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This $12 Billion Hedge Fund Is Switching to Synergy Pharmaceuticals, Away from ACADI

This $12 Billion Hedge Fund Is Switching to Synergy Pharmaceuticals, Away from ACADIA
By Tipranks | November 21, 2017 — 8:47 AM EST

Read more: This $12 Billion Hedge Fund Is Switching to Synergy Pharmaceuticals, Away from ACADIA | Investopedia https://www.investopedia.com/investing/12-billion-hedge-fund-switching-synergy-pharmaceuticals-away-acadia/#ixzz4z4xPedQ0
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Hedge fund titan Dmitry Balyasny is founder of the eponymous $12.6 billion Balyasny Asset Management (BAM) fund, which has now revealed its trades for the third quarter. We can see that in the quarter the fund displayed a bullish sentiment towards Synergy Pharmaceuticals Inc (NASDAQ:SGYP) while turning bearish on ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).

"We think the challenges, consolidation, and changes in the industry are due to one main factor: There isn't enough alpha to make everyone happy," Balyasny told investors recently. He says the best way to get round Hedge fund titan Dmitry Balyasny is founder of the eponymous $12.6 billion Balyasny Asset this is to use a combination of technical data analysis while also ensuring the stock in question has “some fundamental inflection in a business that has not been picked up yet in the data.” Indeed, BAM is famous for its multi-strategy approach which involves using uncorrelated approaches developed by its proprietary trading tools and technology.

Let’s now take a closer look at how this approach played out in the last quarter with two key pharmaceutical stocks:

Synergy Pharmaceuticals

Balyasny initiated a brand-new position in the promising, gastrointestinal medicine-focused Synergy in the third quarter. He snapped up 1,383,400 shares with a value of just over $4 million.
On November 13, Synergy offered 21,705,426 common shares at $2.58 per share together with 21,705,426 warrants to purchase common shares at $2.86 per share, exercisable until November 15, 2019. This will generate about $56 million for Synergy. Investors didn't like the news, sending shares down from $2.72 to the current share price of $1.93.

The financing will give Synergy the cash required to fund the advancement of its key drug Trulance. The drug is already approved for the treatment of chronic idiopathic constipation (CIC) and is also currently being reviewed for the treatment of irritable bowel syndrome with constipation (IBS-C). The crunch date for the application is set for January 2018. This is when the FDA will either approve or reject the application.

The stock still has many supporters who point out that sales of Trulance are steadily growing and that the stock’s fundamentally positive picture remains intact. One of these supporters is Canaccord Genuity analyst John Newman. He has a buy rating on the stock and a price target of $13 (about 360% upside from the current share price). Newman points out that: “SGYP is expecting most remaining new-to-market (NTM) blocks to be lifted in 1H18, which would give Trulance more favorable access across commercial, Medicare Part D and Managed Medicaid plans.” He is also bullish on increased DTC (direct to consumer) advertising, recent formulary wins and the large percentage of prescriptions for patients who were new to the branded treatment.