Synergy Pharmaceuticals Reports Second Quarter 2016 Financial Results and Business Update

NEW YORK–(BUSINESS WIRE)– 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 June 30, 2016.

“Our exciting transformation from a purely research and development
company into a fully integrated commercial organization continues
unabated as we successfully advance and execute against our key
strategic priorities,” said Gary S. Jacob, Chairman and Chief Executive
Officer of Synergy Pharmaceuticals Inc. “These priorities are guided by
our overarching mission to optimize the value of plecanatide and
maximize shareholder value.”

“The rest of 2016 promises to be an exciting time as we expect top-line
results in our two phase 3 IBS-C trials with plecanatide. We are
especially pleased with our ongoing dialogue with the FDA, including the
results of our recent mid-cycle review meeting. Building the right
commercial strategy and having the ability to successfully execute on
the launch plan requires a strong team and we are fortunate to be
attracting talented leaders with relevant experience from across our
industry. I am very proud of the Synergy organization which is committed
to a successful launch of plecanatide and bringing this important new
treatment option to patients suffering from CIC and IBS-C,” added Dr.
Jacob.

Second Quarter 2016 and Recent Highlights

Research & Development

Plecanatide CIC Development Update

• The Food and Drug Administration (FDA) has completed its mid-cycle
  review meeting of the plecanatide new drug application (NDA) in
  chronic idiopathic constipation (CIC). To date, no significant issues
  have been identified. Additionally, the FDA informed us that at this
  time there are no plans for an advisory committee meeting in
  connection with its review of the plecanatide NDA in CIC. The
  plecanatide NDA in CIC is supported by two double-blind
  placebo-controlled phase 3 trials and one open-label long term safety
  study. Over 3,500 patients were exposed to plecanatide in the CIC
  clinical development program. The Prescription Drug User Fee Act
  (PDUFA) target action date is January 29, 2017.
• In May 2016, we presented additional plecanatide data, including one
  oral presentation and five posters, at Digestive Disease Week (DDW)
  2016. Data presented at DDW showed that plecanatide met the primary
  and secondary endpoints in two phase 3 CIC clinical trials. In both
  trials, plecanatide significantly improved durable overall complete
  spontaneous bowel movement (CSBM) responder rates relative to placebo
  (primary endpoint). Plecanatide-treated patients also showed immediate
  and sustained improvements that were statistically significant in CSBM
  and SBM frequency and stool consistency scores compared to placebo.
  Furthermore, plecanatide showed statistically significant improvement
  in abdominal symptoms, such as straining and bloating, as well as
  constipation severity and treatment satisfaction scores compared to
  placebo. Most adverse events were mild to moderate in severity; the
  most common adverse event was diarrhea (<6.0% diarrhea rates in both
  trials). In addition to the plecanatide CIC clinical data, we
  presented new in vitro data showing that the pH-dependent
  activity of plecanatide replicates that of the body’s naturally
  occurring GI peptide, uroguanylin.

Plecanatide IBS-C Development Update

• We have completed over 95% of planned patient enrollment in our two
  phase 3 irritable bowel syndrome with constipation (IBS-C) clinical
  trials with plecanatide and we expect top-line data in both trials in
  the fourth quarter of this year. The two double-blind
  placebo-controlled trials are designed to enroll a total of
  approximately 2,100 IBS-C patients. The primary endpoint being
  evaluated in these trials is the percentage of patients who are
  Overall Responders during the 12-week treatment period. An Overall
  Responder, as defined by the FDA, is a patient who is a weekly
  responder (i.e. meets both a 30% abdominal pain intensity reduction
  and stool frequency increase criteria in the same week) for at least 6
  of the 12 treatment weeks. Plecanatide previously met this endpoint in
  a phase 2b trial with 424 IBS-C patients that was completed in 2014.

Dolcanatide UC Development Update

• Earlier this year, we announced positive proof-of-concept in a phase
  1b double-blind placebo-controlled four-week trial evaluating
  dolcanatide treatment in 28 patients with mild-to-moderate ulcerative
  colitis. We intend to announce next steps for the dolcanatide phase 2
  clinical program in patients with mild-to-moderate ulcerative colitis
  following agreement on the development plans with regulators.

Commercial Planning & Launch Preparation

Our commercial, medical affairs and technical operations teams are
continuing to execute on our key strategic imperatives to ensure launch
readiness, including the following major initiatives:

Product Readiness

• Ensuring a robust supply chain process for launch and throughout
  plecanatide’s life-cycle
• Building sufficient trade and sample stock for launch in early 2017
• Implementing our 3PL distribution network
• Developing and implementing strong Quality Management Systems

Market/Brand Readiness

• Driving and raising awareness of Synergy Pharmaceuticals, the unmet
  medical needs, and burden of disease
• Initiating KOL engagement & speakers bureau preparation plans
• Defining our pricing and reimbursement strategy, as well as initiating
  field payer activities
• Developing the plecanatide branding, positioning, messaging and
  creative launch campaign based on customer insights & segmentation

Organizational Readiness

• Hiring and onboarding key talent to support critical functions
• Onboarding and fielding our Market Access and Medical Liaison Teams
• Ensuring our IT and Compliance systems needs are defined and
  implemented
• Continuing to evaluate all potential sales force options, including a
  hybrid infrastructure supplemented by a contract sales organization
  and/or co-promotion partner

Financial Results

• As of June 30, 2016, we had approximately $141.2 million of cash and
  cash equivalents on hand as compared to approximately $111.8 million
  cash and cash equivalents and available for sale securities as of
  December 31, 2015.
• Net cash used in operating activities was $60.1 million in the six
  months ended June 30, 2016, as compared to $49 million in the six
  months ended June 30, 2015.
• Research and development expenses in the second quarter of 2016 were
  approximately $26.6 million, as compared to $19.5 million in the
  second quarter of 2015. These increased expenses were primarily a
  result of higher spending on IBS-C studies, the filing of our CIC NDA
  in January 2016, and plecanatide API contract manufacturing costs for
  validation batches prepared for our anticipated commercial launch next
  year.
• Selling, general and administrative expenses were approximately $10.2
  million in the second quarter of 2016, as compared to approximately
  $7.4 million in the second quarter of 2015. These increased expenses
  were primarily a result of higher spending in preparation for our
  anticipated commercial launch next year.
• On May 6, 2016, we closed on a registered direct offering of
  approximately 30 million shares of our common stock with gross
  proceeds of approximately $89.8 million.
• As of June 30, 2016, the principal balance of our 7.50% Convertible
  Senior Notes (“Notes”) due 2019 was $79.2 million as compared to
  $159.0 million at December 31, 2015.
• We had 179.8 million and 113.7 million common shares issued and
  outstanding at June 30, 2016 and December 31, 2015, respectively,
  which reflects primarily an increase in the issuance of shares from
  the first quarter conversions of the Notes and the common stock
  offering noted above.
• Net loss in the second quarter of 2016 was $38.6 million, as compared
  to a net loss of $33.7 million incurred in the second quarter of 2015.

About Synergy Pharmaceuticals Inc.

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 on analogs of
uroguanylin, a naturally occurring human GI peptide, for the treatment
of functional GI disorders and inflammatory bowel disease. Synergy is
developing and retains 100% worldwide rights to its proprietary
uroguanylin analog technology platform that includes two lead product
candidates – plecanatide and dolcanatide. Plecanatide is Synergy’s first
uroguanylin analog currently being evaluated for use as a once-daily
tablet for the treatment of CIC and IBS-C. Dolcanatide is Synergy’s
second uroguanylin analog currently being explored for ulcerative
colitis. 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 Annual
Report on 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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