UPDATE 2-Synergy Pharma constipation drug succeeds in trial
(Adds details, analyst comment; updates shares)
By Vrinda Manocha
April 30 (Reuters) - Synergy Pharmaceuticals Inc said its constipation drug improved the frequency of complete spontaneous bowel movements in patients with a form of irritable bowel syndrome, reinforcing investor hopes that the data would boost chances of a buyout.
Synergy Pharma's shares rose nearly 6 percent in early trade after the company also said there were no treatment-related serious adverse events in the mid-stage trial.
Earlier this week, Forest Laboratories Inc said it would buy Furiex Pharmaceuticals Inc for up to $1.46 billion for its experimental irritable bowel syndrome drug, the latest in several multi-billion dollar deals in the healthcare industry in the past week.
"Furiex's acquisition provides us with a benchmark for what Synergy could get in a takeout," Aegis Capital analyst Raghuram Selvaraju said.
Selvaraju said the fair value for Synergy would be at least $1.5 billion-$2 billion at this juncture.
At its current trading levels, the company is valued at about $450 million.
Analysts have previously said that Synergy Pharma could be an attractive target in a ripe gastrointestinal drug market.
Selvaraju said Synergy Pharma's drug, plecanatide, could compete with Linzess, which is jointly marketed by Forest Labs and Ironwood Pharmaceuticals Inc.
Linzess, which was launched in December 2012, is approved to treat irritable bowel syndrome with constipation and chronic idiopathic constipation.
Selvaraju said Synergy Pharma should easily be able to penetrate the market faster than Linzess has done if its drug is just as effective but safer.
"Linzess has an issue with patients discontinuing due to diarrhea," he said.
Synergy Pharma said on Wednesday that the most common adverse event during the trial was diarrhea, which affected about 9.3 percent patients on the 3 mg dose.
Linzess data showed diarrhea in 20 percent of patients enrolled in studies for irritable bowel syndrome with constipation. (link.reuters.com/mez88v)
Linzess had sales of $118.8 million in 2013.
The 3 mg dose dosage also relieved abdominal pain in the patients, Synergy Pharma said.
Plecanatide, the company's lead drug, imitates a hormone in the gastrointestinal tract, promoting fluid secretion which allows for normal bowel function.
The company is also testing the drug in late-stage studies for chronic idiopathic constipation.
Synergy Pharma's shares, which touched a high of $5.09, later gave up some of the gains to trade at $4.84. (Reporting by Vrinda Manocha in Bangalore; Editing by Joyjeet Das and Sriraj Kalluvila)