We would note that, if plecanatide were to be valued similar to linaclotide, the implied price per share of Synergy stock would approach $45, without considering Synergy’s pipeline. So now you can double their upside potential, which is why I think Morgan Joseph is too conservative with the $15 target and the stock can easily be $25-30.Īctually, even Morgan Joseph acknowledges its $15 target is too conservative. By the way, Ironwood only owns 50% of the rights to its product, while Synergy owns 100% of the rights. Synergy's is $324 million - an almost 400% upside potential on Synergy. You might wonder: So Synergy and Ironwood are basically the same except this one negative on Ironwood shouldn't their market caps be similar? And what’s Ironwood’s market cap and what’s Synergy’s? In other words, we have a potential $20bb market with two drugs that act the same, except one drug causes "Montezuma's revenge" (Ironwood) and the other doesn't (Synergy). " She also notes, "the mechanism of action of the two drugs is identical." In fact, According to a Merrill Lynch report written by research analyst Rachel McMinn on Octoabout the Synergy drug, "The one specific detail noted is that none of the patients experienced diarrhea, a side effect noted with. So while the drug works (you get rid of the constipation), some might view this as a negative. However - and this is key - the Ironwood drug had the adverse effect that it causes diarrhea. The Ironwood drug works, so we know the Synergy drug will work. In fact, the scientists come out of the same lab. So why is this the big paragraph? The drug is basically the same as the Ironwood ( IRWD) drug. Linaclotide ― developed by Ironwood Pharmaceuticals ― is the subject of three high-profile corporate partnerships with Forest Laboratories (FRX) in the U.S., Astellas ( OTCPK:ALPMF ) in Asia, and Almirall S.A. In addition, we note that linaclotide, a closely related compound that shares a mechanism of action with plecanatide, has demonstrated positive efficacy results in four Phase 3 trials, spanning both IBS-C and CC. In our view, Synergy’s lead drug candidate, plecanatide, is a substantially risk-mitigated asset, as this drug has already demonstrated proof-of-concept efficacy in a Phase 2a study and shown exemplary safety, with no incidence of diarrhea as a significant adverse event. Over 100 million people worldwide are estimated to suffer from constipation-predominant irritable bowel syndrome (IBS-C) or chronic constipation (CC) …. This is the key paragraph in the report, in my opinion, and I’ll explain why this paragraph means SGYP is worth $15 or even higher: That’s the kind of success I like to follow. He knows how to identify diamonds in the rough. He initiated coverage on Achillion Pharma ( OTC:ACHN) at $2.70 in July 2010 and it went to $7.00 by Febraury 2011. Last year he initiated a buy on IBIO ( IBIO) at $0.80 per share within three months it hit $4.50 per share. He started coverage on SIGA and PIP before both stocks took off. He initiated coverage on Amarin ( AMRN) at $0.85 a share just two years ago in 2009 now it has a market cap of $2.4 billion and stands today at $17.44 per share. Anyone who knows how I invest knows that I like to follow success. I want to explain first why I like the analyst: Raghuram Selvaraju, who has a Ph.D. SGYP develops a compound for curing irritable bowel syndrome as it relates to constipation. Oh, wait I actually have seen such a discrepancy: When Pharmathene ( PIP) was at $1.70 and this exact same analyst (he was at Noble then) called it a $20 stock. I’ve rarely seen such a discrepancy from an analyst report price target and the actual price. The stock is currently at $3.60 as I write this. Morgan Joseph just put out a report saying that Synergy Pharmaceuticals ( NASDAQ: SGYP-OLD), a $300mm market cap company, is worth $15 a share.
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