Synergy Pharmaceuticals (NASDAQ:SGYP) is having an incredible day in the market today as chatter with regard to a coming takeover is reborn. The big question is... Will a takeover happen? While this question is still yet to be answered, I believe that regardless of takeover possibilities, the stock is screaming “BUY ME!” Today, we'll talk about the takeover chatter and how realistic the concept is, what we're seeing in the market as a result, and why the stock is a buy in my opinion, regardless of a takeover.
Takeover Chatter Is Reborn Surrounding SGYP
The idea of a company coming in and acquiring Synergy Pharmaceuticals is nothing new. In fact, just weeks ago we heard that Allergan (NYSE:AGN) was currently in advanced talks with regard to acquiring the company. At the time, the stock climbed dramatically. However, over the past few weeks, the chatter has died down to silence.
Well, that's not the case anymore. Once again, investors seem to be talking about a takeover happening, and happening soon! Now the big question is... Is this realistic? In my opinion, the answer is yes. The reality is that Allergan was very close to a deal to acquire SGYP weeks ago. In fact, at the time, StreetInsider reported that a deal could be announced within a week. While there was no deal announced, that doesn't mean that a deal is an acquisition.
The reality is that at this point, SGYP is an acquisition waiting to happen. The company has made all the right moves, and recently submitted an NDA to the United States Food and Drug Administration, which was indeed accepted. If a company wants to get their hands on what Synergy Pharmaceuticals has done, they're going to want to do it before the FDA decision. At the end of the day, Plecanatide data was overwhelmingly positive and will likely lead to an approval. If a company waits to acquire SGYP until after the FDA's response in January, they're likely going to pay a hefty sum!
So, yes, an acquisition is on the table and a very real possibility at the moment. Will it happen? Only time will tell!
How The Market Is Reacting To The News
As investors, we know that the news moves the market. Any time there is positive news surrounding a publicly traded company, we can expect to see gains in the value of the company. In this particular case, while there isn't much news, the chatter surrounding SGYP is overwhelmingly positive. After all, nothing seems to get investors more excited than the concept of an acquisition. As a result, the stock is climbing in the market today. Currently (12:07), Synergy Pharmaceuticals stock is trading at $4.19 per share after a gain of $0.35 per share or 9.11% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from SGYP. First and foremost, an acquisition is incredibly likely at this point, and will demand a very high premium. So, there's quite a bit of opportunity there alone.
However, I would take a bullish stance on Synergy Pharmaceuticals even if there wasn't an acquisition on the table. The reality is that the company has done incredible things with Plecanatide. Based on the results I've read, I couldn't see the FDA not approving this treatment for chronic idiopathic constipation. Not to mention, the company is currently in the midst of Phase 3 studies on the treatment for the irritable bowel syndrome with constipation indication. The previous studies in this indication were overwhelmingly positive as well.
Based only on what we know to be fact - NDA with the FDA, promising results in the indication, new indication being studied, and solid financial and management to back it up - I'd expect to see further growth in the value of the stock. The fact that an acquisition is on the table is just icing on the cake!
What Do You Think?