NEW YORK (AP) -- Shares of drug developer Synergy Pharmaceuticals Inc. traded higher Monday after a Citi Investment Research analyst started covering the stock with a "Buy" rating based on the company's constipation drug candidate plecanatide.
THE SPARK: Analyst Liav Abraham said she expects plecanatide to reach the market in 2016, and forecast peak sales of $550 million a year. She said Synergy will eventually form a partnership with a larger drug company to help market plecanatide, and said the market for constipation treatments is big enough to accommodate more than one successful treatment.
Abraham said that patients treated with plecanatide appear to have diarrhea less often than patients treated with Linzess, an already-approved drug against which plecanatide would compete. She has a price target of $8.50 on Synergy shares.
THE BIG PICTURE: The New York company has no approved drugs, and plecanatide is its most advanced experimental product. Synergy is studying plecanatide as a treatment for chronic constipation and irritable bowel syndrome with constipation. It is also running clinical trials of SP-333, an experimental treatment for inflammatory bowel diseases including ulcerative colitis.
Linzess was approved in August and was launched in December. The drug is being marketed by Forest Laboratories Inc. and Ironwood Pharmaceuticals Inc., and sales totaled $4.5 million in the first three months of 2013.
SHARE ACTION: Synergy Pharmaceuticals shares picked up 22 cents, or 4.7 percent, to $4.83 in afternoon trading. The shares rose 5 percent Friday, but they are down 33 percent since the company announced a new stock offering in April.