NEW YORK--(BUSINESS WIRE)--Synergy Pharmaceuticals Inc. (NASDAQ:SGYP) (the “Company” or “Synergy”), a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies, today provided a business update.
Strategic Review Update
In April 2015, prior to the FDA
approval and launch of TRULANCE® (plecanatide) in 2017,
Synergy hired a top tier advisory firm to engage external parties and
evaluate all strategic options available to the Company, including US
and ex-US partnerships and a possible sale of the Company. Ultimately,
there were no offers to acquire the Company and no partnership
opportunities emerged in this evaluation that it believed aligned with
the Company strategically or financially. As a result, Synergy
determined the best course of action for the business and Synergy
shareholders at that time was to commercialize on its own. However, the
Company has always remained open to, and committed to exploring all
strategic and business development opportunities to enhance shareholder
value. These efforts resulted in several recently announced partnerships
and collaborations in 2018, including two ex-US licensing deals for
TRULANCE and a collaboration with the National Cancer Institute for
Synergy’s second asset, dolcanatide.
In May 2018, Synergy announced that it was running a strategic review process. As part of this extensive review, the Company, assisted by outside strategic and financial advisors, has been exploring multiple options and alternatives to create and enhance shareholder value. The Company held in-depth discussions with numerous potential counterparties regarding various strategic alternatives during this process. To date, the offers received to acquire Synergy have been significantly below the Company’s current market value, and it has been unable to consummate any partnership opportunities. At this time, Synergy does not believe that it will obtain any offers that are significantly higher in value than those received to date. Nevertheless, Synergy remains committed to the continued evaluation of all opportunities to enhance shareholder value, and there is no set timetable for completing this process.
Liquidity Update
In parallel with the strategic review
process, Synergy has been seeking to renegotiate the terms of its term
loan agreement with CRG Servicing LLC (“CRG”). The Company has been
unable to further amend the agreement with respect to the financial and
revenue covenants, and the Company has decided to forego drawing down on
any additional amounts pursuant to its term loan agreement. Moreover,
the Company’s term loan agreement contains a minimum liquidity covenant
that absent relief from CRG may not be satisfied. Synergy is continuing
discussions with CRG for covenant relief and in parallel the Company is
currently pursuing financing alternatives that better align with its
business, but there is no assurance that the Company can secure CRG’s
consent or otherwise obtain any such financing 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 financing alternatives will be
provided when available.
Financial Update
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. Under the terms of the
agreement, Synergy will be required to repay principal and pay
prepayment penalties in an amount equal to $38.0 million to $51.0
million if total net sales fall within the expected range noted above.
Such principal repayment and prepayment penalties will be due no later
than March 31, 2019. As previously announced, the Company has continued
to evaluate opportunities to reduce cash expenditures to better align
with anticipated revenues and available capital.
Third Quarter Financial Results
The Company plans to release
its third quarter financial results aftermarket on Thursday, November 8,
2018.
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.
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; whether
we can obtain financing on commercially reasonable terms; our ability to
meet our obligations under the term loan agreement; 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.
