Bausch bids $200M for Synergy gut drug, eyeing turnaround opportunity
- Bausch Health has bid $200 million to acquire Synergy Pharmaceuticals' gut drug Trulance, putting forward the initial bid in a bankruptcy process Synergy began after the expected commercial opportunity for Trulance never fully materialized.
- Under an agreement announced Dec. 12, Bausch would take over "substantially all" of Synergy's assets, including Trulance and an experimental drug known as dolcanatide. The deal with Bausch represents the "stalking horse" bid in a court-supervised bankruptcy sale process and is contingent on receipt of "higher and better" offers.
- Synergy secured U.S. approval for Trulance in January 2017, believing the drug would find success as a treatment for chronic constipation and irritable bowel syndrome (IBS). Nearly two years on, however, sales remain insubstantial and look set to fall below a minimum threshold established in a loan agreement Synergy signed last year.
Synergy's story is a familiar one in biotech. Securing approval for a drug, while an arduous and lengthy process itself, graduates a company to a new slate of commercial challenges and pressures.
That's proved the case for Synergy, which had predicted Trulance could ride a growing U.S. market for constipation and IBS treatments to market success. But competition from market incumbents, coupled with hurdles in securing payer coverage, have proved difficult to overcome.
Sales of Trulance in the third quarter totaled only $11 million, Synergy reported in November, and are expected to reach between $42 million and $47 million for the entire year — well below a $61 million minimum revenue threshold set out in a term loan agreement Synergy inked with CRG Servicing LLC.
Synergy has attempted to renegotiate its deal with CRG but hasn't reached any agreement with the lender on modifications, putting the company at potential risk for default.
In response to its ongoing difficulties, Synergy voluntarily initiated Chapter 11 bankruptcy proceedings that have now led to the agreement announced with Bausch Health.
"We are confident that this process will result in a strong new owner that has the necessary funding and commercialization capabilities to continue providing Trulance to the patients and providers who have come to rely on this treatment and will allow us to maximize value for all stakeholders," said Synergy CEO Troy Hamilton in a Dec. 12 statement.
Synergy's proposed sale to Bausch will be assessed through a court-supervised auction process and is subject to receipt of any higher bids for Trulance and the company's related assets.
The sale process is expected to be completed by the first quarter of 2019.
For Bausch, Trulance would complement its existing presence in gastrointestinal diseases. Formerly known as Valeant, Bausch markets the IBS drug Xifaxan (rifaximin) and has an existing sales force focused on the GI market through its Salix Pharmaceuticals business.
Shares in Bausch rose by nearly 9% on the news in early Wednesday trading. Synergy stock, meanwhile, trades for about one penny on the Nasdaq stock exchange.
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