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PropThink: SGYP Advances 2nd Clinical-Stage GI Treatment; Positive For The Stock


September 14, 2012 -

Synergy Pharmaceuticals (NASDAQ:SGYP) recently submitted an IND (Investigational New Drug application) for its IBD (inflammatory bowel disease) treatment, SP-333, and is on track to meet management's objective to begin clinical trials with the compound in the second half of this year. Like SGYP's lead drug candidate, plecanatide, SP-333 is a guanylate cyclase-C (GC-C) agonist that, according to the company, may be the most potent analog of uroguanylin ever developed. Uroguanylin is a natural human hormone that regulates the secretion of fluid into the intestine, which is critical for normal digestion. Unlike plecanatide which is being developed for CC and IBS (chronic constipation and irritable bowel syndrome, respectively), SP-333 will be developed to treat select IBDs, with ulcerative colitis expected to be the first indication tested. As an orally available agent, SP-333 has potential to become an important treatment in this large indication, for which the need for new drug therapies is high. Advancement of SP-333 indicates that SGYP is not a one-trick pony in the gastrointestinal (GI) treatment segment, and could make the company even more attractive to potential large cap pharmaceutical partners or suitors seeking to have a franchise in this area.
Nevertheless, the key focus for SGYP remains on plecanatide, as this potential treatment for CC and IBS is the subject of a late-stage clinical trial intended to support FDA approval. Results for this trial are due to be reported before year-end and if positive, are likely to be a major value-creating event for the stock (see PropThink's prior story). In late August, Forest Laboratories (NYSE:FRX) and partner Ironwood Pharmaceuticals' (NASDAQ:IRWD) received FDA approval for their IBS/CC treatment, Linzess (generically known as linaclotide). Given that Linzess and plecanatide work by the same mechanism of action, the approval of Linzess provided strong validation that plecanatide has a good chance to reach the market. Importantly, based on early-stage data, plecanatide appears to have a more favorable side effect profile than Linzess, and there is some talk that SGYP could be on the radar screen of big pharma as a take-out candidate or a partner. Expect shares of SGYP to trade higher as analysts and investors begin to factor in value for SP-333, and as we move closer to the anticipated clinical results for plecanatide.
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Disclaimer:
Use of PropThink's research is at your own risk. You should do your own research and due diligence before making any investment decision with respect to securities covered herein. You should assume that as of the publication date of any report or letter, PropThink, LLC (possibly along with or through our members, partners, affiliates, employees,and/or consultants) along with our clients and/or investors (collectively referred to as ""PropThink"") has a position in all stocks (and/or options of the stock) covered herein that is consistent with the position set forth in our research report. In connection with SGYP, PropThink has taken a long position and therefore stands to realize significant gains in the event that the price of stock appreciates. Following publication of any report or letter, PropThink intends to continue transacting in the securities covered therein, and we may be long, short, or neutral at any time hereafter regardless of our initial recommendation. PropThink, LLC is not registered as an investment advisor. To the best of our knowledge and belief, all information contained herein is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable, and not from company insiders or persons who have a relationship with company insiders. A shareholder of PropThink is a consultant to Synergy Pharmaceuticals and receives a monthly retainer as compensation. Neither the opinion expressed herein nor PropThink's position is influenced by this relationship. PropThink was not compensated to publish this article, and we retain full control over the content of this article. Our full disclaimer is available at http://www.propthink.com/disclaimer.




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