Actionable news
All posts from Actionable news
Actionable news in SGYP: Synergy Pharmaceuticals, Inc.,

Is A Synergy Pharmaceuticals Buyout Already In Place?

CEO Gary S. Jacobs is set to receive a parting bonus of close to $100M should Synergy be sold for $2.8B.

Shire Plc of Dublin, Ireland, is daily interacting with high prescribing gastroenterologists that could turn plecanatide into a worldwide blockbuster.

Is Troy Hamilton's arrival from Shire as Chief Commercial Officer a Trojan Horse maneuver secretly designed to ready Shire's sales force for plecanatide distribution?

In 3 years of biotech blogging, this is my first and, perhaps, last musing on a buyout scenario.

I've never been one to speculate on the sale of Synergy Pharmaceuticals (NASDAQ:SGYP), or any other biotech for that matter, though I have been one to discourage it. Buyout rumors are a staple of those attempting to manipulate the price of a stock upwards. Go to the Yahoo message board of any biotechnology enterprise and you'll readily happen upon persuasive posts implying that such an eventuality is as predetermined as it is imminent.

Where Synergy is concerned, however, there is more of a reason, perhaps, to entertain such a notion.

  • Synergy's lead compound, plecanatide, is wholly owned and recently displayed best in class efficacy with reduced side effects in the treatment of chronic idiopathic constipation.
  • Plecanatide could go to market in early 2017.
  • Constipation relief is a growing treatment space with newly established and, therefore, vulnerable competitors.
  • Synergy's CEO and CSO are respectively set to receive 3.5% and 1.17% multiples of the enterprise value in any buyout scenario as a bonus.
  • Biotechs with a gastroenterology focus have been the splashy targets of recent big pharma acquisitions.

In an all-cash deal earlier this year, Valeant Pharmaceuticals (NYSE:VRX) acquired Salix, the constipation market leader, for $11B, adding significant debt to an already dubious balance sheet. Although many have criticized Valeant for this brazen tactic in which it seizes the revenue generating assets of a company while quashing its pipelines in the aftermath, equity holders remain supportive as the company's share price climbs ever higher.

Other growing pharmaceutical companies have to be watching this strategy play out with an active interest. Celgene (NASDAQ:CELG) has been deepening its commercial footprint through the recent acquisitions of, and investments in, complementary assets. The idea is to look down the road towards replacing patent expirations of existing compounds while simultaneously growing the product portfolio.

So, which pharmaceutical company would be most interested in pursuing this kind of acquisitional path with Synergy? A premature Bloomberg news article on March 26th speculating on the potential sale of the company prior to the first Phase 3 data release referenced the purchase of Salix as cause...