Synergy Pharmaceuticals Inc (NASDAQ:SGYP) is at it again, wafting up an impressive 8% to put its year-to-date chart back in black.
Since I last wrote about SGYP stock, shares have tacked on 14% or so. Way back then (a month is an eternity in the stock market), I expected Synergy stock to make its moves on news regarding its chronic idiopathic constipation treatment, plecanatide, or on any murmurs in the buyout crowd.
Sure enough, the buyout crowd is chattering.
After the Financial Times published an article on Japan’s largest pharma corporation, Takeda Pharmaceutical Co Ltd (ADR) (OTCMKTS:TKPYY), allocating some $10 billion to $15 billion for takeovers, Citigroup named SGYP as the most likely target.
Is SGYP Shopping Around?
Citi’s analyst, Liav Abraham, believes Synergy’s cash hoard of $140 million isn’t enough to successfully position its plecanatide against Allergan plc Ordinary Shares‘ (NYSE:AGN) Linzess.
That means SGYP is probably shopping around for a buyer with deep pockets to give its IBS drug a fighting chance. Takeda, Abraham notes, has a stake in constipation and IBS treatment areas.
With Synergy, Takeda could give itself a shot in the arm in this area. And according to Abraham, that boost could be as much as $500 million in plecanatide sales.
Among Takeda’s largest recent purchases is that of Nycomed, a Swiss pharma group for which Takeda paid $14 billion. Takeda reasoned the buyout would give the Japanese pharma giant more of a global reach while complementing its high-growth strategy.
The same could certainly be said of SGYP stock, whose plecanatide drug currently sits on the desk of the Food and Drug Administration awaiting approval.
Today’s 8% pop, a day after Citigroup ramped up the Synergy buyout talk, is likely driven by the 15% of short-sellers covering their behinds. I’d say that’s a wise move.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
