Synergy soars on stellar constipation data, rekindling buyout chatter

Synergy Pharmaceuticals' ($SGYP) in-development constipation drug met its goals with resounding success in a Phase III trial, sending the company's shares skyward and stoking rumors that it may be a takeout target.

The drug, plecanatide, is an oral treatment that mimics a key peptide in order to normalize gastrointestinal function, in the process relieving serious constipation. And it did just that in a Phase III trial on more than 1,300 adults with chronic idiopathic constipation, or CIC.

In the study, both doses of plecanatide significantly beat placebo in eliciting durable overall responses, which are defined by the FDA as at least three spontaneous bowel movements a week and a net increase of one bowel movement compared to baseline for 9 of the study's 12 weeks. The durable response rate was 21% for patients taking 3 mg of Synergy's drug and 19.5% for those getting twice that, each beating placebo's 10.2%.

Plecanatide also came through on its secondary endpoint of stool consistency, with each dose clocking a statistically significant improvement in Bristol Stool Form Scale scores compared to placebo, the company said.

On the safety side, Synergy noted no imbalance of serious side effects between the three treatment groups, and rates of discontinuation were low for both plecanatide doses, the company said.

Now Synergy believes it's on track to file plecanatide for FDA approval in the fourth quarter. The company is in the process of wrapping up a second 12-week trial on the drug and expects to report top-line data from that study in the next few weeks, planning to submit pooled results to regulators.

Plecanatide's success sent Synergy's shares up more than 50% in premarket trading on Wednesday, as investors cheered better-than-expected data and the prospect of a high-premium acquisition.

Synergy has been the subject of buyout rumors for months thanks to the promise of its lead drug and rising valuations in the GI space. In March, Bloomberg reported that the company's management was looking into the idea of going up for sale, perhaps encouraged by the $10 billion purse Valeant Pharmaceuticals ($VRX) paid for Salix Pharmaceuticals earlier that month.

The latest data on plecanatide could spell trouble down the line for Ironwood Pharmaceuticals ($IRWD) and its Linzess, already approved for CIC. As Barclays points out in a research note, while the efficacy of Synergy's drug seems "marginally lower" than that of Linzess, plecanatide notched a diarrhea rate of just 5%. Ironwood's treatment is labeled with warnings that roughly 16% of patients experience the side effect, and Barclays believes that could be a differentiator if the drugs ever go head to head.

Beyond its lead asset, Synergy is developing the similar dolcanatide, completing a Phase II study in opioid-induced constipation last year and now running a Phase Ib trial in ulcerative colitis.

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