Synergy Pharmaceuticals Inc. (NASDAQ:SGYP), a biopharmaceutical
company focused on the development and commercialization of novel
gastrointestinal (GI) therapies, today reported its financial
results and business update for the three months ended September
30, 2018.
Third Quarter 2018 and Recent Highlights
TRULANCE® (plecanatide)
- 63,085 TRULANCE 30-count packs were
dispensed in the third quarter of 2018, a 104.7% increase versus
30,825 in the prior year quarter, per IQVIA.
- 23,560 TRULANCE new prescriptions were
filled in the third quarter of 2018, a 46.4% increase versus 16,089
in the prior year quarter, per IQVIA.
- Since the launch on March 20, 2017,
250,684 TRULANCE 30-count packs have been dispensed and normalized
prescription volume has increased 38.4% on average
quarter-over-quarter, per IQVIA.
Financial Results
- TRULANCE U.S. net sales were $11.1
million in the third quarter of 2018, a 122.0% increase compared to
$5.0 million in the third quarter of 2017.
- Synergy received an upfront payment of
$10.1 million (net of China withholding tax and VAT) upon closing a
licensing agreement with Luoxin Pharmaceutical Group Co., Ltd.,
Shandong for TRULANCE in mainland China, Hong Kong and Macau in
August 2018. As of September 30, 2018, the upfront payment was
recorded as deferred revenue since no performance obligations had
been satisfied.
- Total operating expenses were $36.8
million in the third quarter of 2018, a 27.8% decrease compared to
$51.0 million in the third quarter of 2017.
- Total adjusted operating expenses
(non-GAAP) were $33.8 million in the third quarter of 2018, a 28.2%
decrease compared to $47.1 million in the third quarter of
2017.
- Synergy reported a net loss of $34.5
million, or $0.14 per share, for the third quarter of 2018 compared
to a net loss of $48.9 million, or $0.22 per share in the third
quarter of 2017.
- Cash and cash equivalents were
approximately $45.6 million at the end of the third quarter of
2018.
2018 Outlook
- On October 25, 2018, Synergy announced
that it is seeking to renegotiate its term loan agreement with CRG
Servicing LLC (“CRG”) and has forgone drawing down on any
additional amounts pursuant to its term loan agreement. To-date the
Company has been unable to further amend the agreement with respect
to the financial, revenue and minimum liquidity covenants. Synergy
is continuing discussions with CRG and has twice received temporary
waivers on the minimum market cap covenant, which is set to expire
on November 12, 2018 absent further extension. The Company is
currently pursuing alternatives that better align with its
business, but there is no assurance that the Company can secure
CRG’s consent or otherwise achieve a transaction to refinance or
otherwise repay CRG on commercially reasonable terms, in which case
the Company could default under the term loan agreement and may
have to pursue or otherwise accelerate strategic alternatives,
including the possibility of seeking bankruptcy protection to
protect stakeholder value in the event other options are not
reasonably executable. Further updates on alternatives will be
provided when available.
- As previously announced, TRULANCE
uptake in 2018 has been slower than anticipated due to a highly
competitive market access environment and slower than anticipated
overall market growth. As a result, based on the Company’s current
updated forecasts, Synergy is projecting TRULANCE total net sales
for 2018 to be between $42.0 million to $47.0 million, which would
be below the minimum revenue covenant of $61.0 million set forth in
its term loan agreement with CRG. The Company has continued to
evaluate opportunities to reduce cash expenditures to better align
with anticipated revenues and available capital. In addition,
Synergy has remained committed to the continued evaluation of all
strategic opportunities to enhance shareholder value and there is
no set timetable for completing this process. Synergy has engaged
financial and legal advisors to assist Synergy in evaluating these
strategic alternatives. Additional information about the Company's
strategic review and go-forward plan will be provided at the
appropriate time.
About Synergy Pharmaceuticals
Synergy is a biopharmaceutical company focused on the
development and commercialization of novel gastrointestinal (GI)
therapies. The company has pioneered discovery, research and
development efforts around analogs of uroguanylin, a naturally
occurring human GI peptide, for the treatment of GI diseases and
disorders. Synergy’s proprietary GI platform includes one
commercial product TRULANCE® (plecanatide) and a second product
candidate - dolcanatide. For more information, please
visit www.synergypharma.com.
About Irritable Bowel Syndrome with Constipation
(IBS-C)
Irritable bowel syndrome (IBS) is a chronic gastrointestinal
disorder characterized by recurrent abdominal pain and associated
with two or more of the following: related to defecation,
associated with a change in the frequency of stool, or associated
with a change in the form (appearance) of the stool. IBS can be
subtyped by the predominant stool form: constipation (IBS-C),
diarrhea (IBS-D) or mixed (IBS-M). Those within the IBS-C subtype
experience hard or lumpy stools more than 25 percent of the time
they defecate, and loose or watery stools less than 25 percent of
the time. It is estimated that the prevalence of IBS-C in the U.S.
adult population is approximately 4 to 5 percent.
About Chronic Idiopathic Constipation (CIC)
CIC affects approximately 14 percent of the global population,
disproportionately affecting women and older adults. People with
CIC have persistent symptoms of difficult-to-pass and infrequent
bowel movements. In addition to physical symptoms including
abdominal bloating and discomfort, CIC can adversely affect an
individual’s quality of life, including increasing stress levels
and anxiety.
About TRULANCE®
TRULANCE® (plecanatide) is a once-daily tablet approved for
adults with CIC or IBS-C. With the exception of a single amino acid
substitution for greater binding affinity, TRULANCE is structurally
identical to uroguanylin, a naturally occurring and endogenous
human GI peptide. Uroguanylin activates GC-C receptors in a
pH-sensitive manner primarily in the small intestine, stimulating
fluid secretion and maintaining stool consistency necessary for
regular bowel function.
Indications and Usage
TRULANCE (plecanatide) 3 mg tablets is indicated in adults for
the treatment of Chronic Idiopathic Constipation (CIC) and
Irritable Bowel Syndrome with Constipation (IBS-C).
IMPORTANT SAFETY INFORMATION
WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC
PATIENTS
TRULANCE® is contraindicated in patients less
than 6 years of age; in nonclinical studies in young juvenile mice
administration of a single oral dose of plecanatide caused deaths
due to dehydration. Use of TRULANCE should be avoided in patients 6
years to less than 18 years of age. The safety and efficacy of
TRULANCE have not been established in pediatric patients less than
18 years of age.
Contraindications
- TRULANCE is contraindicated in patients
less than 6 years of age due to the risk of serious
dehydration.
- TRULANCE is contraindicated in patients
with known or suspected mechanical gastrointestinal
obstruction.
Warnings and Precautions
Risk of Serious Dehydration in Pediatric Patients
- TRULANCE is contraindicated in patients
less than 6 years of age. The safety and effectiveness of TRULANCE
in patients less than 18 years of age have not been established. In
young juvenile mice (human age equivalent of approximately 1 month
to less than 2 years), plecanatide increased fluid secretion as a
consequence of stimulation of guanylate cyclase-C (GC-C), resulting
in mortality in some mice within the first 24 hours, apparently due
to dehydration. Due to increased intestinal expression of GC-C,
patients less than 6 years of age may be more likely than older
patients to develop severe diarrhea and its potentially serious
consequences.
- Use of TRULANCE should be avoided in
patients 6 years to less than 18 years of age. Although there were
no deaths in older juvenile mice, given the deaths in young mice
and the lack of clinical safety and efficacy data in pediatric
patients, use of TRULANCE should be avoided in patients 6 years to
less than 18 years of age.
Diarrhea
- Diarrhea was the most common adverse
reaction in the four placebo-controlled clinical trials for CIC and
IBS-C. Severe diarrhea was reported in 0.6% of TRULANCE-treated CIC
patients, and in 1% of TRULANCE-treated IBS-C patients.
- If severe diarrhea occurs, the health
care provider should suspend dosing and rehydrate the patient.
Adverse Reactions
- In the two combined CIC clinical
trials, the most common adverse reaction in TRULANCE-treated
patients (incidence ≥2% and greater than in the placebo group)
was diarrhea (5% vs 1% placebo).
- In the two combined IBS-C clinical
trials, the most common adverse reaction in TRULANCE-treated
patients (incidence ≥2% and greater than in the placebo group)
was diarrhea (4.3% vs 1% placebo).
Please also see the full Prescribing
Information, including Box Warning, for additional risk
information.
Forward-Looking Statements
Certain statements in this press release are forward-looking
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements may be identified by the use of forward-
looking words such as "anticipate," "planned," "believe,"
"forecast," "estimated," "expected," and "intend," among others.
These forward-looking statements are based on Synergy's current
expectations and actual results could differ materially. There are
a number of factors that could cause actual events to differ
materially from those indicated by such forward-looking statements.
These factors include, but are not limited to, substantial
competition; our ability to continue as a going concern; our need
for additional financing; the possibility that we may need to seek
bankruptcy protection or pursue strategic alternatives that could
result in leaving our current stockholders with little or no
financial ownership of the Company; uncertainties of patent
protection and litigation; uncertainties of government or third
party payer reimbursement; limited sales and marketing efforts and
dependence upon third parties; and risks related to failure to
obtain FDA clearances or approvals and noncompliance with FDA
regulations. As with any pharmaceutical under development, there
are significant risks in the development, regulatory approval and
commercialization of new products. There are no guarantees that
future clinical trials discussed in this press release will be
completed or successful or that any product will receive regulatory
approval for any indication or prove to be commercially successful.
Investors should read the risk factors set forth in Synergy's
Annual Report on Form 10-K for the year ended December 31, 2017 and
other periodic reports filed with the Securities and Exchange
Commission. While the list of factors presented here is considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Forward-looking
statements included herein are made as of the date hereof, and
Synergy does not undertake any obligation to update publicly such
statements to reflect subsequent events or circumstances.
Synergy Pharmaceutical Inc.
Condensed Consolidated Balance Sheets (unaudited)
($ in thousands)
September 30, 2018 December 31, 2017
Assets Cash and cash equivalents $ 45,647 $ 136,986 Accounts
receivable 9,222 6,491 Inventories 21,530 17,214 Prepaid expenses
and other current assets 5,259 4,469 Total Current
Assets 81,658 165,160 Other assets 1,381 1,446 Total
Assets $ 83,039 $ 166,606 Liabilities and
Stockholders' (Deficit) Other current liabilities $ 38,355 $ 38,147
Senior convertible notes, net 17,834 — Term Loan, net 101,739
— Total Current Liabilities 157,928 38,147 Senior
convertible notes, net — 17,302 Term Loan, net — 98,660 Derivative
financial instruments – warrants 9,767 17,582 Other long-term
liabilities 11,588 433 Total Liabilities 179,283
172,124 Total Stockholders’ Deficit (96,244 ) (5,518 ) Total
Liabilities and Stockholders’ Deficit $ 83,039 $ 166,606
Condensed Consolidated Statement of
Operations
($ in thousands except share and per share
data)
(unaudited)
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Nine Months Ended
September 30, 2018
Nine Months Ended
September 30, 2017
Net sales $ 11,105 $ 5,008 $ 31,945 $ 7,420 Cost of goods sold
3,922 1,722 11,511 5,001 Gross profit
7,183 3,286 20,434 2,419 Costs and Expenses: Research and
development 2,904 5,876 9,140 46,346 Selling, general and
administrative 33,887 45,110 108,647 140,083
Total Operating Expenses 36,791 50,986 117,787
186,429 Loss from Operations (29,608 ) (47,700 )
(97,353 ) (184,010 ) Other Income (Expense): Interest expense, net
(3,369 ) (1,226 ) (9,697 ) (2,361 ) State R&D tax credits — —
30 — Debt conversion expense — — — (1,209 )
Change in fair value of derivative
instruments -warrants
(433 ) 55 7,815 216 Total Other Expense (3,802
) (1,171 ) (1,852 ) (3,354 ) Loss before taxes (33,410 ) (48,871 )
(99,205 ) (187,364 ) Tax expense (1,133 ) — (1,133 ) —
Net Loss $ (34,543 ) $ (48,871 ) $ (100,338 ) $ (187,364 )
Net Loss per Common Share, Basic and Diluted $ (0.14 ) $
(0.22 ) $ (0.41 ) $ (0.84 )
Weighted Average Common Shares
Outstanding,Basic and Diluted
247,994,922 224,954,941 247,221,231
221,854,099
Synergy Pharmaceuticals Inc.
Non-GAAP Financial Measures
Adjusted research and development expenses, adjusted selling,
general and administrative expenses, and adjusted total operating
expenses are not measures of financial performance under accounting
principles generally accepted in the United States (“GAAP”) and
should not be construed as substitutes for, or superior to, GAAP
research and development expenses, GAAP selling, general and
administrative expenses and GAAP total operating expenses as a
measure of financial performance. However, management uses both
GAAP financial measures and the disclosed non-GAAP financial
measures internally to evaluate and manage the Company's operations
and to better understand its business. Further, management believes
the addition of non-GAAP financial measures provides meaningful
supplementary information to, and facilitates analysis by,
investors in evaluating the Company's financial performance,
results of operations and trends. The Company's calculations of
adjusted research and development expenses, adjusted selling,
general and administrative expenses and adjusted operating
expenses, may not be comparable to similarly designated measures
reported by other companies, since companies and investors may
differ as to what type of events warrant adjustment.
The following table reconciles reported research and development
expenses to adjusted research and development expenses (adjusted
R&D):
(Unaudited; $ in thousands)
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Research and development expenses $ 2,904 $ 5,876 Adjusted to
deduct: Stock based compensation expense 459 477
Adjusted research and development expenses $ 2,445 $ 5,399
The following table reconciles reported selling, general and
administrative expenses to adjusted selling, general and
administrative expenses (adjusted SG&A):
(Unaudited; $ in thousands)
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Selling, general and administrative expenses $ 33,887 $ 45,110
Adjusted to deduct: Stock based compensation expense 2,525 3,411
Adjusted selling, general and administrative expenses
$ 31,362 $ 41,699
The following table reconciles reported total operating expenses
to adjusted operating expenses (adjusted OPEX):
(Unaudited; $ in thousands)
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Total operating expenses $ 36,791 $ 50,986 Adjusted to deduct:
Stock based compensation expense 2,984 3,888 Adjusted
operating expenses $ 33,807 $ 47,098
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version on businesswire.com: https://www.businesswire.com/news/home/20181108006027/en/
For Synergy Pharmaceuticals Inc.Ted McHugh and Nicole Briguet,
212-584-7610SynergyIR@edelman.com
Synergy Pharmaceuticals, Inc. (NASDAQ:SGYP)
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