Synergy Pharmaceuticals Inc fka SGYPQ

[Snackman]

Synergy Pharmaceuticals Inc (NASDAQ:SGYP)

This one’s a bit counter intuitive. Synergy Pharmaceuticals Inc (NASDAQ:SGYP) announced on Friday that it had reached an FDA mid cycle review milestone. When a company submits a new drug application, the FDA will generally set up a couple of review period milestones, designed to improve communication between the agency and the company seeking approval. As these milestones are reached, it’s sort of hurdle clearing, and means the drug under review is a step closer to commercialization. As a general rule, therefore, when the review clears one of these milestones, a company will pick up a bit of strength on the back of the announcement. Not so in this instance, however.

Synergy Pharmaceuticals Inc (NASDAQ:SGYP) kicked off Friday’s session at $3.83 a share. By session close, the company traded for $3.61 – a 5.74% decline throughout the day. After hours, the company’s market capitalization slipped further, and will now open the week at $3.55, or a market capitalization for $648 million. So why the decline? Well, we also saw a bit of data released concerning the company’s ongoing irritable bowel syndrome with constipation (IBS-C) program. The program has been plagued with enrollment issues, and as such, there is going to be a slight delay on topline release from two phase IIIs. The data is now expected during the fourth quarter of this year, with a view to submitting an NDA to the FDA in this indication at some point during the first quarter of next year.

Follow Synergy Pharmaceuticals Inc. (NASDAQ:SGYP)
Trade (NASDAQ:SGYP) Now!

It’s reasonable to assume that the decline came on the back of disappointment over the delays, as markets were hoping for an NDA at some point this year – something that there is now pretty much no chance of happening.

It’s not all bad, however, so there may be something of an opportunity in the decline. With a drug progressing nicely through the review process in one indication, and the same drug in two pivotals with a view to NDA submission within the next eight or so months, there’s plenty of room for a recover medium term. The Friday decline might be a good reason to get in, serving up a discount entry on market sentiment induced volatility.

One to watch, and of the two stocks discussed, very much the frontrunner from a risk profile perspective.