Synergy Pharmaceuticals Reports Third 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 September 30, 2016.

“This was another exciting quarter for Synergy,” said Gary S. Jacob,
Ph.D., Chairman and Chief Executive Officer of Synergy Pharmaceuticals
Inc. “I am encouraged by our continued positive interactions with FDA
and the steady progress being made by our highly experienced and
talented leadership team in preparing our organization, as well as the
market, for the anticipated launch of plecanatide early next year.”

“We are expecting several transformative events in the coming months,
including top-line results from our two plecanatide phase 3 IBS-C trials
by year-end and a January 29, 2017 PDUFA date for plecanatide in CIC,”
added Dr. Jacob. “As we move forward, we will continue to make
appropriate, well-timed investments to ensure that plecanatide is
positioned for a successful launch upon approval and will soon be
available to patients, healthcare providers and payers.”

Third Quarter 2016 and Recent Highlights

Research & Development

Plecanatide CIC Development Update

• The plecanatide new drug application (NDA) in chronic idiopathic
  constipation (CIC) is currently under review by the Food and Drug
  Administration (FDA) and the Prescription Drug User Fee Act (PDUFA)
  target action date is January 29, 2017. Plecanatide is the first
  investigational therapy designed to replicate the activity of
  uroguanylin, a naturally occurring human GI peptide, by working
  locally primarily in the proximal small intestine to stimulate
  digestive fluid movement and support regular bowel function.
• The late-cycle review meeting with the FDA was completed and no
  significant issues were identified. The FDA previously informed us
  that there are no plans at this time for an advisory committee meeting
  in connection with the 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 long-term open-label safety
  study. Over 3,500 patients have been exposed to plecanatide in the CIC
  clinical development program.
• Two posters were presented on the plecanatide CIC clinical data at the
  American College of Gastroenterology (ACG) annual scientific meeting
  in October 2016.

• Safety and Tolerability of Plecanatide in Patients with Chronic
  Idiopathic Constipation: Long-term Evidence from an Open-Label Study
  • Data presented from the long-term open-label safety study showed
    plecanatide was associated with low adverse events and low
    discontinuation rates in patients with CIC who received
    plecanatide (3 mg or 6 mg) once-daily for up to 72 weeks. The most
    common adverse events were diarrhea (7.1%) and urinary tract
    infection (2.2%). The remainder of adverse events occurred in less
    than 2% of patients treated with plecanatide. Adverse events
    leading to discontinuation occurred in 5.3% of patients treated
    with plecanatide, with discontinuation due to diarrhea occurring
    in 3.1% of patients. In addition, this study asked patients about
    level of treatment satisfaction and desire to continue treatment.
    The median score for treatment satisfaction was 4.0 (4=quite
    satisfied) and for continuation of treatment was 4.0 (4=quite
    likely).
• Efficacy and Safety of Plecanatide in the Treatment of Chronic
  Idiopathic Constipation (CIC): Pooled Results from Two Phase 3 Studies
  • Pooled results from two previously reported double-blind
    placebo-controlled phase 3 CIC trials confirmed patients treated
    with plecanatide showed a significantly greater response rate of
    durable overall complete spontaneous bowel movements compared to
    placebo (20.5% in 3 mg and 19.8% in 6mg dose groups compared to
    11.5% in placebo; p<0.001 for both doses). This is the primary
    endpoint defined by the FDA for regulatory approval in CIC. This
    integrated analysis also showed consistent safety data with
    adverse event rates similar across plecanatide-treatment groups
    and placebo (30.6% in 3 mg and 31.1% in 6 mg dose groups compared
    to 28.7% in placebo). Diarrhea was the most common adverse event
    (4.6% in 3 mg and 5.1% in 6 mg compared to 1.3% in placebo).
    Discontinuation rates were low across all treatment groups (4.1%
    in 3.0 mg and 4.5% in 6.0 mg dose groups compared to 2.2% in
    placebo).

Plecanatide IBS-C Development Update

• Patient enrollment has been completed in the two double-blind,
  placebo-controlled phase 3 clinical trials with plecanatide in IBS-C
  patients. Top-line data in both trials are expected by the end of this
  year. The primary endpoint in both 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.
• The IBS-C pre-NDA meeting with the FDA was completed in September
  2016. Pending approval of plecanatide in the CIC indication, we plan
  to file a New Drug Application Supplement with Clinical Data (sNDA)
  for plecanatide in IBS-C in the first quarter of 2017 and expect a
  10-month review period from submission.

Commercial Planning & Launch Preparation

“We are laser-focused on our key strategic imperatives of product
readiness, market and brand readiness and organizational readiness,”
said Troy Hamilton, Executive Vice President and Chief Commercial
Officer of Synergy Pharmaceuticals Inc. “Based on our extensive market
research, advisory board meetings and interactions with payers,
healthcare providers and patients to-date, we are very encouraged about
the positive impact that plecanatide will have in the market place as a
differentiated therapeutic option for patients with CIC. We are also
pleased with the progress our technical operations team has made this
year to ensure plecanatide product supply will be ready and available to
physicians and patients by our anticipated launch early next year. We
strongly believe that we have the right strategy and right team to
successfully launch plecanatide and address the unmet needs of a growing
GI market.”

Product Readiness

Key Highlights

• Met all technical operations timelines to-date and remain on-track to
  complete all activities by the anticipated launch of plecanatide in
  early 2017.
• Established a robust supply chain and actively producing commercial
  product.
• Continuing to build trade and sample stock for launch in early 2017.
• Implemented 3PL distribution network.
• Established strong Quality Management Systems.

Market/Brand Readiness

Key Highlights

• Generated substantial customer insights through qualitative and
  quantitative market research that will include more than 2,700 HCPs
  and more than 5,000 patients/consumers by the end of 2016.
• Conducted multiple productive advisory boards with national and
  regional GI Key Opinion Leaders and payers.
• Finalized plecanatide brand vision, brand positioning, value
  proposition, core marketing strategies and launch tactics; our message
  platform and a creative campaign will be completed and ready by
  year-end.
• Initiated pre-launch multimedia and digital campaigns to drive company
  awareness and disease education, focusing on current unmet medical
  needs of patients with CIC.
• Developed a compliant, value maximizing, and cost-effective
  promotional mix to reach the broadest universe of prescribers.
• Market Access team has conducted meetings with all key commercial and
  public payers, representing approximately 230 million covered lives in
  the U.S.

Organizational Readiness

Key Highlights

• National and regional market access teams have been active and in the
  field introducing Synergy Pharmaceuticals to payers since January 2016.
• Medical education efforts initiated in March 2016 and included strong
  corporate presence and key data presentations at Digestive Disease
  Week and ACG.
• Hired regional sales leaders averaging more than 10 years of GI
  experience who are driving important pre-launch initiatives and who
  will support an effective hybrid sales infrastructure that will be
  deployed at launch.
• Initiated a partnership with Publicis Touchpoint Solutions, Inc. to
  implement a cost-effective, flexible hybrid sales force, leveraging
  highly experienced sales representatives who will be fully dedicated
  to supporting the launch and adoption of plecanatide.
• Established a focused and efficient sales force strategy, combined
  with a comprehensive multi-channel approach, to reach the key
  prescribers and influencers at launch.
• Implemented all critical IT and compliance systems.

Financial Results

• As of September 30, 2016, we had approximately $109.1 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 $92.0 million in the nine
  months ended September 30, 2016, as compared to $70.7 million in the
  nine months ended September 30, 2015.
• Research and development expenses in the third quarter of 2016 were
  approximately $24.6 million, as compared to $20.4 million in the third
  quarter of 2015. These increased expenses were primarily a result of
  higher spending on IBS-C studies, additional technical operations and
  medical affairs operating expenses as well as drug product related
  costs for our commercial launch in the first quarter of 2017.
• Selling, general and administrative expenses were approximately $13.9
  million in the third quarter of 2016, as compared to approximately
  $2.7 million in the third quarter of 2015. These increased expenses
  primarily reflect commercial preparedness and planning expenses to
  support an anticipated launch of plecanatide during the first quarter
  of 2017.
• 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 September 30, 2016, the principal balance on 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 September 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 third quarter of 2016 was $40.2 million, as compared
  to a net loss of $26.0 million incurred in the third 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 around analogs
of uroguanylin, a naturally occurring human GI peptide, for the
treatment of GI diseases and disorders. Synergy discovered, is
developing and controls 100% worldwide rights to its proprietary
uroguanylin analog 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
chronic idiopathic constipation (CIC) and irritable bowel syndrome with
constipation (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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