Synergy Pharma’s constipation drug succeeds in late-stage study

Synergy Pharmaceuticals Inc said its drug to treat idiopathic constipation met the main goal in a late-stage trial, sending its shares up as much as 67 percent to a four-year high.

Plecanatide, Synergy’s lead experimental drug, mimics a hormone that promotes fluid secretion in the gastrointestinal tract, allowing for normal bowel function.

The company’s shares were up 66 percent at $7.72 in heavy trading on Wednesday afternoon. More than 4.7 million shares traded, nearly twice the 25-day moving average.

Only two drugs are currently approved to treat idiopathic constipation — Sucampo Pharmaceuticals Inc and Takeda Pharmaceutical Co Ltd’s Amitiza and Allergan Plc and Ironwood Pharmaceutical Inc’s Linzess.

Data appears to favor plecanatide over Linzess, Wedbush analysts wrote in a note.

Patient discontinuation rates in Synergy’s trial were lower, compared with those in Ironwood’s trial, the analysts said.

Average discontinuation rates due to adverse events were about 5 percent for plecanatide, while it was 8 percent for Linzess.

Amitiza raked in sales of about $331 million in 2014, while Linzess had sales of $297 million.

Analysts said the positive trial data made them view Synergy as an attractive takeout target.

“In particular, we think that plecanatide would be complementary to Valeant’s gastrointestinal franchise after the recent approval of Xifaxan in irritable bowel syndrome,” Cantor Fitzgerald analyst Irina Rivkind Koffler wrote.

Synergy, which had a market value of $464 million as of Tuesday close, said it plans to apply for regulatory approval in the fourth quarter.

More patients consistently responded to the treatment, which was tested at two dosage strengths, than to a placebo, the company said.

Data showed that the drug was safe and effective, with about 1 percent of patients in the study experiencing serious adverse events, the most common of which was diarrhea.

Idiopathic constipation affects about 15 percent of the U.S. population, according to the National Institutes of Health. It is called idiopathic because the cause is unknown.

(Reporting by Amrutha Penumudi and Samantha Kareen Nair in Bengaluru; Editing by Simon Jennings and Sriraj Kalluvila)