Synthetic Biologics (SYN) Seen as Undervalued at RBC Capital

RBC Capital maintained an Outperform rating on Synthetic Biologics (NYSE: SYN) with a price target of $8. Yesterday the company reported that the second Phase 2 clinical trial of its proprietary SYN-010 for the treatment of irritable bowel syndrome with constipation (IBS-C) met its primary endpoint.

Commenting on the news, analyst Adnan Butt said, "Outcomes appear to have improved over earlier Phase 2 data, and start of a Phase 3 study could be next. We believe SYN remains an underappreciated and undervalued opportunity given that it has two, high-potential, ongoing Phase 2 programs (SYN-010 in IBS-C and SYN-004 in CDI prevention)."

The analyst continued, "The Phase 2 study enrolled 63 patients who were divided into three arms: placebo, low dose (21 mg), and high dose (42 mg) SYN-010. Patients were treated and then 54 rolled into the extension phase where everyone received 42 mg SYN-010 for 8 weeks. Results at the end of 12 weeks showed a stat sig decrease in methane production (p=0.002) for breath methane positive patients. Results appear to have improved over this extension period."

Butt added, "Results also showed stat sig improvements in clinical symptoms. Patients received 8–12 weeks of SYN-010 and had improvements in abdominal pain, bloating, and stool frequency, common symptoms of IBS-C, and also quality-of-life scores in patients with IBS-C. There was a stat sig reduction in the mean IBS Symptom Severity Score (IBSSSS; p<0.0001). This is a composite endpoint made up of abdominal pain, bloating, stool frequency, and quality-of-life scores. Given the strength of the p-value, we believe improvements were seen across all of these components. There was also an increase in the percentage of patients identified as Monthly Responders, which is a composite measure incorporating improvements in complete spontaneous bowel movements (CSBMs) and abdominal pain."

Discussing safely, the analyst said, "No side effects were mentioned, and given the number of patients who rolled over into the extension phase, tolerability also appears solid. SYN-010 is a proprietary, modifiedrelease formulation of lovastatin that reduces methane production by components of the microbiome without damaging the microbiome. Since it is a statin, we expect the side-effect profile to be largely predictable."

A phase 3 trial for SYN-010 could start in 2016.

For an analyst ratings summary and ratings history on Synthetic Biologics click here. For more ratings news on Synthetic Biologics click here.

Shares of Synthetic Biologics closed at $1.52 yesterday.

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