
WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC PATIENTS
TRULANCE® is contraindicated in patients less than 6 years of age; in nonclinical studies in young juvenile mice administration of a single oral dose of plecanatide caused deaths due to dehydration. Use of TRULANCE should be avoided in patients 6 years to less than 18 years of age. The safety and efficacy of TRULANCE have not been established in pediatric patients less than 18 years of age.
Contraindications
TRULANCE is contraindicated in patients less than 6 years of age due to the risk of serious dehydration.
TRULANCE is contraindicated in patients with known or suspected mechanical gastrointestinal obstruction.
Warnings and Precautions
Risk of Serious Dehydration in Pediatric Patients
TRULANCE is contraindicated in patients less than 6 years of age. The safety and effectiveness of TRULANCE in patients less than 18 years of age have not been established. In young juvenile mice (human age equivalent of approximately 1 month to less than 2 years), plecanatide increased fluid secretion as a consequence of stimulation of guanylate cyclase-C (GC-C), resulting in mortality in some mice within the first 24 hours, apparently due to dehydration. Due to increased intestinal expression of GC-C, patients less than 6 years of age may be more likely than older patients to develop severe diarrhea and its potentially serious consequences.
Use of TRULANCE should be avoided in patients 6 years to less than 18 years of age. Although there were no deaths in older juvenile mice, given the deaths in young mice and the lack of clinical safety and efficacy data in pediatric patients, use of TRULANCE should be avoided in patients 6 years to less than 18 years of age.
Diarrhea
Diarrhea was the most common adverse reaction in the four placebo-controlled clinical trials for CIC and IBS-C. Severe diarrhea was reported in 0.6% of TRULANCE-treated CIC patients, and in 1% of TRULANCE-treated IBS-C patients.
If severe diarrhea occurs, the health care provider should suspend dosing and rehydrate the patient.
Adverse Reactions
In the two combined CIC clinical trials, the most common adverse reaction in TRULANCE-treated patients (incidence ≥2% and greater than in the placebo group) was diarrhea (5% vs 1% placebo).
In the two combined IBS-C clinical trials, the most common adverse reaction in TRULANCE-treated patients (incidence ≥2% and greater than in the placebo group) was diarrhea (4.3% vs 1% placebo).
Please also see the full Prescribing Information, including Box Warning, for additional risk information.
Forward-Looking Statements
Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward- looking words such as "anticipate," "planned," "believe," "forecast," "estimated," "expected," and "intend," among others. These forward-looking statements are based on Synergy's current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, substantial competition; our ability to continue as a going concern; our need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payer reimbursement; limited sales and marketing efforts and dependence upon third parties; and risks related to failure to obtain FDA clearances or approvals and noncompliance with FDA regulations. As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. There are no guarantees that any product discussed in this press release will prove to be commercially successful. Investors should read the risk factors set forth in Synergy's Annual Report on Form 10-K for the year ended December 31, 2017 and other periodic reports filed with the Securities and Exchange Commission. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Forward-looking statements included herein are made as of the date hereof, and Synergy does not undertake any obligation to update publicly such statements to reflect subsequent events or circumstances.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180924005305/en/
Pareteum Awarded $38 Million Contract in Asia
[PR Newswire]
PR NewswireSeptember 24, 2018
Five-year enterprise contract is company's largest single, signed agreement to date
NEW YORK, Sept. 24, 2018 /PRNewswire/ -- Pareteum Corporation (NYSE American: TEUM), ("Pareteum" or the "Company"), the rapidly growing Global Software Defined Cloud company, delivering award winning mobile enablement solutions, today announced that its Managed Service Platform (MSP) has been chosen in a five-year, $38 Million contract with an IoT and MVNO provider in Asia.
Pareteum Corporation Logo.
Pareteum Corporation Logo.
This new enterprise customer will use IoT services powered by the Pareteum MSP, and thereby be able to offer a fully-integrated software solution that delivers flexibility through multi-country branded services, digital applications, data services, and traditional mobile services to its subscribers. Under the terms of the contract, Pareteum will support this new customer's efforts to expand its business throughout southern Asia, including its plans to add WiFi, Blockchain, M2M, and Smart City solutions.
Vic Bozzo, CEO of Pareteum, stated, "This global enterprise client aims to use Pareteum's MSP to take the market by storm. Our goal is to provide the tools and technology to make that happen. The disruption of industry standards is alive, and it is here and now."
"Pareteum embraces this opportunity to serve our newest enterprise customer as they expand in Asia," comments Pareteum Executive Chairman and Principal Executive Officer Hal Turner. "Enabling global software applications, using our SuperAPI with global connectivity and communications access for customers on our software-based cloud enablement platform, translates into the opportunity for limitless growth potential. This is a clear case of both software and mobility driving our vision: global open mobility and open software applications."
About Pareteum Corporation:
Pareteum Corporation (NYSE American: TEUM) is a rapidly growing Global Software Defined Cloud company with a mission to connect "every person and everything." Organizations use Pareteum to energize their growth and profitability through our Global Software Defined Cloud and complete turnkey solutions featuring relevant content, applications, and connectivity worldwide. Our Cloud platform services partners (technologies integrated into our cloud) include: HPE, IBM, Ribbon Communications (Sonus+GenBand), NetNumber, Oracle, Microsoft, and other world class technology providers. All of the relevant customer acquired value is derived from Pareteum's leading Global Software Defined Cloud, delivering award-winning mobile enablement, regardless of the user's location or network. By harnessing the value of communications, Pareteum serves retail, enterprise and IoT customers. Pareteum currently has offices in New York, Sao Paulo, Madrid, Barcelona, Bahrain, Singapore, and the Netherlands. For more information please visit: www.pareteum.com.
Forward Looking Statements:
Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to Pareteum's plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about Pareteum's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of Pareteum may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, Pareteum also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those projected or suggested in Pareteum's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Pareteum Corporation.
Pareteum Investor Relations Contacts:
Ted O'Donnell
Chief Financial Officer
(212) 984-1096
InvestorRelations@pareteum.com
Stephen Hart
Hayden IR
(917) 658-7878
Carrie Howes
Rayleigh Capital
Dubai- London
T UAE: +971 (0) 55 997 0427 | T UK: +44 (0) 870 490 5443 | T CAN: +1 416 900 3634
Pareteum Secures $50 Million in New Contracts During August
Date : 09/17/2018 @ 8:30AM
Source : PR Newswire (US)
Stock : Pareteum Corp. (TEUM)
Quote : 2.9394 0.1294 (4.60%) @ 9:44AM
Pareteum Secures $50 Million in New Contracts During August
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NEW YORK, Sept. 17, 2018 /PRNewswire/ -- Pareteum Corporation (NYSE American: TEUM), ("Pareteum" or the "Company"), the rapidly growing Global Software Defined Cloud company, delivering award winning mobile enablement solutions, announced the signing of contracts totaling an additional $50 Million during the last two weeks of August 2018. These new contracts do not include any previously announced awarded contracts. The 36-Month Contractual Revenue Backlog (36MCRB) totaled $375 million at August 31, 2018.
Pareteum Corporation Logo.
Pareteum's new customer agreements include the following applications:
IoT Security providing home monitoring systems
Wireless Mobile Phone Service provider throughout the US
Mobile Application Developer integrating Mobile services with flexible data packages
Mobile provider for Consumer Mobile Brands
Distributor of mobile brands throughout the UK
UK Based Full service mobile provider to Consumer, Enterprise and Banking customers
The following customers are among those recently newly contracted:
ACN Europe
Wing Tel Communications
Secure Watch
Eyethu Mobile Network
Hal Turner, Pareteum's Principal Executive Officer commented, "Customers are accelerating new revenues and substantial savings in ever increasing numbers. It is Pareteum's Global Software Defined Cloud, with its SuperAPI that makes this possible, affordably for our customers. We have assembled a first class sales executive organization, led by Rob Mumby and Vic Bozzo, who with their colleagues are empowering Pareteum customers with disruptive and innovative solutions, every day. This is how we deliver new services creation, enabling new revenues, and operational efficiencies. Our customers' inevitable business growth and competitiveness is why they keep signing new agreements."
About Pareteum:
Pareteum Corporation (NYSE American: TEUM) is a rapidly growing Global Software Defined Cloud company with a mission to connect "every person and everything." Organizations use Pareteum to energize their growth and profitability through our Global Software Defined Cloud and complete turnkey solutions featuring relevant content, applications, and connectivity worldwide. Our Cloud platform services partners (technologies integrated into our cloud) include: HPE, IBM, Ribbon Communications (Sonus+GenBand), NetNumber, Oracle, Microsoft, and other world class technology providers. All of the relevant customer acquired value is derived from Pareteum's leading Global Software Defined Cloud, delivering award-winning mobile enablement, regardless of the user's location or network. By harnessing the value of communications, Pareteum serves retail, enterprise and IoT customers. Pareteum currently has offices in New York, Sao Paulo, Madrid, Barcelona, Bahrain, Singapore and the Netherlands. For more information please visit: www.pareteum.com.
Forward Looking Statements:
Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to Pareteum's plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about Pareteum's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of Pareteum may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, Pareteum also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those projected or suggested in Pareteum's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Pareteum Corporation.
Pareteum Investor Relations Contacts:
Ted O'Donnell
Chief Financial Officer
(212) 984-1096
InvestorRelations@pareteum.com
Stephen Hart
Hayden IR
(917) 658-7878
Carrie Howes
Rayleigh Capital
Dubai- London
T UAE: +971 (0) 55 997 0427 | T UK: +44 (0) 870 490 5443 | T CAN: +1 416 900 3634
Pareteum: Record Backlog And Increased Revenue Guidance
Aug. 28, 2018 11:59 AM ET|
|
About: Pareteum Corporation (TEUM)
JD Henning
Value, momentum, portfolio strategy, investment advisor
Marketplace
Value & Momentum Breakouts
(5,302 followers)
Summary
Company boasts a 393% increase in contractual revenue backlog.
Strategic partnerships with iPass and takeover of Artilium.
Revenue outlook increased to higher than 80% year over year in the latest Q2 guidance.
Q2 delivers first positive quarterly EPS since at least Q2 2016.
Members of our private investing community, Value & Momentum Breakouts, get our best ideas and insights. Get started today >>
Introduction
Every stock has a story. Pareteum (TEUM) is no different. I have decided to write this brief financial synopsis in a different format than I typically do as a certified fraud examiner, anti-money laundering specialist, and PhD/MBA in finance. Instead, I will use various random concerns quoted from public message boards on financial websites and provide a brief narrative with the company financial statements, news releases, and corporate presentations. In full disclosure, I don't currently own the stock, but it has turned up previously in my Weekly Breakout Portfolio selections and members of my service are still very interested in this company.
In the world of messaging, hype abounds. The analysis I offer here just takes my general approach to financial investments that, "nothing is quite as good as it seems, or as bad as it first appears."
Corporate Summary
Pareteum describes the company this way from the material on their website: Pareteum is expressly focused on global connectivity with any device, any network, and anywhere. Clearly, an enormous undertaking for any company. They offer eight mission statements as their defining objectives and post them prominently on their website:
Fundamentally, the company is described by financial websites as:
Pareteum Corporation, formerly Elephant Talk Communications Corporation, develops Communications Cloud Services Platform. The Company provides mobility, messaging and security services and applications, with a single-sign-on, application program interface (API) and software development suite. Its platform hosts integrated information technology (IT)/Back Office and Core Network functionality for mobile network operators, and for enterprises to implement and leverage mobile communications solutions on a outsourced Software as a Service, Platform as a Service and/or Infrastructure as a Service basis: Made available either as an on-premise solution or as a hosted service in the Cloud depending on the needs of its customers. It also delivers an Operational Support System (OSS) for channel partners, with APIs for integration with third-party systems, workflows for complex application orchestration, customer support with branded portals and plug-ins for a multitude of other applications.
A recent technical chart of the stock price looks like this:
The stock price has tested the 3.25/share resistance (pink) line several times over the past year and is currently building a base along the positive trending support (blue) line for about the fifth time this year. The trend for the stock remains positive, and from a technical viewpoint another retest of the price resistance line at 3.25/share seems highly likely.
Pareteum The Narrative
So now the interesting part. Where should this firm be valued and what messages should we believe about Parateum? One of the first messages we see prominently posted among many company PR updates is this catchy news bullet that certainly caught my attention:
393% Increase In Contractual Revenue Backlog
Pareteum has added $46 million to its 36MCRB with ten (10) new customer agreements the last 36 days. Achieving this tremendous milestone represents a 393% increase from a year earlier, when in July 2017, our 36MCRB was $61 million. - Source
Their recent corporate presentation highlights similar backlog information this way:
By my count there is an unusually high 31 PR announcements, media articles, and updates just since June 1, 2018. Most companies I review have fewer than 10 news updates in the same period. The overwhelming number of news updates relates in some form to Pareteum obtaining a new multimillion-dollar agreement with a new provider in a distant location looking for "mobile enablement solutions."
Equally noticeable is that popular message boards are replete with counter-messaging casting doubt on so much PR messaging:
So let's take a closer look behind the messaging and see what might be going on here.
A sample of the rapidly growing backlog announcements shown below from the past six months gives you some perspective. Are these just loose agreements or real contracts? Is this guaranteed revenue or just PR announcements? Ultimately, these questions boil down to what William F wondered on the message board: "How come all the press releases do nothing for the share price?"
Aug-21-18 Pareteum Wins TMC 2018 Communications Solutions Product of the Year Award PR Newswire
Aug-16-18 Pareteum Awarded $4 Million Agreement for Southeast Asia National Mobile Operator PR Newswire
Aug-14-18 Pareteum Awarded $3.5 Million Agreement by British Multinational Conglomerate PR Newswire
Aug-09-18 Pareteum Secures $4 Million Contract with Eastern European-Based Broadband Provider PR Newswire
Aug-07-18 Pareteum Awarded $8 Million 3-Year Agreement by US Mobile Marketer PR Newswire -7.82%
Aug-02-18 Pareteum Attains $300 Million Milestone in 36-Month Contractual Revenue Backlog PR Newswire
Aug-02-18 Pareteum Awarded $4 Million 3-Year Agreement by Internet of Things Provider PR Newswire
Aug-01-18 Pareteum Awarded $3 Million Agreement from US Service Provider PR Newswire
Jul-31-18 Pareteum Awarded $5.5 Million 3 Year Agreement in United Kingdom PR Newswire
Jul-26-18 Pareteum Awarded New $3.5 Million 3-Year Contract Extension in Brazil PR Newswire
Jul-25-18 Pareteum Awarded $3 Million 5-Year Contract in North Africa PR Newswire
Jul-24-18 Pareteum Awarded $5 Million Contract from Singapore-Based Mobile Solutions Company PR Newswire +6.64%
Jul-19-18 Pareteum Signs $2 Million Agreement with US Wireless Internet Services Provider PR Newswire +6.69%
Jul-18-18 Pareteum Awarded $10 Million Contract From Asian Mobile And Cryptocurrency Enterprise PR Newswire
Jul-16-18 Pareteum Awarded $4 Million Contract by Tier 1 Asia-Pacific Network Operator PR Newswire
Jul-11-18 Pareteum Awarded $6 Million Contract from Asia Service Provider PR Newswire
Jun-28-18 Pareteum Secures a Total of $55 Million in New Contracts in the Second Quarter of 2018 PR Newswire
Jun-28-18 Pareteum Awarded $3.5 Million Contract from Mobile Service Provider PR Newswire
Jun-11-18 Pareteum Awarded $6 Million Contract from Established Mobile Virtual Network Operator PR Newswire +5.15%
May-21-18 Pareteum Announces $8 Million 3-Year Agreement for Global Mobility Services PR Newswire
May-21-18 Pareteum Adds $3 Million Global Cloud Services Contract PR Newswire
May-16-18 Pareteum Awarded $2 Million Agreement for WiFi Services PR Newswire
May-16-18 Pareteum Awarded $5 Million Contract from India-Based Telecom Company PR Newswire
May-08-18 Pareteum Awarded $4 Million Contract from Diversified Enterprise in Asia PR Newswire +6.83%
May-01-18 Pareteum Expands into China with $1 Million Contract Extension with Existing India-Based Mobile Travel Client PR Newswire
Apr-30-18 Pareteum awarded $6 Million Global Cloud Agreement Supporting Internet of Things Services PR Newswire
Apr-26-18 Pareteum Awarded 3-Year $2.5 Million Agreement PR Newswire
Apr-18-18 Pareteum Awarded 3-Year $10 Million Contract in the Indian Subcontinent PR Newswire
Apr-12-18 Pareteum Awarded $1 Million 3-year Global Cloud Agreement PR Newswire
Apr-03-18 Pareteum Awarded $3.1 Million South Asian Communications Services Provider Agreement PR Newswire
Apr-02-18 TEUM: Pareteum Enters 2018 With $200m Contract Backlog and Cash Zacks Small Cap Research -7.79%
Apr-02-18 Pareteum Expands Contract with Leading Global Tourism Retailer as it Enters New Markets with Additional $1.5 Million Contract PR Newswire
Apr-02-18 Pareteum Awarded $15 Million Service Contract Over 5 Years with Multi-Country African Mobile Virtual Network Operator PR Newswire
Mar-19-18 Pareteum Awarded $2.4 Million Contract from Established Global Mobile Operator PR Newswire
Mar-15-18 Pareteum Awarded $1.5 Million Contract by California Communications Platform as a Service Provider PR Newswire
Mar-08-18 Pareteum Enters Mexican Market in a 5 Year $4.5 Million MVNO Agreement PR Newswire
Feb-28-18 Pareteum Awarded $10 Million Contract from Established Carrier to Launch a Global MVNO PR Newswire +14.00%
Feb-26-18 Pareteum's Global Cloud Platform Receives 2018 Internet Telephony Product of the Year Award PR Newswire
Feb-23-18 Pareteum Awarded $1.4 Million Contract in Asia-Based Digital Online Marketplace PR Newswire
Feb-14-18 Pareteum Awarded $1.5 Million Connected Home and Office Project in United Kingdom PR Newswire +7.81%
Other message board posters like ClosedTruth imply that these announcements may be inflated contractual projections with only a very small fraction that will materialize as revenue:
So what is the right context we should use to view the progress on these contracts/agreements? Is the truth hidden in the fine print?
The metric used for the Pareteum backlog window is 36 months as shown in the tables below through 2020. A contract landed yesterday may have 90% of the deal materializing in 2019 or later with a small potential fraction of the revenue recognized for 2018. While I don't see a $12 million Cambodia contract listed above in the recent press releases, the process of measuring and booking a stream of revenue could easily involve $80,000 for 2018 and the remaining $12 million realized through 2020.
Frankly, none of the announcements by themselves are particularly bearish or bullish, but each serves to complete a larger story.
First, we need to better understand how Pareteum defines their language and categorizes the 36-month revenue backlog in their recent corporate presentation.
As the slide title explains, this is the Cloud Delivered Services & Monthly Recurring Revenue (MRR). The accompanying oral presentation was not reviewed in the writing of this brief narrative, but clearly, there are planned $ conversions and planned # connections they are tracking as key metrics. The contractual revenue backlog conversion bar charts show an increase to 106% in Q2 from 103% in Q1 even when the Q2 total planned and actual conversions are substantially higher than all the previous quarters back to Q2 2017. The stream of contracted revenue from the monthly streams falls into two categories: "Live and In Service" customer backlog and backlog that is "In Deployment and Service Establishment." Both of these streams are growing exponentially.
It is correct and helpful to picture these deals as overlapping recurring revenue deals. Call them agreements or contracts, but they are a form of future commitment to deliver revenue on a recurring basis, in a stream. As I understand it, some of the backlog are agreements with planned conversion and some of the contracts are extensions on previous deals with actual prior conversions. The net effect is that both streams of the total revenue backlog metric are increasing at substantially high rates. It's also noteworthy to see that both the "Total $ Conversion" and the "Total # of Connections" are growing significantly over the last five quarters.
So, "how come all the press releases do nothing for the share price?" Well, that is a much more complicated question than it may seem at first. Share price is affected by a large number of variables well beyond backlog, revenue growth, and earnings.
Are the shares getting diluted and is everyone getting lied to?
Messages across the boards imply that some deceptive dilution scheme is underway with Pareteum stock.
Presumably some of the grief on the message boards relates to a private placement offering that closed December 5, 2017. That's already in the books and accounted for in the statement of cash flows, besides not being a significant source of price dilution to pay the exercised warrants.
an aggregate of 7,151,146 shares of common stock issued and/or issuable upon the exercise of warrants (the “Warrants”) issued to the investors in the Company’s private placement offering which closed December 5, 2017 (the “Offering”).
More significantly, Pareteum is increasing the number of shares outstanding, even as the revenue and earnings are increasing. As I remind many people who find public offerings suspicious activity in some way, all of these public companies chose to be listed publicly in order to use share issuance as a source of funding for their growth objectives. It's neither suspicious nor surprising that the vast majority of public companies offer shares to raise capital, acquire other companies, or attract key leadership instead of borrowing from a bank for long-term debt.
However, management always needs to find the right balance of issuing shares in order to grow share price for sustained future growth initiatives without losing long-term investor interest and support that would hurt the stock share price.
The stock chart below illustrates both the last year and a half of share price behavior and also the steady rate of increase in shares outstanding (blue line). Currently, according to this data the number of share outstanding now exceeds 60 million.
Is this too much dilution? Are too many shares being issued? An excellent and very simple way to assess this balance between issuing shares and generating return for investors is to look at the earnings per share growth:
Clearly, through FY 2018 Q2 the earnings per share show the first positive earnings in more than two years. If investors liked the share price when earnings per share was negative, how much more will investors appreciate the latest positive earnings return per share in more than nine quarters?
What else is going on that affects share price value?
Pareteum illustrates the acquisition of Artilium in this perspective on their corporate slide showing multi-billion subscription potential through 2022.
The media coverage details the takeover in this form:
MVNE Pareteum, the former Elephant Talk, takes over its peer and provider of private LTE networks and IoT-enabler Artilium.
Last year, Pareteum and Artilium already formed an official partnership and in the month of April, the cloud platforms of both specialists were already combined. The main reason for the acquisition is for both companies to expand new customers with an enlarged product portfolio, the ability to earn more from existing customers through cross- and upsell and the creation of a larger platform through which the company can enter new markets.
Details
Before the acquisition, Pareteum paid an amount of $104.7 million. After the takeover, the current CEO of Artiium Bart Weijermars will become the new CEO of the entire subsidiaries of Pareteum, Pareteum Europe and Artilium. The transaction is expected to be completed in the month of September.
Supporting filings with the SEC show slightly different values, but all in the same ballpark as the media coverage.
SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(4) Proposed maximum aggregate value of transaction: $88,227,937
Pareteum Corporation - and - Artilium Plc Co-operation Agreement
How to properly value this acquisition is a much more complicated undertaking than I intended to delve into for this highlight article. Nevertheless, we can take advantage of the coverage by three analysts and the growing number of institutions investing in the firm to solidify some of our own investment perspectives. Assessing the valuation of the firm is saved for the end.
Where is all the cash coming from?
The message boards also are full of cash questions and solvency posts that can be easily answered in a number of ways.
One of the best places to start to answer cash questions is the Statement of Cash Flows as filed in the quarterly filings with the SEC called the 10-Q:
Another view of the same statement of cash flows from a financial website helps illustrate more clearly below.
Cash for the company over the past six months ended June 30, 2018, comes primarily from Financing Activities through the exercise of warrants and options ($3 million) and gross proceeds from public offering ($6.1 million). It's also important to note that in the Operating Activities the cash flow from Net Income before extraordinary items has become positive and is now a contributing source of cash flow for the first time in many quarters:
Operating Activities
Financing Activities
Cash flow from Investing Activities remains a net outflow and relates to the purchase of P&E and capitalized software up to $1.8M in the last six months compared to $332,630 in the same six months for 2017.
Concerns about cash flow typically relate to solvency questions. Another way to assess bankruptcy/solvency risk is by using algorithms from peer-reviewed financial research that test for exactly those issues. In many of my portfolios I apply these algorithms including the Ohlson O-Score probability percentage as another way to check the going concern of a company.
In this particular case, the Ohlson O-Score probability for Pareteum bankruptcy over the next two years is at an extremely low 8.23% probability. Generally firms with more than 50% O-Score probabilities begin to be considered at risk by this model.
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Company Overview • August 6, 2018 Global Software Defined Cloud Cloud ConnectivityContent
Click to enlarge
Pareteum-Company-Overview-August-7-2018-Final.pdf
Other developments
Awards
2018 Communications Solutions Product of the Year Award from TMC
Added to the Russell Microcap Index
Pareteum Set to Join Russell Microcap® Index
Valuation Estimates
So based on these results what should the firm be valued at? We can see that revenue is increasing, revenue backlog is increasing, quarterly earnings are positive and increasing, share dilution is increasing, acquisitions are occurring, and P&E expenditure is rising. Which part of this value equation matters most?
What do the analysts say?
Only three analysts currently cover TEUM and all three have a current consensus recommendation of Outperform on the stock:
What does the investment flow of institutional investors tell us?
From the latest report at fintel.io posted below:
Institutional Owners 32
Institutional Shares 12,028,436 - 19.96%
Common Shares Outstanding 60,263,228 shares (as of 2018-06-30)
Comparing these institutional investment numbers with the Nasdaq.com website which appears to show Q1 institutional ownership:
There's clearly a substantial increase in institutional holdings up from 8.72% to 19.96% of the shares outstanding. This growth is also depicted in the graph below that shows Institutional Ownership from 2015 through 2018.
I don't see any basis for institutions to own more than 50% of the shares after the Artilium deal is completed in September, but the growth rate and institutional ownership does appear substantial. Again there also is no reason that institutions could not eventually own more than 50% of the outstanding shares of TEUM.
So where do we value the price of this stock?
Pareteum management values the stock like this:
Naturally, management sees their firm grossly undervalued using standard revenue multiples of their industry, undervalued using the revenue backlog multiples of their industry, and profit growth ranges for their industry.
Every company is certainly in a better position to know the quality of their agreements and revenue forecasts. Whether we trust those results is an entirely different valuation question.
When it comes to valuation of share price, I personally take the oversimplified approach that the first positive EPS in at least nine quarterly results is worth considerably more to me than all the prior negative EPS. Further, the institutional investment accumulation gives me peace of mind that more than 30 PR announcements and awards in the last few months that I've never heard of or don't fully understand have enough basis to attract institutional investment.
If I journey back nine quarters when EPS was still negative and revenues were considerably lower than they are today, it puts me in the range of $6/share for a much less attractive company back then than what Pareteum has become today.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
https://seekingalpha.com/article/4202542-pareteum-record-backlog-increased-revenue-guidance
2018 looks to be a very good positive year
Your overwhelming approval of the Artilium acquisition means expanding the successful strategic alliance we have enjoyed with Artilium since October 2017, through the full integration of our two companies.
The resulting fully-integrated business, will be accretive from a financial perspective, will strengthen our establishment of expanded-scale service delivery, and will enhance our ability to sell to larger accounts globally and continue to convert our substantial growing 36 Month Contractual Revenue Backlog (36MCRB).
The following snapshot shows key measures of the new business, on a pro forma basis, post-closing (assuming the businesses had been fully combined for the whole financial year ending 31 December 2018):
Employees: ~150, globally deployed
Connections: ~4.2 million
Revenue: ~$49 million
Adjusted EBITDA: ~$11.9 million
About Pareteum Corporation:
Pareteum Corporation (NYSE American: TEUM) is a rapidly growing Global Software Defined Cloud company with a mission to connect "every person and everything." Organizations use Pareteum to energize their growth and profitability through our Global Software Defined Cloud and complete turnkey solutions featuring relevant content, applications, and connectivity worldwide. Our Cloud platform services partners (technologies integrated into our cloud) include: HPE, IBM, Ribbon Communications (Sonus+GenBand), NetNumber, Oracle, Microsoft, and other world class technology providers. All of the relevant customer acquired value is derived from Pareteum's leading Global Software Defined Cloud, delivering award-winning mobile enablement, regardless of the user's location or network.
By harnessing the value of communications, Pareteum serves retail, enterprise and IoT customers. Pareteum currently has offices in New York, Sao Paulo, Madrid, Barcelona, Bahrain and the Netherlands. For more information please visit: www.pareteum.com.
Pareteum Announces Favorable Shareholders' Vote
Date : 09/13/2018 @ 10:30AM
Source : PR Newswire (US)
Stock : Pareteum Corp. (TEUM)
Quote : 2.8 0.08 (2.94%) @ 6:00PM
Pareteum Announces Favorable Shareholders' Vote
Pareteum Corporation (AMEX:TEUM)
Intraday Stock Chart
Today : Thursday 13 September 2018
Click Here for more Pareteum Corporation Charts.
NEW YORK, Sept. 13, 2018 /PRNewswire/ -- Pareteum Corporation (NYSE American: TEUM), ("Pareteum" or the "Company"), the rapidly growing Global Software Defined Cloud company, delivering award winning mobile enablement solutions, announced today the issuance of a shareholder update letter from its Executive Chairman and Principal Executive Officer, Hal Turner.
Pareteum Corporation Logo.
Dear Fellow Shareholders,
Today, your voice has been heard in resounding fashion. Your votes have been counted and reported through our Annual General Meeting (AGM). Your collective vote enabled us as follows:
To comfortably meet quorum, with ~ 80% of shares voted
To attain "FOR" on all seven propositions; with a range of ~80% - 98% in favor for all binary votes
Your voice was strongest in casting a 98% "FOR" vote to issue the shares to acquire Artilium!
We now expect to close the Artilium transaction by October 1, 2018.
We offer our sincere THANK YOU for your demonstrable support of the company, affirming our clear mandate to hyper-accelerate our growth through targeted consolidation and to continue to disrupt markets with our software and our ambitious strategies and business plans.
Your overwhelming approval of the Artilium acquisition means expanding the successful strategic alliance we have enjoyed with Artilium since October 2017, through the full integration of our two companies. The resulting fully-integrated business, will be accretive from a financial perspective, will strengthen our establishment of expanded-scale service delivery, and will enhance our ability to sell to larger accounts globally and continue to convert our substantial growing 36 Month Contractual Revenue Backlog (36MCRB). The following snapshot shows key measures of the new business, on a pro forma basis, post-closing (assuming the businesses had been fully combined for the whole financial year ending 31 December 2018):
Employees: ~150, globally deployed
Connections: ~4.2 million
Revenue: ~$49 million
Adjusted EBITDA: ~$11.9 million
We expect this dramatic increase in scale to be recognized by the market in our overall value in due course, especially as we continue to attract long-term and increasingly institutional investors, who share our confidence in our ability to execute on our plans, as we have consistently shown we can.
In looking at the balance of the year ahead, we can take a moment to recap the strong results achieved so far this year, and as reported through Q2:
Revenues of $6 million, up 85% Year-Over-Year
Net Income of $1,656,338 or EPS of $0.03 per Share (versus net loss of ($1.3 million) in the second quarter of 2017)
Adjusted EBITDA improved by over $834K, or 180%, to $1.3 million
EBITDA of $597,263 (improved by over $898K, or 298%, to $597,263)
Connections, a Lead Indicator of Revenue, Increased 225% over the Second Quarter of 2017 and 23% Increase Over the First Quarter of 2018
Raised 2018 Outlook to > 80% Revenue Growth
Operating Cash Flow Net of Restructuring and Acquisition Related Expenditures of $565K for the six months ended June 30, 2018
Dollar based net expansion rate of 161% for contracts added since 2017
Based upon our stellar Q2 results and our visibility into Q3 and Q4 operating performance, we remain very bullish in our outlook. For the financial year ending 31 December 2018:
We stand firmly by our formal guidance of over 80% revenue growth for 2018, and we plan to issue an updated outlook statement following completion of the Artilium acquisition on October 1, 2018;
We will be reporting results on a standalone (Pareteum and Artilium) and combined view (Pareteum plus Artilium) for Q4, and full year 2018;
We reiterate our guidance that, with our current cost structures, Pareteum expects positive EBITDA and cash from continuing operations for the full year 2018, adjusted for restructuring and acquisition related costs;
Our 36MCRB of revenue and connections (our proxy for connected devices and their usage) will soon also be updated and we note that to date we exceeded 100% of our plan for converting revenue and connections from backlog.
Pareteum's Sales Teum, led by Chief Revenue Officer, Rob Mumby, and Chief Executive Officer, Vic Bozzo, continue to produce similar or better results than those that led to our over-80% year-over-year revenue increase, and to our Net Dollar expansion rate of 161%. Our Sales Teum's initiatives succeed, because, simply stated, customers find great value in our Global Software Defined Cloud and the SuperAPI capabilities to enable more rapid revenue generation from almost anything from movies, music, games, messaging and mobility services while substantially saving costs compared to our competitors' solutions. It is deeply gratifying to see that we have built a software platform and business model that enables TEUM to succeed, as our customers succeed.
We believe this already excellent performance will further improve with the acquisition of Artilium, and with the benefit of Bart Weijermars' leadership as we expand in Europe. Similarly, our enhanced presence in Asia, under Manjot Mann's leadership, is also showing signs of great promise in some of the world's most rapidly growing markets, where we expect significant demand.
To illustrate Pareteum's role in the growth and success of our customers, here follows a quote from a large Brazilian customer contract we previously announced. The customer, not previously identified, is Telecall, a Brazilian National Carrier with their own Fiber Ring servicing Enterprise, IoT, B2B, Personal Mobile and IP PBX. Telecall selected us to add enterprise Mobility Services.
Allan Ajuz, Chief Executive Officer of Telecall, commented, "I have chosen to work with Pareteum because of their customer centric approach in simplifying complex software, communications, and IT problems. Pareteum's software solutions accelerated our new service offerings and market entry with their simple cloud-based APIs. We can now offer a personalized experience to each individual enterprise, consumer and device we manage. We looked at all of the options in this space, including the large integrators and software vendors, the MNOs legacy systems and Niche Software systems. We found the only truly integrated software and communications API-based solution to be Pareteum. Now we can add products and services, or dynamically change products and services, at will, using the Pareteum SuperAPI … it's absolutely a great solution!"
Telecall, like all large and successful businesses, clearly shares our vision that software is strategic to their business, and we're increasingly seeing new and innovative use cases for our Software Defined Cloud platform and we expect this trend to increase, particularly as we emphasize developer engagement through our sales initiatives.
You may also expect our aggressive go-to-market plans to establish more attractive strategic alliances and market consolidation throughout the globe. In working with our advisors, Denis McCarthy (who leads our corporate development strategy) and I are very pleased at the interest that has been expressed with new strategic alliances and synergistic opportunities.
I will leave you with this: our strategies are expected to enable and accelerate the world's shift to an open mobility and application network. As we enjoy even greater successes, it will accelerate the pace of innovation in the world, create more economic freedom, and provide better mobility services to billions of underserved people.
We look forward to continued success for the remainder of 2018 and into 2019 with the driving force of our company: We are all in sales!
All good wishes to you our shareholders … we will update you again following completion of the Artilium acquisition and during our Q3 earnings call in November, and of course, you will see the ongoing evidence of the Teum's sales and 36MCRB conversion from our future announcements.
Robert H. Turner
Executive Chairman & Principal Executive Officer
Pareteum Corporation (NYSE American: TEUM)
About Pareteum Corporation:
Pareteum Corporation (NYSE American: TEUM) is a rapidly growing Global Software Defined Cloud company with a mission to connect "every person and everything." Organizations use Pareteum to energize their growth and profitability through our Global Software Defined Cloud and complete turnkey solutions featuring relevant content, applications, and connectivity worldwide. Our Cloud platform services partners (technologies integrated into our cloud) include: HPE, IBM, Ribbon Communications (Sonus+GenBand), NetNumber, Oracle, Microsoft, and other world class technology providers. All of the relevant customer acquired value is derived from Pareteum's leading Global Software Defined Cloud, delivering award-winning mobile enablement, regardless of the user's location or network. By harnessing the value of communications, Pareteum serves retail, enterprise and IoT customers. Pareteum currently has offices in New York, Sao Paulo, Madrid, Barcelona, Bahrain and the Netherlands. For more information please visit: www.pareteum.com.
Forward Looking Statements:
Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to Pareteum's plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about Pareteum's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of Pareteum may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, Pareteum also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those projected or suggested in Pareteum's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Pareteum Corporation.
Contractual Revenue Backlog Definition:
Contractual Revenue Backlog, 36MCRB, or just Backlog, a Non-GAAP measure is measured on a forward looking 36 month snapshot view monthly, and, is generated by each of the Company's Managed Services, Global Software Defined Cloud, and Application Exchange & Developer's Platform customers. The Pareteum multi-year Software-as-a-Service agreements include service establishment and implementation fees, guaranteed minimum monthly recurring fees, as well as contractually scheduled subscribers, in some cases including subscriber usage, during the term of the agreement, and, their resulting monthly contractual revenue. There can be no assurances that we reach the total contract revenue backlog. Timing of revenue recognition may vary from actual results.
EBITDA and Adjusted EBITDA Definition:
"EBITDA" is a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization. "Adjusted EBITDA" is a non-GAAP measure defined by Pareteum as "EBITDA" excluding stock based compensation, restructuring charges, nonrecurring expenditures and certain software and non-cash adjustments made during the 2016 restructuring that are not applicable in 2017 and 2018.
Pareteum Investor Relations Contacts:
Ted O'Donnell
Chief Financial Officer
(212) 984-1096
InvestorRelations@pareteum.com
Stephen Hart
Hayden IR
(917) 658-7878
Carrie Howes
Rayleigh Capital
Dubai- London
T UAE: +971 (0) 55 997 0427 | T UK: +44 (0) 870 490 5443 | T CAN: +1 416 900 3634
Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/pareteum-announces-favorable-shareholders-vote-300712174.html
SOURCE Pareteum Corporation
Copyright 2018 PR Newswire
The most important thing to remember is that with the win of the Express Scripts preferred formulary Synergy is on track to break even in Q4 of 2019 or Q1 of 2020.
From my last post:
If the company was interested in borrowing more money they would have already worked with CRG to reduce the sales target for this year or they would have already borrowed the $25 million on June and been more aggressive on sending samples and trying to gain more scripts.
Instead, the company seems to only be using the loan as an insurance policy in case talks collapse.
The 2 more likely scenarios are a partnership or a merger because no money was borrowed. Some type of upfront money deal is likely on the works - otherwise,
Synergy wouldn't keep pushing the deadlines to borrow money and most importantly CRG wouldn't keep working with them to modify the deadlines while costing them money.
Synergy Pharmaceuticals: Why Does The Company Keep Pushing Its CRG Loan Borrowing Dates?
Sep. 12, 2018 4:53 PM ET|
About: Synergy Pharmaceuticals, Inc. (SGYP)
Jose Solorio
Long/short equity, special situations, healthcare, options
(966 followers)
Summary
Synergy promised its investors that on or before August 9th it will provide a strategic update.
The company instead reported Q2 earnings without a conference call with analysts and stated that a strategic update will happen during Q3.
The company also amended its CRG loan agreement once again to provide 2 additional months of time to borrow another tranche of money.
The stock price has reacted negatively to the missed deadline to provide a strategic update and has given up any gains since their Q2 quarterly report.
Investors shouldn't look too much into price action as a guide about what recent events mean for the company as 60% of the company shares are owned by retail investors.
Investors in Synergy Pharmaceuticals (SGYP) have recently been extremely disappointed by the lack of communication and understanding about what's been happening inside the company. The company has gone in silent mode and that has a lot of investors fretting about what the future might look like. I urge investors to take a measured approach based on facts and not on emotions.
Once in a while, it's a good practice to turn off your screen monitors and stop watching the stock price for a few days to give you some time to analyze facts rather than emotions. The best investments I have had in my investing career were those where I was a contrarian to what the market was saying. Some of those involved buying Bausch Health Companies (BHC) when Bill Ackman capitulated on Valeant, buying calls on Mylan (MYL) last year when it was trading at $36 just to see it run to $46, buying (XOM) when oil was trading at $29 per barrel, etc. All of those examples provided me returns in excess of 200% using the leverage of calls.
So let's review the facts.
CRG has been extremely flexible with Synergy
Originally Synergy had secured a $300 million loan agreement from CRG. Under the original agreement Synergy needed to have $128 million in cash and cash equivalents on January 31, 2018, to access an additional $100 million in funding. The company in order to stay compliant had to hit at least $100 million in net Trulance sales for 2018.
Instead of taking the $100 million which would have resulted in an additional $9 million in interest payments for 2018, Synergy changed the terms of the agreement for a total commitment of a $200 million loan and a $61 million net Trulance sales target. The additional $100 million to be borrowed was to be drawn on 3 tranches: $25 million, $25 million and $50 million on or before June 30, 2018, September 30, 2018, and December 31, 2018.
The 180 turn shows part of the change in strategic direction from the replacement of Gary Jacob to Troy Hamilton as CEO of the company. Given that the IBS-C label had not yet been achieved in time for the 2018 formulary updates - the company didn't achieve preferred formulary status in insurance formularies. Therefore the company felt that the return on investment this year would be less than ideal and decided to conserve cash.
In fact, Synergy has avoided borrowing money and instead has focused on making its operations a lot leaner.
CRG has proved to be extremely flexible in working around Synergy's needs by amending the first $25 draw date to August 29 in exchange for a $500,000 penalty if/when the money was borrowed. The other draw dates were to remain the same: $25 million on September 30, 2018, and $50 million on December 31, 2018.
When August 29th came there was yet another modification. This time all 3 tranches were moved far out. According to the SEC filing:
The first sub-tranche of $25.0 million may occur after June 30, 2018 through and including October 31, 2018 provided the Company pays to the Administrative Agent a fee of $2.5 million at the time of borrowing and the second and third sub-tranches of $25.0 million and $50.0 million, respectively, may be made no later than December 31, 2018 and February 28, 2019, respectively.
Many here will argue that CRG is not being friendly by charging a $2.5 million penalty fee by moving the deadlines but that's erroneous thinking. See, CRG is on business to make money. By reducing the loan commitment from $300 to $200 million CRG had to go into the market and find another party interested on borrowing that extra $100 million that they had set aside for Synergy. That creates additional work and expenses for CRG.
On top of that, CRG has needed to set aside money in case Synergy comes back and asks for more money. For example, right now and at any point between now and October 31, 2018, Synergy can ask CRG for a $25 million tranche and CRG needs to have those funds readily available. That's money CRG can't lend out to anybody and is costing them money on lost interest. Not only that but if CRG is borrowing money from somebody in order to make money on the spread of lending it out to Synergy at a higher rate then Synergy's pushback of the draw dates is costing CRG money for the interest they have to pay to keep those funds readily available.
CRG Officer to be present at annual meetings
Many here are uncomfortable that a representative from CRG will be present at the board of directors meetings as stated in the SEC filing. I wouldn't view this development as a negative. First of all, as I have already mentioned CRG is losing interest income on "parked" money that they have until Synergy decides whether or not they will borrow more money. Though they have shown extreme willingness to work with Synergy my guess is that they want to see that true progress is being made at the board to close on whatever initiatives they've been using to postpone the draw dates.
Keep in mind that CRG has offices in New York where Synergy headquarters are located so CRG is not going out of there way or traveling to make it to the meetings. They are just sending one of their local representatives to assist.
Also, there's a 40% prepayment penalty on the CRG loan should a change in control of the company were to happen. In case a merger is on the works the board might be trying to negotiate a smaller penalty with CRG and in order to expedite things they will negotiate this on a face to face meeting with the Board.
What happens if CRG doesn't meet the net sales requirement?
At current sales growth trajectory, it's likely that Synergy will fall short of the $61 million in net sales by about $6 million. In such an event Synergy would have 90 days to cure the default by depositing the shortfall in revenue by either borrowing more money from another source or by issuing equity equivalent to the shortfall.
There's no forced bankruptcy scenario here where somehow Synergy will end up insolvent and without access to the loan. The amount of capital that would need to be raised would also be minimal in comparison to previous occasions.
A partnership or merger is on the works
The most important thing to remember is that with the win of the Express Scripts preferred formulary Synergy is on track to break even in Q4 of 2019 or Q1 of 2020.
If the company was interested in borrowing more money they would have already worked with CRG to reduce the sales target for this year or they would have already borrowed the $25 million on June and been more aggressive on sending samples and trying to gain more scripts.
Instead, the company seems to only be using the loan as an insurance policy in case talks collapse. The 2 more likely scenarios are a partnership or a merger because no money was borrowed. Some type of upfront money deal is likely on the works - otherwise, Synergy wouldn't keep pushing the deadlines to borrow money and most importantly CRG wouldn't keep working with them to modify the deadlines while costing them money.
As a final point on this subject don't forget CRG stands to win a significant one-time payment in case of a change in control or a merger.
Summary
At the annual meeting, Synergy CEO Troy Hamilton made it very clear that by originally going alone they made the best decision. That had to do with some confidential information that couldn't be disclosed in regards to what partners/offers were on the table. But they made it clear that now that they had achieved some traction on Trx's and gained the approval of a 2nd FDA indication what was available for them to strategically review was a lot more attractive.
We still don't know what the final outcomes of the strategic review will be but what we do know is that any closed deals could cause a surge of 100% to 200%. With an almost 23% of our shares shorted and low institutional exposure any good news can cause a significant short squeeze as shorts cover and institutional investors buy into the stock.
Though investors are right to be disappointed on the delay of the strategic review - they should also understand that what any real long-term investors want isn't just a deal but a really good deal that will ensure the success of the company. The company has now issued a new deadline to provide an update during Q3 of this year and I think this time they will have no choice except to deliver something as I don't think CRG for the mentions provided above would amend the borrowing deadlines again. That gives the company just 18 days to provide such an update, a drop in a bucket compared to how long many long-term holders have owned this stock.
Disclaimer: The statements made in regards to the future of the company are my own personal opinion and should be used only at the beginning of a long due-diligence process. The risk of investing in securities includes but is not limited to total loss of capital invested. Consult a registered financial advisor regarding any questions in regards to investing in securities and before placing any trades on your own.
Disclosure: I am/we are long SGYP.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Synergy Has Turned A Corner
Aug. 13, 2018 2:06 PM ET
About: Synergy Pharmaceuticals, Inc. (SGYP)
Matthew Zeets
Summary
Revenues were stellar, gross margin increased, and more fat was cut from SG&A.
Before this quarter I had projections for SGYP to run out of money in Q4 2019.
Updated projections based on new cost cuts and margin increases have me projecting SGYP turning cash flow positive before running out of current liquidity.
I was lucky enough to stumble upon Synergy Pharmaceuticals (SGYP) after they had already dropped to around $2/share earlier this year (I could see myself having bought in earlier if I had seen it sooner). I've been closely watching the weekly prescription numbers of their lead drug Trulance, which treats IBS-C, to try to get an idea of if they would come out of the somewhat financially tight position they're in. I was back and forth on holding onto my shares bought at just under $2 or if I get out while I'm still close to break even. After the Q2 2018 quarter just reported, I'm very optimistic on how the next two years will go and I'm likely holding my shares for at least that time frame. From my projections before this current quarter you can see that I was not too optimistic by the revenue growth or the gross profit. In the projections below I'm subtracting my projected SG&A costs from the gross profit to get the cash flow:
Source: Author
5 Great Developments from Q2 2018
1) Based on how the last few quarters had gone, I was expecting revenue between $10.5M and $11.0M for Q2 2018. However SGYP handily beat those numbers with revenue of $12.3M. This made for Q/Q growth of 42.6%. Because of this exceptional growth rate, I increased the growth rate going forward. I still am keeping it mostly linear to stay conservative, but I could also see it really taking off next year and beating my projections.
2) Gross margins increased dramatically, which is likely due to scaling that hopefully can keep getting even better as they ramp up sales. Where revenue increased $3.7M, cost of goods sold only increased $0.2M, making for an increase from 57% in gross margins to 68%. In my projections before this quarter, I was using 57% for the gross margin going forward. Now I'm using 68% going forward to be conservative, but I would actually expect this to continue to increase.
3) SG&A costs were cut again, this time from $43.5M to $37.5M. I actually could see this one going either way in the future. I wouldn't be surprised if management continues to find more ways to cut costs, but also wouldn't be shocked if this is the lowest they can get costs and it ticks higher going forward. For this reason I'm using $37.5M for the SG&A expense going forward.
4) Express Scripts picked up Trulance for its preferred formulary list for 2019, which obviously is a very good thing. In my projections I have revenue increasing even faster at the start of 2019 due to this.
5) SGYP sold the development and commercialization rights for Trulance in China to Luoxin Pharma for $12M upfront as well as other milestones and royalties. For the sake of not complicating my projections too much, I'm only adding $12M in cash in Q3 2018. I'm not going to speculate on when they would reach other milestones or how much would be brought in on royalties.
Updated Projections
With all of these positives coming together, it greatly improved my projections. I now believe I was being way too conservative before and I am purposely trying to remain conservative going forward. I would not be surprised at all to see the gross margin continue to move higher as well as I could definitely see revenues beating my projections in 2019. Here are the updated numbers:
Source: Author
Valuation
With all of the fantastic developments during Q2, I no longer am worried about SGYP running out of cash. Even if I am being too optimistic, the $67M left in liquidity with my projections leaves quite a bit of margin of error. So with positive cash flow in sight, I want to look at valuation. I like to use 3x revenue for small biotech valuations. If SGYP can even hit $300M in peak revenue, they could be worth $900M market cap which would be right about double what they are worth now. If they can eventually top Linzess' $700M, that would be ~$2.1B by my valuation methods or over 4 times what they are currently priced at.
Conclusion
SGYP had a great Q2 2018, with fantastic increases in revenue, increases in gross margin, SG&A cost reductions, Express Scripts adding Trulance to its preferred formulary list, and selling the rights to Trulance in China. It could take 2 years until the price really increases, but I see SGYP as a fairly safe bet to become cash flow positive before they run out of liquidity. I expect them to be worth 2-4 times what they are now. As usual in this field, there are lots of unknowns and volatility is common, so I recommend treating it as the high risk/high reward investment that it is.
Disclosure: I am/we are long SGYP.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
https://seekingalpha.com/article/4198657-synergy-turned-corner
Financial Results
TRULANCE net sales were $12.3 million in the second quarter of 2018, increasing 43% over the first quarter of 2018, and resulting in $20.8 million in total net sales for the six months ended June 30, 2018. TRULANCE was first approved by the FDA for chronic idiopathic constipation (CIC) in January 2017 and Synergy initiated U.S. sales and marketing efforts on March 20, 2017. TRULANCE was approved by the FDA for a second indication in irritable bowel syndrome with constipation (IBS-C) in January 2018.
Total operating expenses were $37.5 million in the second quarter of 2018 compared to $74.3 million in total operating expenses in the second quarter of 2017.
Total adjusted operating expenses (non-GAAP) were $34.0 million in the second quarter of 2018, a 44% decrease compared to $61.0 million in total adjusted operating expenses (non-GAAP) in the second quarter of 2017.
Synergy reported a net loss of $29.7 million, or $0.12 per share, for the second quarter of 2018 compared to a net loss of $73.9 million, or $0.33 per share in the second quarter of 2017.
Cash and cash equivalents were approximately $61.2 million at the end of the second quarter. Synergy has the ability to access up to an additional $100 million in 2018 under its Term Loan Agreement with CRG LP, subject to the satisfaction of certain borrowing conditions.
Optimizing the Value of TRULANCE
On August 7, 2018, Synergy announced that Express Scripts, a leading U.S. pharmacy benefit manager, will add TRULANCE to its 2019 National Preferred Formulary List, effective January 1, 2019.
Total TRULANCE normalized prescription volume in the second quarter of 2018 included approximately 55,000 TRULANCE 30-count packs, up over 24% versus the first quarter, and resulting in over 90% average quarterly growth since the product's launch on March 20, 2017, per IQVIA.
TRULANCE new prescription volume showed nearly 25% average quarterly growth since launch through June 30, 2018, per IQVIA.
Total number of unique healthcare practitioners prescribing TRULANCE reached over 14,000 in the second quarter of 2018, increasing more than 20% over the first quarter, and resulting in 60% average quarterly growth since launch, per IQVIA
I put this up a few days ago: Looking at the chart it looks to me that we are going to bounce off $1.70. JMO
I should have said: $1.65 to $1.70.
Looking at the chart it looks to me that we are going to bounce off $1.70. JMO
The volume has been very low for weeks now. No one is selling and no one is buying. Everyone is waiting to see what happens between now and August 9th.
If there is good news, merger, or buyout, the shorts will be scrambling to cover at any price.
On the other hand, if nothing comes up good for the shareholders, look for further downside.
So that's what's happen, longs do not want to sell in anticipation of something good happening and shorts don't want to short until the see either the good or the bad. JMO
Well, the shorts are not shorting at the moment and that was a lot of the volume. In fact, the outstanding shorts on the stock are at low right now.
Let's talk about SGYP
Anyone as encourage as I am for the next four weeks?
The volume was very low this past week. No buyers and no sellers. Something up?
Synergy Pharmaceuticals: Partner, Merger, Ex-USA Deal Or Co-Promotion?
Jul. 13, 2018 3:55 PM ET
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34 comments
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About: Synergy Pharmaceuticals, Inc. (SGYP)
Jose Solorio
Jose Solorio
Long/short equity, special situations, healthcare, options
(828 followers)
Summary
On or before August 9th Synergy Pharmaceuticals has committed to provide an update on their strategic business review.
On June 12 the company hosted its annual meeting and early indications were given about what the possible outcome of such strategic review might be.
A group of only 6 investors was present at the annual meeting. I was one of them.
Short interest just experienced its biggest contraction in a year. Are shorts betting a turnaround is on the works?
Investors in Synergy Pharmaceuticals (SGYP) should be encouraged that the first roots of a turnaround are beginning to show in the stock. At least it seems that shorts are beginning to at least pare their short exposure in the name ahead of what could be a period of significant catalysts in the next 30 days. This article will provide the freshest information available to investors provided by management at the annual meeting. It seems from the answers provided by management a co-promotion deal along with an Ex-USA deal is on the works or at least the preferred route by management. It's my own impression someone has approached them for a merger as well.
Based on the answers provided by management, investors who are underwater or investors waiting on the sidelines should consider starting or adding to their position. Few times companies telegraph their moves ahead of time - But it seems at least shorts got the message and are starting to cover. Investors should use the upside momentum to buy and force even more short covering in the days to come. Shorts will most likely continue to reduce their exposure ahead of the August 9th event which was presented as a timeline to provide a business strategic update.
Synergy Pharmaceuticals Annual Meeting
I was present at the annual meeting along with another 5 retail investors. My job at the annual meeting was to present the questions of an open-sourced document that the Synergy Activist Group had for management as well as its concerns. At the time of the annual meeting, the retail activist group had a total of 904 members and shortly after the meeting it grew to over 1,000 members.
The meeting lasted for about an hour of which about 50 minutes were dedicated to a Q&A session between the management team and board of directors and the 6 retails investors.
I will summarize the questions (the headers in black) presented to management and the essence of the answers provided as well. I took extensive notes to the best of my ability and I have taken a significant amount of time going back with fellow investors who were present at the meeting to gather all the facts together as recording devices were not allowed at the meeting. So take everything you read here as a summary of what management presented and not as a word for word transcript. My own comments will be in parentheses.
Q. How do we move forward with a salesforce so small?
CEO Troy Hamilton: When Synergy launched Trulance we focused our effort on the 25,000 most active physicians who prescribe 70% of all GI prescriptions. Our salesforce was integrated with the hope that each sales representative would target 100 physicians.
We are constantly compared to the Linzess Launch but that comparison can't be made and it isn't fair to make because of the following reasons.
When Linzess launched 5 years ago it was a completely different managed care environment. The market has completely turned in favor of PBM's.
Linzess launched with 1,500 representatives vs. our 250 representatives.
Trulance launched with only 1 indication vs Linzess who launched with 2 indications.
When Linzess launched there were no new to market blocks.
Given how concentrated the market is where 25,000 physicians prescribe 70% of GI-related prescriptions it made sense for us to launch smaller.
Going forward we will like to look at co-promotion. We would like to be able to reach more primary care physicians. Ironwood is now promoting Linzess with a 2,000 representatives salesforce and Takeda has 3,700 representatives salesforce. So we would like to find a partner to help us reach more primary care physicians.
As an example of what we are looking at let's suppose that there's a pharmaceutical company out there who has a 1,000 salesforce but they are not going to launch their product for another 1.5 to 2 years. We would like to approach them and inquire whether they would be willing to provide their salesforce while they wait to launch their product.
(I will make a pause here and explain the rationale behind a 1.5 to a 2-year partnership with a partner who has a product who is about to launch. Many wonder why would any larger pharmaceutical company agree to promote a different product than theirs especially if they are 2 years away from launching. The reason is two-fold: Cost of inactive salesforce and relationships with doctors. The most challenging thing for sales representatives is to develop a trust relationship with doctors. By starting with a different product they would basically acquire a 1.5 to 2-year headstart ahead of their own launch. Finally, a salesforce cost is usually amortized among a portfolio of products. Having an additional product on their portfolio would help the larger pharmaceutical company reduce their own costs. Again this was just an example given by the company.)
Q. Why have insiders not purchased any shares?
Troy Hamilton: There are multiple reasons why insiders could not be buying shares. The first and most important is that insiders have access to insider information. Without going into details, if insiders had information in regards to strategic opportunities they can't purchase shares until such opportunities are consummated. Also, there could be personal factors affecting each individual that doesn't allow them to buy shares.
Q. What short-term opportunities are available?
Troy Hamilton: When we talk about strategic opportunities we talk about both short term and long term opportunities. Examples of those opportunities are co-promotions, Ex-USA deals, partnerships, and M&A.
In the short term and based on our current strategy most of our opportunities are around managed care. As mentioned earlier the managed care environment has significantly changed. When Linzess launched you could offer a 3-5% rebate to the PBM and be automatically added to a preferred formulary. We believe we can be more aggressive in the managed care environment and have some significant wins. We are having discussions with Aetna and with Cigna and we believe there are significant opportunities for us in the managed care environment. We mentioned on the Q1 conference call that we brought an industry veteran Bob Gilkin aboard to help us negotiate with payers.
One of the things we are having to deal the most at the moment is with prior authorizations. To that extent, we have a major push-through program with CoverMyMeds which started in May that will really help us going forward and create short-term value.
(CoverMyMeds deals with pushing Rx's through. Doctors don't like spending time on the phone with insurance companies trying to get approvals. To that extent, CoverMyMeds is a great help because they help do all the dirty work behind every approval. This is a significant win for Synergy and it should really help push Rx's through in the second half of the year.)
Q. Do we expect any changes in the current year for insurance coverage?
Synergy Management: There's potential for some one-off wins on the commercial side and on Medicare Part D. Again, Medicare Part D has also gone through significant changes in the last 5 years vs when Linzess launched. As we are negotiating our access to 2019 formularies there are opportunities for us to gain "early access" to their formularies. Such early access might work by having a transition 3 or 4 months before the end of the year to the 2019 formulary. We can't guarantee that we will have such wins but we will definitely work to that extent. We will have a clearer picture by the end of July/August.
In the near term, most of our opportunities are in regional front vs the national front. For example, we mentioned that in the Midwest we were able to secure a deal with Caremark CVS where we got an exclusivity agreement for 2 million lives. That's something that came as a result of a previous relationship our new market access team had. We will continue to push for 2018 wins and CoverMyMeds which started in May will be a significant piece of our strategy going forward.
We have done a great deal of progress in 14 months. We have over 70% commercial access and over 91% access on managed Medicaid.
Changing the subject - Back to the short interest
I will stop my narration of the annual meeting and go back to the short interest. The short interest on 6/19/18 was 62,939,216 and on 6/29/18 it dropped to 54,868,105 so a net decrease of 8,071,111. This is the largest decrease in over a year in the short interest of the stock over a two week period.
Chart
SGYP
data by
YCharts
Summary
There's big potential for shares of Synergy over the next 2 months. The company has already telegraphed that they are looking at opportunities for ex-USA deals, partnerships, co-promotions and even M&A and expects to provide an update on or before August 9th. As mentioned at the beginning, it seems that a co-promotion along with an Ex-USA deal will be the route preferred by management. But I believe such outcome will depend on whether a possible merger fails.
Any significant news over the next 30 days could catapult the stock back to the 3-4 range. This is the time to buy the stock and capitalize on the short interest which will help add fuel to any rally. The risk-reward ratio is very favorable. I estimate a 20% downside risk on less than favorable news on August 9th vs a 50% to 100% upside on the favorable news.
For a broader coverage of the risks associated with the shares please visit my article: Exodus in Institutional Ownership.
Disclosure: I am/we are long SGYP, VRX.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Synergy Pharmaceuticals: Activist Group Reaches 26.1 Million Shares
May 6, 2018 1:08 PM ET|
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About: Synergy Pharmaceuticals, Inc. (SGYP)
Jose Solorio
Long/short equity, special situations, healthcare, options
(650 followers)
Summary
The activist group which is pledging to vote against an increase on management compensation now represents the largest block of voting shares.
Management should tie compensation and share awards based on a significant appreciation of the shares. It needs to align its interests with those of shareholders immediately.
How management reacts to this movement speaks about whether it is actually shareholder friendly or not. Investor relations representative Gem Hopkins has not yet opened dialogue with the group.
An open source letter has been written to the CEO of the company. Would he address key points at the conference call?
Management should do a press release announcing the hiring of investment bankers to assist on the process of finding a partner.
We could be on the verge of witnessing how shareholder activism will occur on the decades to come. In less than two weeks, 760 shareholders from both retail and institutional background have joined to form one of the biggest activist campaigns against a company's management in recent years. Synergy Pharmaceuticals (NASDAQ:SGYP) is now potentially the target of an activist.
The group has lost no time contacting possible candidates. At current prices, I strongly urge people waiting on the sidelines to take a position as the risk-reward ratio has taken a very favorable turn for the bulls. Also, if your risk profile is favorable, this is a good time to consider averaging down a position as the company is trading as if it were heading towards bankruptcy. I recommend investors to listen up to the upcoming conference call and listen to see whether any of the points raised up on the open letter to Troy Hamilton are addressed by the management team.
Source: Synergy Activist Group
No response from investor relations
What's troubling to me is that Gem Hopkins from the investor relations team hasn't opened dialogue with the activist group even after being contacted. It should be obvious that shareholders are outraged at the job management has done and also about the proposals brought up for the shareholders meeting. An open dialogue with management could work toward a mutually beneficial resolution. If she is unwilling to talk to the largest group of investors in the company, that should be the largest red flag to date about how sincere the company is to its investors.
Salaries and options should be tied to share price recovery
There's no trust in management and shareholders (myself included). Most think that management would rather dilute shareholders than let go of the control of the company. The first way to fix that problem would be to give significant bonuses to the management team tied to a price recovery above $3.50 or $4 a share. I know that's no ideal for many here, but at least it would be a step on the right path.
A press release stating that the 10 million in new shares would only be awarded once a certain share performance metric is achieved would go a long way towards regaining shareholder trust and perhaps even sufficient votes for the resolution to pass at the annual meeting. The problem is that it seems the management team wants to award them at current prices further diluting the value of each share. Management keeps winning at the expense of its shareholders.
Unless further clarification comes from management as to how those shares will be awarded, I recommend to vote against it. Also voting against adding another 100 million shares to the authorized block should be a no brainer at this point.
Press release stating that investment bankers have been hired
It's possible that some investment bankers are already involved on helping the company partner, but the problem is the lack of communication with the investment community. Management should immediately hire Goldman Sachs, Morgan Stanley and Credit Suisse and possibly others to help them negotiate with possible partners. Hiring multiple investment banks helps the process as banks are often aggressive on trying to bring the best offer to the table in order to get the fees associated with a successful transaction.
A press release doesn't mean a partnership is going to happen, but at least it buys the company time and goodwill with its shareholders. It helps because it makes it look active and on charge of the market narrative. It also helps keep the shorts at bay due to the risk that at any moment a deal might be announced.
An open letter to the CEO
The following letter was collectively wrote on an open source format and sent to the CEO of the company Troy Hamilton.
I would love to see whether the CEO of the company acknowledges the group and addresses its concerns. At the end of the day, if he ignores the group, it would show just how disconnected management is from what's happening with the market.
The most interesting proposal is whether he would be willing to take a temporary pay cut until the share price recovers or to take a higher percentage of his salary tied to a share price recovery.
No insider purchases yet
Right now, we are on a quiet period, and insiders can't trade stock, but if after the conference call insiders continue to not buy any shares at the current low prices, then I would get really concerned. If there's value here, insiders should be the first ones to jump hand over fist to scoop shares at these prices.
Conclusion
The next couple of weeks should provide us with a lot of information about where we stand as shareholders of the company. I reiterate that the biggest risk to this company is management itself. But even with all the adverse decisions and proposals, I believe this price is a real bargain for the shares of Synergy and that most of the negatives are already priced in at current prices.
Finally, I would like to leave you with access to the latest email communication from the Synergy Activist Group.
Disclosure: I am/we are long SGYP.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Synergy Pharmaceuticals: Best Drug + Terrible Management = Terrible Investment
Apr. 23, 2018 2:30 PM ET
About: Synergy Pharmaceuticals, Inc. (SGYP), Includes: AGN, IRWD
Jose Solorio
Summary
Almost 3 months into approval of a second indication, the prescription trends are flat since December before IBS-C approval.
The measly gains in Rx don't make up for the significant cash burn.
New dilution fears have risen since a new clause to approve an additional 100 million shares were added to the annual meeting proxy.
Trust in management is non-existent as share price is trading at 52-week lows. Management is disconnected from shareholder interests as the current vote to increase compensation indicates.
The failed launch strategy was made worst by naming Troy Hamilton, the mastermind behind the launch strategy of Trulance, CEO of the company.
When it comes to Synergy Pharmaceuticals' (SGYP) management team, I can only think of one word to describe it: incompetent. But before we dig into this article, I want readers to understand that this isn't the time to sell your shares yet, but rather to raise your voice against management through the voting power of your shares. For new potential buyers, this company could potentially bring exponential gains on a quick period of time if management changes direction in the next couple of weeks.
It was just 15 months ago, when Synergy received its much-anticipated approval for its CIC drug. Shares were trading at over $6 per share and management was able to sell an additional 20.3 million shares to raise $120 million.
ChartSGYP data by YCharts
Failed Launch Strategy and doubling down on a bad strategy
Management had the unrealistic assumption that sales would take off within months and that insurance companies were going to pile up to cover the treatment because it was the best in class. The failed launch strategy was made worse by management's deception about their approval of "non-dilutive financing." In an outrageous move, management ended up diluting shareholders by 20.3 million more shares on the market at a price of $2.58 and warrants for another 20.3 million for $2.86 respectively.
What's even worse is that they put Troy Hamilton, the man responsible for the failed launch of Trulance, at the helm of the company all while leaving Gary S. Jacob as chairman of the company. There was no true change in leadership at the company and Gary S. Jacob continues to have too much power on a company that has forgotten that it has a fiduciary duty to its shareholders.
In a recent presentation at the Oppenheimer 28th healthcare conference, CEO Troy Hamilton stated that sales were going "according to the company's projections" which in my opinion is completely absurd. The company can't claim that sales are going according to trajectory all while diluting at all-time lows the shares of the company. Is the company saying that after raising $120 million the plan was all along to dilute shareholders just 6 months after their first offering? Why did they wait so long to do the secondary?
Unclear strategy and unrealistic expectations
The problem with Synergy is that they aren't transparent about what their true goal is. Is their goal to continue to develop analogs and become a R&D powerhouse in GI? Is their goal to move to cancer treatment? Is their goal to sell the company? Is the goal to partner outside the US and go alone in the US? Clear goals always equal clear results.
It also seems clear by the lack of partnerships, that management is asking unrealistic prices for rights to its drug.
Time decay on Intellectual Property
It seems that the management team has an unclear strategy to begin with all while the patents on their products are running out of value. It took management 7 years already, since the patents were first registered, to bring Trulance to market and is costing them more in lost revenue to continue with their going alone strategy.
Dolcatanide is almost halfway through its patent life cycle and it hasn't entered final trials to bring it to market. On a probable best-case scenario, (if a partnership were to occur right now), it would hit the market until late 2020.
If Trulance were to have 1 billion in peak sales 7 years from now with a 70% gross profit margin and 50% net margin after administrative expenses, every year that goes by without gaining traction 500 million in profits are simply wasted by time decay. To put it in other words, failing to gain significant traction at the beginning will result in massive lost profits in the future.
Lost bargaining power
Synergy now finds itself on a death spiral where lower share price and high cash burn makes its leverage gone.
The sales pitch of "we have the BIC (best in class) product is gone." The fact that sales have not accelerated make future partners weary of whether there's something wrong with the product or not.
Insurance companies are also playing hardball against a smaller player. Given that Synergy only has one product and no bargaining, all that it can do is beg for the best possible deal. Unlike other diseases, IBS-C is something that people rarely die from making coverage more difficult. From recent conversations with doctors, I was told some insurance companies require a 6-month waiting period of taking fiber and OTC laxatives before getting approved.
Unlike other companies with bigger portfolios of drugs where a sales force makes more sense, carrying a 200 sales force for one single drug is a total waste of money since doctors have their hands tied by the insurance companies. Written prescriptions are returned many times due to lack of coverage.
The politics of Pharma
As we constantly see in politics, I am sure there are thousands of Americans that would do a better job in Washington but they are just not elected. Unfortunately, in life it's not always about who is the best but who is already at the top.
In the Pharma world, it works the same way. Who do you know, how much money you have to spend, what rebates are you going to pay the insurance companies back are many times more decisive than what product is the best.
Allergan (AGN) is choking Synergy out of the market with a 1,500 sales force. Allergan already priced Trulance out of the Express Scripts preferred formulary and it has flooded the media with their ads. This will be a war to the death and the only way to win is to match Allergan's and Ironwood's (IRWD) sales force with an equal sales force.
Synergy will continue losing to Allergan with current strategy
The big question for shareholders is this: Will management finally understand that it doesn't matter what the potential peak sales of the drug are or how safe it is, as long as they continue to be alone in this war, they will always lose?
Will they understand the non-financial benefits of partnering with a larger Pharma? Access to a large sales force, reputation, bargaining power, cheaper financing, connections, credibility, pharma-doctor relationships, etc. It's not just about the initial fee but about the intangibles associated with it.
Even if they receive $300 million for 50% of the rights, it's better than the current path. 50% of $1 billion in sales is better than 50% of $200 million in sales.
Otherwise, in exchange for a preferred status formulary, Allergan can continue to outbid Synergy for years and years in the insurance market. That along with the great relationship that Allergan's 1,500 sales force has with doctors along with robust portfolio of GI drugs in the market and on the pipeline that makes for a pharma-doctor relationship that Synergy just won't be able to challenge alone.
In comparison, at this point in time, Allergan and Ironwood's Linzess had already achieved 23,000 Rxs per week. Talk about the mediocre results that management has had with a supposedly better and safer drug.
Amended terms to loan facility reflect uncertain future
The following excerpt is from Gary S. Jacob during the company's fourth quarter conference call:
"First, we reduced the total amount of commitment from $300 million to $200 million as the decline in the company’s market capitalization resulted in uncertainty in our ability to meet the requirements to drawdown on the original third and fourth tranches. We decided to forego access to those additional two tranches of up to $100 million in exchange for more flexible terms around the original second tranche.
We’ve amended that second tranche borrowing structure which originally required us to drawdown the entire $100 million in one tranche by February 28, 2018. The amendment allows for us to access the $100 million in three sub-tranches with no minimal cash balance requirement as follows; $25 million by June 30, 2018; $25 million by September 30, 2018 and $50 million by December 31, 2018."
As part of the initial CRG covenants, Synergy was required to have an $800 million market cap to access the last $100 million tranche of the loan facility. As you can see, terms were renegotiated so that no market caps or cash balances are required to access an additional $100 million in funding.
Use your shares to vote against new management propositions
Among the propositions are an increase of 100 million shares authorized for issuance as a "poison pill," an increase of $10 million for stock options as well as an increase in compensation for the management team. More information about the proxy fillings can be found here.
At this point in time, the best thing that could happen to investors is precisely the opposite of what management is suggesting. A change in control of the company could open up the possibility for an auction of the company, a transparent Board of Directors could truly determine the best interests of the company and management shouldn't be rewarded with increased options for a 75% drop in share price in a year and a failed Trulance launch.
Use caution when investing and final thoughts
At this point in time, I would advise against selling your shares. As a matter of fact, I recently poured 200k in January 2019 and 2020 $1 strike calls for an average of $1.10 apiece. I own more than half the open interest on both. And even though the spreads aren't great they are ITM calls, which means I can exercise them at any point and sell the shares in the open market.
Given the high short interest, a change in course from management can quickly make the share price double. At this share price, the market is expecting one more dilutive offer and no partnerships. If one of those factors change, the share price should double.
But make investments at your own risk. Management seems greedy, selfish and zero concerned about being friendly to stockholders in the company. They reward their total launch failure by expanding their pay and options instead of delivering results. They cower behind a poison pill to prevent a change in control instead of putting extra effort to gain the goodwill of their shareholders, which if they were happy they would not support a change in control.
If they continue down the road they are, it's totally possible that the company's best-case scenario would be a buyout close to the actual price where the shares were trading this January. For those who bought higher than $5.50 a share, the prospects of a full recovery are almost nil for the time being unless a full buyout does happen.
Disclosure: I am/we are long SGYP.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Consult your investment advisor before investing. Risks to investments include but are not limited to total loss of capital.
Synergy Pharma: One Perplexing Biotech With Upside
Apr. 2, 2018 4:54 PM ET|
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About: Synergy Pharmaceuticals, Inc. (SGYP), Includes: CPHR
Stone Fox Capital
Long/short equity, growth at reasonable price, research analyst, Deep Value
Stone Fox Capital
(10,695 followers)
Summary
Synergy Pharma management caused the current stock weakness by not accurately forecasting reduced cash burn levels.
Trulance continues gaining market share and generating record prescription levels.
The small biotech has a better financing position due to willingness for partnerships and licensing deals.
All of these factors correlate to a stock that shouldn't trade at the lows.
Synergy Pharma (SGYP) reported Q4 numbers that deviated from guidance in a positive manner. The investment thesis in the stock is further enhanced that better transparency from management would've prevented the crash in the stock to new lows below $2 in the first place.
Positive Cash Flow Steps
The biggest issue with Synergy Pharma over the last several months was the perplexing statement by the CFO that Q4 cash flows would match the roughly $60 million burn rate for the 1H of last year. As revenues were growing and R&D spending was set to drop, the numbers never added up as the biotech would only burn another $60 million during the December quarter from a massive inventory build.
Source: Synergy Pharma presentation
Pushing cash burn down eliminated the fears of the small biotech never reaching financial goals. For the quarter, Synergy Pharma only burned an incredibly low $32.6 million from operations. The number was nearly half the original guidance that scared the street into thinking costs were out of control while Trulance faced a slow ramp.
The amazing part is that the small biotech even saw no material change to key assets like inventories and prepaid expenses. These categories actually roughly offset each other with inventories up $4.2 million and prepaid expenses down $4.1 million.
The other factor was a jump in the gross profit from higher revenues. Gross profits doubled to $5.6 million during Q4. As mentioned in the previous article, revenues were expected to jump in the quarter to near analyst estimates of $7.2 million. The company though hit $9.4 million due to $1.9 million recognized from deferred revenues.
The key was controlling operating expenses. The large cash burn in Q3 hid the improvements in this category. Further reductions in R&D helped reduce quarterly operating expenses to the lowest levels since ramping up the sales force for Trulance.
Source: Synergy Pharma Q4'17 presentation
Despite some concerns about prescription volumes, the total 30-day subscription units were growing. The trouble is meeting Q1 and Q2 estimates based on stalling numbers in the first two months of the year.
Chart SGYP Revenue Estimates for Current Quarter data by YCharts
Revenues are targeted to jump to $12.2 million in Q1, yet weekly prescription numbers only reached record levels in March. Total prescriptions only hit roughly 33,000 for the quarter, up from about 31,000 in the previous quarter. The shift toward extended units probably boosted the amount of 30-day units easily above the 42,486 in Q4. The number though isn't enough to grow revenues over 50% to $12.2 million from the $7.5 million in Q4 excluding the deferred revenue.
Source: Synergy Pharma Oppenheimer presentation
The Q2 set up is much more bullish as the weekly prescriptions top 3,000 and 30-day extended units reaching 4,000 by the end March. A simple jump to a 4,000 weekly prescription average brings prescriptions up to 52,000 in the quarter for nearly 60% growth.
Synergy Pharma is set for strong revenue growth while costs remain in check. Whether the biotech hits analyst targets isn't exactly key to the stock rallying from below $2.
Better Financing Terms
Synergy Pharma made a couple of moves during the quarter that were positive of the future financing situation of the company. The biggest move was the agreement to license exclusive rights to Trulance in Canada to Cipher Pharma (CPHR) for a $5 million upfront payment and potential future milestone payment and royalties. The key is the willingness of the new CEO to pursue partnerships and licensing deals while the additional cash never hurts.
As discussed above, meeting the cash flow targets helped reduce the need for a massive current infusion of cash along with the expensive interest costs and prepayment penalties. The company was able to defer taking on an additional $100 million in debt by the end of February while still leaving the option available over the next three quarters.
Synergy Pharma ended 2017 with a cash balance of $137 million. Adding in the $5 million payment from Cipher, the small biotech has the amount needed to cover the operating losses run rate of Q4 for over a year. Revenue gains will help extend the current cash beyond a year.
As well, the market is still waiting for the company to forge a partnership to provide funds to further support the ongoing ramp of Trulance in the U.S. and reduce any need of more funds to build out that business opportunity.
Takeaway
The key investor takeaway is that the market has missed that Synergy Pharma has shifted the stock to one of reduced cash burn and growing revenues while the company is now pursuing more shareholder friendly partnerships. The founding CEO didn't exactly handle the transition from the R&D phase to the launch of Trulance very well, but the small biotech is different now and in a much better financial position.
The stock is still trading below $2, but this only presents further opportunities to build a position.
Disclosure: I am/we are long SGYP, SGYP.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Synergy Pharmaceuticals Inc (NASDAQ:SGYP): Is Breakeven Near?
[Simply Wall St.]
Victor Youngblood
Simply Wall St.March 23, 2018
Synergy Pharmaceuticals Inc’s (NASDAQ:SGYP): Synergy Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of novel therapies to treat gastrointestinal diseases and disorders. On 31 December 2017, the US$488.39M market-cap posted a loss of -US$224.34M for its most recent financial year.
Many investors are wondering the rate at which SGYP will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for SGYP, its year of breakeven and its implied growth rate.
Check out our latest analysis for Synergy Pharmaceuticals
Expectation from analysts is SGYP is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$93.08M in 2020. SGYP is therefore projected to breakeven around 2 years from today.
How fast will SGYP have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 68.67% year-on-year, on average, which signals high confidence from analysts.
Should the business grow at a slower rate, it will become profitable at a later date than expected.
NasdaqGS:SGYP Past Future Earnings Mar 23rd 18
Given this is a high-level overview, I won’t go into detail the detail of SGYP’s upcoming projects, but, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow.
This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I would like to bring into light with SGYP is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
There are key fundamentals of SGYP which are not covered in this article, but I must stress again that this is merely a basic overview.
For a more comprehensive look at SGYP, take a look at SGYP’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
Valuation: What is SGYP worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SGYP is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Synergy Pharmaceuticals’s board and the CEO’s back ground.
Why Synergy Pharmaceuticals' Shares Soared 24% Today
[Motley Fool]
Todd Campbell, The Motley Fool
Motley FoolMarch 2, 2018
What happened
After the company reported fourth-quarter financials that were better than industry watchers were expecting, shares in Synergy Pharmaceuticals (NASDAQ: SGYP) skyrocketed 24% on Friday.
So what
Investors eagerly anticipating news regarding the company's progress in commercializing its first drug, Trulance, an FDA-approved treatment for chronic idiopathic constipation, weren't disappointed today.
A rocket soaring into outer space from earth.
A rocket soaring into outer space from earth.
IMAGE SOURCE: GETTY IMAGES.
Synergy Pharmaceuticals reported fourth-quarter sales of $9.4 million, and that was $2.3 million better than Wall Street analysts were forecasting. The company also reported a loss of $0.16 per share in the quarter that was $0.03 ahead of estimates.
The top- and bottom-line beats are welcome news because the company's chosen to go-it-alone in marketing Trulance, which is not an inexpensive proposition given the drug competes against Linzess, a drug developed by Ironwood (NASDAQ: IRWD) that's licensed to the deep-pocketed Allergan (NYSE: AGN).
On a quarter-to-quarter basis, Synergy Pharmaceuticals' revenue was up nicely from the $5 million reported in the third quarter, and its $37 million net loss was a solid improvement from its $49 million loss in the prior quarter.
Now what
The company came into the fourth quarter with $118 million in cash and equivalents, but equity offerings helped that figure improve to $137 million despite the company's big spending. Its cash burn, however, remains a concern. In 2017, net cash used in its operating activities was $213 million.
In order to put this company into the black, Trulance's sales are going to have to climb considerably higher. Fortunately, the market opportunity is big. Linzess, which had sales of $701 million in 2017, only saw its sales increase 2% quarter-to-quarter in Q4, 2017, while Trulance's sales jumped 82%. The expansion of Trulance's label in January to include patients with irritable bowel syndrome constipation could allow it to compete even more effectively against Linzess this year.
Nevertheless, there's plenty of work left to do, and it's certainly possible that Synergy Pharmaceuticals will need to continue diluting investors' shares to raise more cash for its balance sheet. While the company's fourth-quarter performance is a solid step in the right direction, investors might want to remain on the sidelines.
Synergy Pharmaceuticals Reports Fourth Quarter and Full Year 2017 Financial Results and Business Update
[Business Wire]
Business WireMarch 1, 2018
NEW YORK--(BUSINESS WIRE)--
Synergy Pharmaceuticals Inc. (SGYP), a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies, today reported its financial results and business update for the full year and the three months ended December 31, 2017.
"2017 was a transformative year for Synergy with the FDA approval and launch of our first product, TRULANCE, which saw impressive early adoption and uptake in our first few quarters as a commercial organization and resulted in solid operating results for 2017," said Troy Hamilton, Chief Executive Officer of Synergy Pharmaceuticals Inc. "Strong customer demand was recognized by payors with TRULANCE coverage more than doubling its access on the largest commercial plans since launch. During 2017, we also successfully submitted a sNDA for TRULANCE that led to the second FDA approval in IBS-C in January 2018, expanding our opportunity to bring this important new treatment option to more patients in need."
"As we execute the long-term growth strategy of our business, we are continuing to prioritize investments in key areas that deliver the highest return and growth to the company's top-line," added Mr. Hamilton. "We are continuing to explore all strategic and business development opportunities that align with our core mission to deliver long-term value to our patients, customers and shareholders. The licensing deal we just entered into with Cipher Pharmaceuticals for TRULANCE in Canada is just the first example of our commitment to provide the potential benefit of TRULANCE to patients globally. To this end, we are pleased to announce the amendment of our CRG term loan agreement to provide enhanced strategic and financial flexibility. We are very encouraged by what we accomplished in 2017 as we established a strong foundation for future growth and success."
Fourth Quarter 2017 and Recent Highlights
TRULANCE U.S. net sales were $9.4 million in the fourth quarter of 2017, totaling $16.8 million for the full year 2017.
Total TRULANCE prescription volume in the fourth quarter of 2017 included 42,486 TRULANCE 30-count packs, per IQVIA. For the full year 2017, more than 88,360 TRULANCE 30-count packs were dispensed, increasing 70% on average month-over-month since launch on March 20, 2017, per IQVIA.
On January 25, 2018, we announced that the U.S. Food and Drug Administration (FDA) approved TRULANCE® (plecanatide) 3 mg tablet for the once-daily treatment of irritable bowel syndrome with constipation (IBS-C) in adults. This is the second indication for TRULANCE, which was first approved for the treatment of adults with chronic idiopathic constipation (CIC) in January 2017.
Since launch, TRULANCE commercial coverage has more than doubled to over 85% of all lives covered as of the end of February 2018. In addition, TRULANCE coverage on Medicare Part D and Managed Medicaid plans has grown to over 54% of lives covered.
In February 2018, we completed our field force integration plan by successfully transitioning our former contract sales representatives over to Synergy to coincide with our IBS-C approval and launch.
On February 27, 2018 we entered into a definitive licensing agreement with Cipher Pharmaceuticals under which we granted Cipher the exclusive right to develop, market, distribute and sell TRULANCE in Canada. Under the terms of the licensing agreement, Synergy received an upfront payment of $5.0 million and is eligible for an additional milestone payment, as well as royalties from product sales in Canada. We are continuing to evaluate other potential ex-US business development opportunities for TRULANCE.
Financial Results
As of December 31, 2017, we had approximately $137.0 million of cash and cash equivalents on hand as compared to approximately $82.4 million of cash and cash equivalents as of December 31, 2016.
Net cash used in operating activities was $212.9 million in the year ended December 31, 2017, as compared to $129.8 million in the year ended December 31, 2016.
Research and development expenses in the fourth quarter of 2017 were approximately $2.0 million, as compared to $16.4 million in the fourth quarter of 2016. These decreased expenses were primarily a result of reduced clinical trial spend associated with TRULANCE as well as pre-commercial inventory costs which are recorded as cost of goods sold in 2017.
Selling, general and administrative expenses were approximately $41.8 million in the fourth quarter of 2017, as compared to approximately $26.0 million in the fourth quarter of 2016. These increased expenses primarily reflect the cost of our commercial organization to launch TRULANCE.
On November 13, 2017, we entered into an underwriting agreement to issue and sell 21,705,426 shares of our common stock together with accompanying warrants (“Warrants”) to purchase an aggregate of 21,705,426 shares of Common Stock in an underwritten offering. The net proceeds from the Offering were approximately $52.2 million, after deducting underwriting discounts and commissions and offering expenses payable by us.
As of December 31, 2017 the principal balance on our senior secured term loan ("Term Loan") was $103.2 million. In February 2018 we amended the Term Loan agreement. The amended Term Loan provides for future borrowings of $25 million, $25 million and $50 million on or before June 30, 2018, September 30, 2018 and December 31, 2018, respectively. Additionally, the total amount of the commitment was reduced from $300 million to $200 million (excluding PIK loans) and the Minimum Market Capitalization covenant of $300 million was revised to be 200% of the outstanding principal amount of loan (excluding PIK loans).
We had 246.7 million and 202.7 million common shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively, which reflects primarily an increase in the issuance of shares from the conversion of Notes, and equity offerings in January and November 2017.
Net loss in the fourth quarter of 2017 was $37.0 million, as compared to a net loss of $59.9 million incurred in the fourth quarter of 2016.
Fourth Quarter Conference Call and Webcast
Synergy will host a conference call and webcast to discuss its financial and operating results for the fourth quarter and full year ending December 31, 2017 today at 4:30 p.m. Eastern Time. Participants may access the conference call by dialing 877-407-3978 (US and Canada) or 412-902-0039 (International). Please let the operator know you would like to join the Synergy Pharmaceuticals call.
To access the webcast as well as a PDF copy of the presentation, please visit the Investors section of Synergy's website at www.synergypharma.com. An audio replay of the conference call will also be available beginning approximately two hours after the call's conclusion, and will remain available through March 15, 2018. The replay may be accessed by dialing 877-660-6853 (U.S. and Canada) or 201-612-7415 (International) and entering conference ID number 13668774. A replay of the webcast will also be available on the Investors section of Synergy's website at www.synergypharma.com.
About Synergy Pharmaceuticals
Synergy is a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies. The company has pioneered discovery, research and development efforts around analogs of uroguanylin, a naturally occurring human GI peptide, for the treatment of GI diseases and disorders. Synergy’s proprietary GI platform includes one commercial product TRULANCE® (plecanatide) and a second product candidate - dolcanatide. For more information, please visit www.synergypharma.com.
About Irritable Bowel Syndrome with Constipation (IBS-C)
Irritable bowel syndrome (IBS) is a chronic gastrointestinal disorder characterized by recurrent abdominal pain and associated with two or more of the following: related to defecation, associated with a change in the frequency of stool, or associated with a change in the form (appearance) of the stool. IBS can be subtyped by the predominant stool form: constipation (IBS-C), diarrhea (IBS-D) or mixed (IBS-M). Those within the IBS-C subtype experience hard or lumpy stools more than 25 percent of the time they defecate, and loose or watery stools less than 25 percent of the time. It is estimated that the prevalence of IBS-C in the U.S. adult population is approximately 4 to 5 percent.
About Chronic Idiopathic Constipation (CIC)
CIC affects approximately 14 percent of the global population, disproportionately affecting women and older adults. People with CIC have persistent symptoms of difficult-to-pass and infrequent bowel movements. In addition to physical symptoms including abdominal bloating and discomfort, CIC can adversely affect an individual’s quality of life, including increasing stress levels and anxiety.
About TRULANCE®
TRULANCE® (plecanatide) is a once-daily tablet approved for adults with CIC or IBS-C. With the exception of a single amino acid substitution for greater binding affinity, TRULANCE is structurally identical to uroguanylin, a naturally occurring and endogenous human GI peptide. Uroguanylin activates GC-C receptors in a pH-sensitive manner primarily in the small intestine, stimulating fluid secretion and maintaining stool consistency necessary for regular bowel function.
Indications and Usage
TRULANCE (plecanatide) 3 mg tablets is indicated in adults for the treatment of Chronic Idiopathic Constipation (CIC) and Irritable Bowel Syndrome with Constipation (IBS-C).
IMPORTANT SAFETY INFORMATION
WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC PATIENTS
TRULANCE® is contraindicated in patients less than 6 years of age; in nonclinical studies in young juvenile mice administration of a single oral dose of plecanatide caused deaths due to dehydration. Use of TRULANCE should be avoided in patients 6 years to less than 18 years of age. The safety and efficacy of TRULANCE have not been established in pediatric patients less than 18 years of age.
Contraindications
TRULANCE is contraindicated in patients less than 6 years of age due to the risk of serious dehydration.
TRULANCE is contraindicated in patients with known or suspected mechanical gastrointestinal obstruction.
Warnings and Precautions
Risk of Serious Dehydration in Pediatric Patients
TRULANCE is contraindicated in patients less than 6 years of age. The safety and effectiveness of TRULANCE in patients less than 18 years of age have not been established. In young juvenile mice (human age equivalent of approximately 1 month to less than 2 years), plecanatide increased fluid secretion as a consequence of stimulation of guanylate cyclase-C (GC-C), resulting in mortality in some mice within the first 24 hours, apparently due to dehydration. Due to increased intestinal expression of GC-C, patients less than 6 years of age may be more likely than older patients to develop severe diarrhea and its potentially serious consequences.
Use of TRULANCE should be avoided in patients 6 years to less than 18 years of age. Although there were no deaths in older juvenile mice, given the deaths in young mice and the lack of clinical safety and efficacy data in pediatric patients, use of TRULANCE should be avoided in patients 6 years to less than 18 years of age.
Diarrhea
Diarrhea was the most common adverse reaction in the four placebo-controlled clinical trials for CIC and IBS-C. Severe diarrhea was reported in 0.6% of TRULANCE-treated CIC patients, and in 1% of TRULANCE-treated IBS-C patients.
If severe diarrhea occurs, the health care provider should suspend dosing and rehydrate the patient.
Adverse Reactions
In the two combined CIC clinical trials, the most common adverse reaction in TRULANCE-treated patients (incidence ≥2% and greater than in the placebo group) was diarrhea (5% vs 1% placebo).
In the two combined IBS-C clinical trials, the most common adverse reaction in TRULANCE-treated patients (incidence ≥2% and greater than in the placebo group) was diarrhea (4.3% vs 1% placebo).
Please also see the full Prescribing Information, including Box Warning, for additional risk information.
Forward-Looking Statements
Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward- looking words such as "anticipate," "planned," "believe," "forecast," "estimated," "expected," and "intend," among others. These forward-looking statements are based on Synergy's current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, substantial competition; our ability to continue as a going concern; our need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payer reimbursement; limited sales and marketing efforts and dependence upon third parties; and risks related to failure to obtain FDA clearances or approvals and noncompliance with FDA regulations. As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. There are no guarantees that future clinical trials discussed in this press release will be completed or successful or that any product will receive regulatory approval for any indication or prove to be commercially successful. Investors should read the risk factors set forth in Synergy's Annual Report on Form 10-K for the year ended December 31, 2017 and other periodic reports filed with the Securities and Exchange Commission. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Forward-looking statements included herein are made as of the date hereof, and Synergy does not undertake any obligation to update publicly such statements to reflect subsequent events or circumstances.
Synergy Pharmaceutical Inc.
Consolidated Balance Sheets
($ in thousands) December 31, 2017 December 31, 2016
Assets
Cash and cash equivalents $ 136,986 $ 82,387
Accounts receivable 6,491 —
Inventories 17,214 5,640
Prepaid expenses and other current assets 4,469 889
Total Current assets 165,160 88,916
Other assets 1,446 936
Total assets $ 166,606 $ 89,852
Liabilities and Stockholders' (Deficit)/Equity
Total Current Liabilities $ 38,147 $ 29,430
Senior convertible notes, net 17,302 22,665
Long term debt, net 98,660 —
Derivative financial instruments – warrants 17,582 216
Other long term liabilities 433 —
Total Liabilities 172,124 52,311
Total Stockholders’ (Deficit)/Equity (5,518 ) 37,541
Total Liabilities and Stockholders' (Deficit)/Equity $ 166,606 $ 89,852
Synergy Pharmaceutical Inc.
Consolidated Statement of Operations
($ in thousands except share and per share data)
Three Months
Ended
December 31,
Three Months
Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
2017 2016 2017 2016
(unaudited) (unaudited)
Net Sales $ 9,400 $ — $ 16,820 $ —
Cost of goods sold 3,820 — 8,811 —
Gross profit 5,580 — 8,009 —
Costs and Expenses:
Research and development 1,990 16,406 48,346 87,056
Selling, general and administrative 41,779 25,992 181,862 58,230
Loss from Operations (38,189 ) (42,398 ) (222,199 ) (145,286 )
Other Income/(Loss):
Interest expense, net (2,909 ) (3,007 ) (5,270 ) (13,390 )
Debt conversion expense — (14,543 ) (1,209 ) (40,158 )
State R&D tax credits — 126 — 121
Change in fair value of financial instruments 4,124 (45 ) 4,340 106
Total Other Income/(Loss) 1,215 (17,469 ) (2,139 ) (53,321 )
Net Loss $ (36,974 ) $ (59,867 ) $ (224,338 ) $ (198,607 )
Net Loss per Common Share, Basic and Diluted $ (0.16 ) $ (0.31 ) $ (1.00 ) $ (1.21 )
Weighted Average Common Shares Outstanding 235,924,350 190,093,786 225,439,121 164,437,548
In my opinion it looks like none of the firms had found any "buyers" for the class action.
Where Is Synergy Pharmaceuticals Inc Heading From Here? H.C. Wainwright Weighs In
[SmarterAnalyst]
support@smarteranalyst.com (Ben Mahaney)
SmarterAnalystFebruary 6, 2018
Now that Synergy Pharmaceuticals Inc (NASDAQ:SGYP) meets the qualifications to open the next tranche of debt funding with CRG LP, one bull believes this will ease the debt concerns towering above shares. By the close of last month, Synergy boasted over the necessary minimum of $128 million needed to access the second tranche of $100 million under the facility.
Read more: This biotech stock portfolio has tripled the IBB since inception
H.C. Wainwright analyst Ram Selvaraju eagerly spots a meaningful ramp from the second debt facility tranche that will benefit lead asset Trulance, approved to treat Chronic Idiopathic Constipation (CIC) and constipation-predominant Irritable Bowel Syndrome (IBS-C).
Therefore, the analyst reiterates a Buy rating on SGYP stock with a $7 price target, which implies a 272% upside from current levels. (To watch Selvaraju's track record, click here)
"In our view, this update mitigates the significant financing overhang that has weighed on the company's shares, and provides Synergy with substantial runway via which to continue the commercialization of its sole marketed product, Trulance™. We remind investors that the FDA recently approved the Trulance supplemental New Drug Application (sNDA) in constipation-predominant irritable bowel syndrome (IBS-C). In our view, label expansion to include this indication alongside the existing label indication for chronic idiopathic constipation (CIC) should meaningfully accelerate sales momentum and reinvigorate sales force messaging," asserts Selvaraju.
Meanwhile, the new label expansion for Trulance to now treat IBS-C and not just CIC to the analyst "reflects solid safety and efficacy profile" for the drug.
By the end of next year, Selvaraju angles for prospective profitability considering Synergy's outlook, explaining: "In our view, given the current status of Trulance commercialization in the U.S. and our forecast of over $85M in 2018 U.S. Trulance sales, rising to $270M in 2019, we believe that Synergy could potentially reach cash flow-positive status in 2H19."
Synergy could have enough "runway" to achieve "self-sustaining status," concludes the analyst pointing to the company's current available resources alone.
TipRanks reveals a strong bullish camp betting on this biotech player. Out of 5 analysts polled in the last 3 months, 4 are bullish on Synergy stock with just 1 playing it safe on the sidelines. With a whopping return potential of 392%, the stock's consensus target price stands at $9.25.
Synergy Pharmaceuticals Achieves Cash Balance Requirement to Access Additional Capital
Business WireFebruary 1, 2018
NEW YORK--(BUSINESS WIRE)--
Synergy Pharmaceuticals Inc. (SGYP), a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies, today announced that it has met the cash balance requirement to access additional capital under the Term Loan Agreement dated as of September 1, 2017 with CRG Servicing LLC. In addition, Synergy announced details of upcoming investor events, including its financial results call to be held on March 1, 2018.
“Synergy’s cash balance at the end of January was in excess of $128 million, which means we met the financial requirement to access additional capital by February 28, 2018,” said Gary Gemignani, EVP and Chief Financial Officer of Synergy Pharmaceuticals Inc. “With the achievement of this financial condition, we have demonstrated our ability to effectively manage costs while simultaneously investing in strategic initiatives that deliver growth to the company’s top-line. We look forward to providing a full update on our 2017 financial and business performance and go-forward priorities during our March 1st call.”
“Today’s announcement highlights our commitment to implementing cost efficiencies throughout the company while prioritizing investments that will continue to drive the uptake of TRULANCE®, a high value asset now FDA approved in two indications,” said Troy Hamilton, Chief Executive Officer of Synergy. “We are continuing to evaluate all strategic and business development opportunities that align with our mission to deliver long-term value to patients, healthcare providers and our shareholders. We are confident the company is well positioned to execute on its business objectives and look forward to providing regular updates on our progress as we move ahead.”
Upcoming Investor Events
Leerink Partners 7th Annual Global Healthcare Conference:
Synergy is scheduled to participate in the Leerink Partners 7th Annual Global Healthcare Conference on Thursday, February 15, 2018 at the Lotte New York Palace Hotel in New York, NY. A live webcast of Troy Hamilton’s fireside chat with the host analyst will begin at 3:00 p.m. Eastern Time and will be accessible through the Investors section of Synergy’s website at www.synergypharma.com. A replay of the webcast will be available at the same location for 60 days following the conference.
Financial Results Conference Call Details:
Synergy will host a conference call and webcast to discuss its financial and operating results for the fourth quarter and full year ending December 31, 2017 on Thursday, March 1, 2018 at 4:30 p.m. Eastern Time. Participants may access the conference call by dialing 877-407-3978 (US and Canada) or 412-902-0039 (International). Please let the operator know you would like to join the Synergy Pharmaceuticals call.
To access the webcast as well as a PDF copy of the presentation, please visit the Investors section of Synergy's website at www.synergypharma.com. An audio replay of the conference call will also be available beginning approximately two hours after the call's conclusion, and will remain available through March 15, 2018. The replay may be accessed by dialing 877-660-6853 (U.S. and Canada) or 201-612-7415 (International) and entering conference ID number 13668774. A replay of the webcast will also be available on the Investors section of Synergy's website at www.synergypharma.com.
About Synergy Pharmaceuticals Inc.
Synergy is a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies. The company has pioneered discovery, research and development efforts on analogs of uroguanylin, a naturally occurring and endogenous human GI peptide, for the treatment of GI diseases and disorders. Synergy’s proprietary GI platform includes one commercial product TRULANCE® and a second product candidate, dolcanatide. For more information, please visit www.synergypharma.com.
Forward-Looking Statement
Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Synergy’s anticipated public offering, anticipated use of proceeds and other statements containing the words "anticipate," "planned," "believe," "forecast," "estimated," "expected," and "intend," among others. These forward-looking statements are based on Synergy's current expectations and actual results could differ materially. There are a number of factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, the uncertainties related to market conditions and the completion of the public offering on the anticipated terms or at all; the development, launch, introduction and commercial potential of TRULANCE; growth and opportunity, including peak sales and the potential demand for TRULANCE, as well as its potential impact on applicable markets; market size; substantial competition; our ability to continue as a going concern; our need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payer reimbursement; dependence upon third parties; our financial performance and results, including the risk that we are unable to manage our operating expenses or cash use for operations, or are unable to commercialize our products, within the guided ranges or otherwise as expected; and risks related to failure to obtain FDA clearances or approvals and noncompliance with FDA regulations. As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. There are no guarantees that future clinical trials discussed in this press release will be completed or successful or that any product will receive regulatory approval for any indication or prove to be commercially successful. Investors should read the risk factors set forth in Synergy's most recent periodic reports filed with the Securities and Exchange Commission, including Synergy’s Form 10-K for the year ended December 31, 2016. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Forward-looking statements included herein are made as of the date hereof, and Synergy does not undertake any obligation to update publicly such statements to reflect subsequent events or circumstances.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005334/en/
Synergy Pharmaceuticals Inc Has New IBS-C Indication Under Its Belt, But Can Trulance Succeed Long-Term?
147c5790-4ac7-11e7-a663-cb0ba869dcb8_Sma
support@smarteranalyst.com (Ben Mahaney)
SmarterAnalystJanuary 25, 2018
Synergy Pharmaceuticals Inc (NASDAQ:SGYP) shares are falling 3% even though this drug maker scored a slam dunk with the FDA today on Trulance's expanded indication to the constipation-predominant Irritable Bowel Syndrome (IBS-C) market. Considering the Street had largely been betting on Synergy to win approval on this sNDA, it seems to be a case of "buy on the rumor, sell on the news," with investors turning over a hefty profit today.
Read more: Synergy Enters a Fiercely Competitive IBS-C Market, But “Attractive Commercial Opportunities” Exist, Says William Tanner
Canaccord analyst John Newman weighs in noting that this victory went "as expected," and adds that "on-label use should boost script growth" for Synergy.
In reaction to the "positive" news, the analyst reiterates a Buy rating on SGYP stock with a $13 price target, which implies a 428% upside from current levels. (To watch Newman's track record, click here)
"We expect direct-to-consumer (DTC) promotion and the new indication approval could help steepen its launch curve. Particularly, given that Linzess is also promoted via DTC channel, we believe that DTC could help Trulance level the competition field to some extent. We remind investors that Trulance continues to grow at a steady pace against competition, such as the introduction of AGN's Linzess 72 mcg," highlights the analyst.
Additionally, Newman will keep an eye on the removal progress of new-to-market (NTM) blocks in the first half of this year, which he believes would stand to offer Synergy's Trulance better access throughout commercial to Medicare Part D to Managed Medicaid plans. The analyst asserts, "This would help further support Trulance’s growth trajectory."
Worthy of note, the third quarter saw Trulance experiencing a rocket of script growth, a solid 105% jump from the second quarter, hitting a total of around 38,000 scripts from the first days of its launch back in March of last year. With script growth taking off on back of more and more physicians willing to prescribe the treatment, this growth indicates to the analyst a compelling value proposition recognized by physicians- a pattern and "sentiment" he sees no signs of stopping.
Bigger picture, "Trulance will be a successful product long term, with the IBS-C indication approval further bolstering Trulance’s commercial potential. We recognize that GI launches for oral products take time to build momentum, but we continue to believe Trulance is a safer and easier-to-use drug than AGN's Linzess, which we believe physicians and patients would prefer in the long run," Newman contends.
TipRanks points to confidence on Wall Street circling this biotech player, with 4 out of 5 analysts polled in the last 3 months rating a Buy on Synergy stock and just 1 maintaining a Hold. The 12-month average price target stands at $9.25, marking a nearly 281% upside from where the stock is currently trading.
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Maybe now a larger company may be interested in SGYP for an acquisition.
Can Synergy Pharmaceuticals Inc Get Things Moving Again with Trulance?
Wednesday could mark a turning point for Synergy investors.
-January 23, 2018, 9:42 AM EDT
An FDA decision could push Synergy Pharmaceuticals Inc (NASDAQ:SGYP) stock higher as little as 24 hours from now — or not. Sales of the company’s popular constipation drug may not increase enough, or increase fast enough, to offset a blazing rate of cash burn.
Irritable Bowel Syndrome (IBS) is no laughing matter, but an uncomfortable intestinal condition with symptoms ranging from cramping, gas, and bloating, to … worse. Internet information website WebMd estimates that 20% of American adults suffer from IBS (and when has the Internet ever been wrong?).
That sounds like an uncomfortable situation, but for investors in Synergy it could come as a relief.
A relief from irritable stock syndrome
You see, Synergy Pharmaceuticals stock has been on a downward slide ever since hitting a recent high of $7.07 a share on January 1, 2017. At its closing price of $2.64 Monday, Synergy shares have lost 63% of their value in just a little over 12 months. But according to some analysts, that may change — and soon.
Last year , Synergy received approval from the Food and Drug Administration to use its “Trulance” drug for treating chronic idiopathic constipation in adults. In June 2017, Synergy further applied for approval to use Trulance in the large IBS with constipation (IBS-C) market, and under rules established by the 1992 Prescription Drug User Fee Act (PDUFA), the FDA has until January 24 to issue its decision. For Synergy and Trulance, that deadline arrives on Wednesday.
Analysts are wondering if approval could turn things around this stock. Citing data from Phase III trials, analyst Timothy Chiang at BTIG Research predicted that the FDA will approve Trulance for IBS-C, and that this would boost Synergy stock — perhaps by quite a lot. BTIG has a $7 price target on the shares, which suggests the shares could more than double. Ram Selvaraju at H.C. Wainwright is of a similar opinion — and in fact more optimistic, setting a price target of $8 a share, and setting up the possibility of a three-bagger for Synergy investors off today’s prices.
More recently though, analysts at Oppenheimer pointed out that while Trulance has enjoyed some success in the market, this could actually limit the upside from a positive FDA decision. Oppenheimer notes that “some” physicians are already prescribing Trulance for use in treating IBS-C “off-label.” This suggests that any sales increase following FDA approval might not be as big as would be expected if use of Trulance to treat IBS-C were a completely novel idea.
Oppenheimer urges investors to focus less on any potential boost in sales of Trulance, and more on Synergy’s high cash burn rate. In that regard, investors should be aware that with perhaps $180 million in the bank today, Synergy is still burning through cash at a rate of nearly $220 million a year — and due to run out of cash in less than a year.
Overall, Wall Street loves this stock, earning a stellar analyst consensus rating, as TipRanks analytics demonstrate SGYP as a Strong Buy. Out of 5 analysts polled in the last 3 months, 4 are bullish on Synergy stock, while one is neutral. With a return potential of nearly 250%, the stock’s consensus target price stands at $9.25.
Implied Volatility Surging for Synergy Pharmaceuticals (SGYP) Stock Options
[Zacks]
Zacks Equity Research
ZacksJanuary 22, 2018
Investors in Synergy Pharmaceuticals, Inc. SGYP need to pay close attention to the stock based on moves in the options market lately. That is because the Feb 16, 2018 $2.00 Put had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Synergy Pharmaceuticals shares, but what is the fundamental picture for the company? Currently, Synergy Pharmaceuticals is a Zacks Rank #2 (Buy) in the Medical - Drugs industry that ranks in the Bottom 34% of our Zacks Industry Rank. Over the last 60 days, two analysts have increased their earnings estimates for the current quarter, while none have dropped their estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from a loss of 22 cents per share to a loss of 19 cents in that period.
Given the way analysts feel about Synergy Pharmaceuticals right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
I wonder if the Govt shutdown will affect the FDA. If their employees are not at work until the Govt opens again will this affect what happens on the 24th?
About 800,000 federal employees will be furloughed until Congress resolves the issue.
To All.
Please do not spam other stocks on this thread. It will not be tolerated.
Thank you for your cooperation.
Tim Chiang Upbeat on These Two Biotech Players Circling FDA Approvals in 2018: Synergy Pharmaceuticals Inc., Progenics Pharmaceuticals
[SmarterAnalyst]
support@smarteranalyst.com (Ben Mahaney)
SmarterAnalystJanuary 4, 2018
With Synergy Pharmaceuticals Inc (NASDAQ:SGYP) looking at exciting new leadership along with IBS-C treatment indication approval for Trulance by the end of this month and Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) prospectively garnering an FDA nod by the end of April for its orphan status asset for treatment of rare tumors, BTIG analyst Tim Chiang spotlights two biotech companies worth the bullish bet. (To watch Chiang's track record, click here)
Let's dive in:
Synergy Approaching a New and Improved Year for 2018
With Synergy cherry-picking its once Chief Commercial Officer Troy Hamilton as the new effective CEO, Chiang takes the news in bullish stride. Considering Synergy's top priority storming into the new year eyes a ramp up of chronic constipation asset Trulance (plecanatide), with fresh new leadership, the analyst is now "expecting a better year in 2018" for the drug maker.
In reaction, the analyst maintains a Buy rating on SGYP with a price target of $7, which implies a 188% upside from current levels.
Chiang writes, "Heading into 2018, we think there are several key items to focus on including increased payor access for Trulance, with major insurers like Aetna […] moving to Tier 2 preferred status, UnitedHealthCare […] removing its new to market block, and Cigna […] removing its prior authorization requirement for Medicare Part D Plans. In addition, major PBM’s including CVS Caremark […] and Prime Therapeutics will also be adding Trulance to their formularies."
With a prospective FDA approval decision waiting in the wings on the 24th of this month for the IBS-C treatment indication, the analyst believes this could prove to be a share driver for Synergy. Keep in mind, back in October, Synergy unleashed successful pooled data at the American College of Gastroenterology (ACG) meeting. Plecanatide's results showcased statistically significant results reached 12 weeks in against the placebo arm, which translates to two wins: both primary and secondary endpoints.
Moving forward, Chiang projects roughly $175 to $180 million of cash following Synergy's equity raise in November, which should assist the biotech company in realizing its "Second Tranche Borrowing Milesone" under the term loan agreement in place with CRG LP.
TipRanks highlights a strong bullish camp on Wall Street betting on Synergy stock, with all 5 analysts polled in the last 3 months unanimously rating a Buy on the biotech stock. With a whopping return potential of nearly 250%, the stock's consensus target price stands at $8.60.