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PropThink: Why AMRN and SGYP Could Trade Higher On AstraZeneca's Newly Announced CEO

August 28, 2012 - London

Amarin Pharmaceuticals (NASDAQ:AMRN) could trade higher as investors digest this morning's news that Roche's (OTC:RHHBY) former Head of Global Pharmaceuticals has joined AstraZeneca (NYSE:AZN) as CEO. Investors expect AMRN to be acquired for its recently approved triglyceride-lowering therapy, Vascepa, and the most logical suitor is AZN. This is primarily because AZN markets its blockbuster cholesterol-lowering agent, Crestor, offering significant cost savings if it can sell Vascepa and Crestor together through the same sales force. AZN's new CEO, Pascal Soriot, stated that he is charged with growing the European pharma company via innovation and acquisition, and with Crestor patent-protected through late 2016, leveraging the company's investment in major cardiovascular markets makes sense.  All eyes remain on upcoming news on whether or not Vascepa will receive NCE status from the FDA (see PropThink's article last week). Nevertheless, with an average price target by Wall Street analysts of $25, AMRN could have a nice bounce today on the AZN news.

In addition to AMRN, Synergy Pharmaceuticals (NASDAQ:SGYP) is another stock that could move higher on today's announcement from AZN. SGYP is rumored to have spoken to several major pharmaceutical companies on partnering plecanatide, Synergy's development-stage treatment for irritable bowel syndrome with constipation (IBS-C). Key clinical data on plecanatide is anticipated before year-end. AZN is likely one of the companies that spoke with SGYP as a potential partner for the drug, before the last CEO stepped down. AZN has the world's largest gastrointestinal (GI) drug franchise with its Nexium product, so a deal with SGYP in this therapeutic area makes sense. As a result, the new acquisition-driven CEO at AZN might revive any partnering talks, fueling potential upside in SGYP. Once the new AZN chief has fleshed out his strategy, he will likely communicate to analysts and investors which therapeutic areas will be a focus for the company going forward, which could lead to more trading opportunities for companies like AMRN and SGYP. Expect these two stocks to trade up today as investors and analysts interpret the AZN news.

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