No sale: After 3 years of hunting a buyer, bruised Trulance maker Synergy desperate for cash

Already struggling to boost Trulance sales, Synergy could default on a loan agreement tied to revenue performance. (Pixabay/qimono)

Synergy's been trying to sell itself for more than three years, but no buyer's willing to pay enough, the company admitted Thursday. Even worse? With its Trulance launch on the skids, Synergy's running out of money. If it can’t renegotiate terms with its lender, bankruptcy could be next.

At Trulance's current sales pace, Synergy said it won’t be able to meet minimum revenue requirements of a loan agreement with investor CRG Servicing. As a buyer willing to meet Synergy's price remains elusive—and Synergy so far pleading in vain with CRG to amend the deal—a potential bankruptcy is looming.

And when Synergy revealed its woes after the market close Thursday, panicked investors immediately sent its shares south by more than 70%.

Synergy hired an advisory firm in April 2015 to help evaluate its options, including a possible sale. As no buyout offer “aligned with the company strategically or financially,” it decided to launch Trulance on its own, the company said.

But it didn’t give up on a sale or strategic deal. In May, the company started “in-depth discussions with numerous potential counterparties regarding various strategic alternatives”—only to fail again. “To date, the offers received to acquire Synergy have been significantly below the company’s current market value,” the statement noted.

Meanwhile, Synergy’s cash is running low, no thanks to the underperforming Trulance, which won FDA approval for chronic idiopathic constipation in January 2017. Synergy poached GI-experienced sales reps from Valeant for the rollout, and analysts were optimistic because the drug could be taken with or without food and carried a sticker price comparable to those on Allergan's rival med Linzess and Sucampo and Takeda’s Amitiza. One analyst’s original estimate for its 2018 sales? $100 million.

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Not so, even with another salesforce boost in January 2018 and a new FDA nod in irritable bowel syndrome with constipation. For the first half of 2018, the drug only registered $20.8 million, and the company projected full-year sales at $47 million at the most, way below the minimum revenue requirement on its deal with CRG.

That figure was $61 million. And now, Synergy will have to repay CRG principal and additional penalties by March 31 unless it renegotiates the deal.

As of 2018, Synergy had licensed Trulance’s Chinese rights to China-based Luoxin Pharma for $12 million up front. Its Canadian partner, Cipher Pharmaceuticals, is on track to file Trulance in IBS-C this year. However, the milestone payments tied to those deals won’t come early enough to rescue Synergy. And the dilemma is, if Synergy can't draw on its CRG credit line, it won't meet the deal's liquidity requirements, either.

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To make things worse, Shire’s rival constipation drug prucalopride just won unanimous backing from an FDA panel, sending it closer to a final FDA nod before Dec. 21. Meanwhile, small biotech Ardelyx has filed its lead drug tenapanor for FDA approval in IBS-C.

Right now, Synergy said it doesn’t expect a significantly higher buyout offer to magically appear. It's continuing discussions with CRG and at the same time pursuing financing elsewhere. But if none of those efforts work, the company may be looking at bankruptcy protection as the way out.