#SYNERG PHARMA LICENSE#

The biggest move was the agreement to license exclusive rights to Trulance in Canada to Cipher Pharma ( CPHR) for a $5 million upfront payment and potential future milestone payment and royalties. Synergy Pharma made a couple of moves during the quarter that were positive of the future financing situation of the company. Whether the biotech hits analyst targets isn't exactly key to the stock rallying from below $2. Synergy Pharma is set for strong revenue growth while costs remain in check. A simple jump to a 4,000 weekly prescription average brings prescriptions up to 52,000 in the quarter for nearly 60% growth. The Q2 set up is much more bullish as the weekly prescriptions top 3,000 and 30-day extended units reaching 4,000 by the end March.

Source: Synergy Pharma Oppenheimer presentation The number though isn't enough to grow revenues over 50% to $12.2 million from the $7.5 million in Q4 excluding the deferred revenue. The shift toward extended units probably boosted the amount of 30-day units easily above 42,486 in Q4. Total prescriptions only hit roughly 33,000 for the quarter, up from about 31,000 in the previous quarter. Revenues are targeted to jump to $12.2 million in Q1, yet weekly prescription numbers only reached record levels in March. SGYP Revenue Estimates for Current Quarter data by YCharts The trouble is meeting Q1 and Q2 estimates based on stalling numbers in the first two months of the year. Source: Synergy Pharma Q4'17 presentationĭespite some concerns about prescription volumes, the total 30-day subscription units were growing. Further reductions in R&D helped reduce quarterly operating expenses to the lowest levels since ramping up the sales force for Trulance. The large cash burn in Q3 hid the improvements in this category. The key was controlling operating expenses. The company though hit $9.4 million due to $1.9 million recognized from deferred revenues. As mentioned in the previous article, revenues were expected to jump in the quarter to near analyst estimates of $7.2 million. Gross profits doubled to $5.6 million during Q4. The other factor was a jump in the gross profit from higher revenues. These categories actually roughly offset each other with inventories up $4.2 million and prepaid expenses down $4.1 million. The amazing part is that the small biotech even saw no material change to key assets like inventories and prepaid expenses. The number was nearly half the original guidance that scared the Street into thinking costs were out of control while Trulance faced a slow ramp. For the quarter, Synergy Pharma only burned an incredibly low $32.6 million from operations. Pushing cash burn down eliminated the fears of the small biotech never reaching financial goals. As revenues were growing and R&D spending was set to drop, the numbers never added up as the biotech would only burn another $60 million during the December quarter from a massive inventory build. The biggest issue with Synergy Pharma over the last several months was the perplexing statement by the CFO that Q4 cash flows would match the roughly $60 million burn rate for 1H of last year. The investment thesis in the stock is further enhanced that better transparency from management would've prevented the crash in the stock to new lows below $2 in the first place. Synergy Pharma ( NASDAQ: SGYP-OLD) reported Q4 numbers that deviated from guidance in a positive manner.

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