Synergy Pharmaceuticals’ Exchange Agreements to Reduce 50% of Senior Notes Outstanding

NEW YORK–(BUSINESS WIRE)– Synergy Pharmaceuticals Inc. (NASDAQ:SGYP) today announced that the
exchange agreements entered into on March 17, 2016, with certain holders
(the “Holders”) of $79.8 million aggregate principal amount of its
Convertible Senior Notes due 2019 (the “Notes”), carrying a conversion
price of $3.11 per share, will reduce Notes outstanding by 50% and the
company will realize cash savings of approximately $24 million over the
life of the Notes, as it will no longer be required to make 7.50% annual
interest payments on the Notes exchanged.

“We made the decision to enter into exchange agreements with the Holders
in order to significantly reduce our current debt obligations and
strengthen our balance sheet,” said Gary Sender, EVP and Chief Financial
Officer of Synergy Pharmaceuticals Inc. “The Holders had the right to
convert into approximately 26.7 million shares of Synergy common stock
at a price of $3.11 per share at any time before November 2019 pursuant
to the terms of the Notes. Through these early conversions, we are
avoiding approximately $24 million in future interest payments, putting
the company in an improved financial position.”

Under the exchange agreements, the Holders agreed to exchange an
aggregate principal amount of $79.8 million of Notes and accrued but
unpaid interest in an aggregate amount of $2.4 million held by them in
exchange for shares of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”). Upon the consummation of the transactions
contemplated by the exchange agreements, the Company expects to issue
approximately 33.4 million shares of Common Stock, consisting of 26.7
million shares that were issuable pursuant to the existing terms of the
Notes, along with an additional portion that is subject to adjustment
based on the trading prices of the Common Stock over a five-trading-day
averaging period that began on March 18, 2016.

The transaction is expected to close on or about March 25, 2016, subject
to customary closing conditions. Immediately following the exchanges of
the Notes contemplated by the exchange agreements, $79.2 million in
aggregate principal amount of the Notes will remain outstanding, which
will continue to be convertible at a conversion price of $3.11 pursuant
to the terms of the Notes.

The shares have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), or with any securities regulatory
authority of any State or other jurisdiction, and may not be offered or
sold in the United States or to U.S. persons absent registration or an
applicable exemption from the registration requirements. The Exchanges
were made only with, and the shares were offered and issued only to,
holders of Notes who are “qualified institutional buyers” as defined in
Rule 144A under the Securities Act (“Eligible Holders”), in private
transactions in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 4(a)(2) thereof.

This news release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
shares, in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.

About Synergy Pharmaceuticals Inc.

Synergy is a biopharmaceutical company focused on the development and
commercialization of novel gastrointestinal (GI) therapies. Our
proprietary GI platform is based on uroguanylin and includes two lead
product candidates – plecanatide and dolcanatide. Plecanatide is our
first uroguanylin analog currently being evaluated for use as a
once-daily oral tablet for two functional GI disorders, chronic
idiopathic constipation (CIC) and irritable bowel syndrome with
constipation (IBS-C). In 2015, we announced positive phase 3 data with
plecanatide in two pivotal CIC clinical trials and on January 29, 2016
the company filed with the U.S. Food and Drug Administration (FDA) a new
drug application (NDA) for plecanatide in CIC. We are continuing to
progress our two ongoing phase 3 clinical trials with plecanatide in
IBS-C and expect top-line data from the first pivotal trial in the first
half of this year and top-line data from the second pivotal trial are
expected in the second half of this year. We intend to file a second NDA
for plecanatide in IBS-C by the end of this year. In January 2016, we
announced positive data with our second uroguanylin analog, dolcanatide,
in a phase 1b trial with ulcerative colitis patients. 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; 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 Form 10-K
for the year ended December 31, 2015 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.

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