(Adds details, analyst comment; updates shares)
By Vrinda Manocha
April 30 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 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
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
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)