![]() Developed by another smaller firm, Ironwood Pharmaceuticals ( IRWD ), Linzess is licensed to Allergan ( AGN ), one of the biggest pharmaceutical companies in the world. Linzess, another drug for the treatment of CIC and IBS-C, was already in the market. It might have been able to make a decent go of winning market share if it had an open field. Synergy faced an even greater challenge in the form of competition. That is especially true for a product like Trulance, which aims at a mass-market audience. Small firms lack the resources, experience, and clout to make inroads with insurers and prescribers. For most developmental pharmaceutical companies, a commercial partnership can be vital to success. The company quickly opted to pursue a go-it-alone commercialization strategy, meaning it would not license the drug to a larger partner in exchange for upfront cash, milestone payments, and a cut of sales. In January 2017, Synergy won FDA approval for Trulance in the CIC indication. Synergy’s first big mistake was to attempt to commercialize Trulance, its drug for the treatment of chronic idiopathic constipation (“CIC”) and irritable bowel syndrome (“IBS-C”) with constipation, on its own. Fighting Goliath: The Hubris of Eschewing a Commercial Partner What can we all learn from this sorry case study? In our most recent note (published, quite aptly, on Halloween), our tone had changed in light of the company’s imminent financial distress: “ Can Synergy Survive This Crisis?” The answer to that last question: No. As it turned out, Synergy had a long way to fall. We followed that up with an even worse judged note titled “ Not A Falling Knife”. In our first note, we declared that “ After A Stumble, Synergy Pharmaceuticals Is Poised To Rise”. ![]() Since we initiated coverage of Synergy in October 2017, we published 19 research notes about the company. Bausch Health Companies ( BHC) has offered $200 million for them in the court-supervised auction and sale. The small pharmaceutical company has filed for bankruptcy and its assets are set to be bought up on the cheap. Reviewing our performance in 2018, our worst call was, without question, Synergy Pharmaceuticals ( NASDAQ: SGYP-OLD). Alas, it is the nature of the investment game.
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