Seeking Alpha: Progress At Synergy Pharmaceuticals, But Not Enough To Really Please Investors

Synergy Pharmaceuticals (NASDAQ:SGYP) continues to be an unusual little biotech with almost as many weaknesses or concerns as strengths. On one hand, you have a company with what could be a best-in-class drug that addresses a market that may include millions of people in the U.S. alone. On the other hand, the drug will be second-to-market and may have difficulty differentiating itself, to say nothing of the difficulties of developing the market as a whole and securing good reimbursement.

Synergy shares have risen almost 20% since my last article on the company, but not without spending most of the intervening time down about 20%. Management has possibly secured enough cash to get its lead drug to market, but the company still needs a partner (or a buyer) and that financing didn't come cheap. The prospective dilution of the financing takes my fair value down, but the shares still look undervalued with two catalysts on the way that could improve the risk-adjusted fair value by almost 30%.

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Progress At Synergy Pharmaceuticals, But Not Enough To Really Please Investors

Seeking Alpha: Ironwood Has Plenty Of Market-Development Work Ahead

Biotech investors love to speculate on the basis of what a drug could generate in future sales, but relatively few of them have the patience to stick it out and support a company as it transitions from an R&D enterprise to a commercial enterprise. In cases like Ironwood (NASDAQ:IRWD) where the company has a lot of market development work to do, patience can be even thinner.

To be fair to Ironwood, the shares have done quite well over the past year (up more than 50%), but over the trailing five years the shares are up just 5% (during a red-hot biotech market). For Ironwood to work well as a stock from here, management has to deliver on its efforts to drive patient and physician awareness and that's no easy task when a large proportion of the market can arguably be suitably managed with diet modifications or cheap OTC and generic options. While the potential is here for Ironwood shares to be worth considerably more in a few years' time, I think the potential rewards and risks are pretty well balanced right now.

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Ironwood Has Plenty Of Market-Development Work Ahead

Seeking Alpha: Synergy Pharmaceuticals Could Be A Diamond In The Rough

For a biotech that has reported encouraging clinical results and seeks to address a significant market, Synergy Pharmaceuticals (NASDAQ:SGYP) can't get much love. I can appreciate that there's a funding overhang here and that the market doesn't always embrace drugs that look like "me too's", not to mention a general move away from risky smaller names, but I think those concerns miss a lot of positives at this development-stage biotech.

I don't think plecanatide is just a Linzess wannabe, and I believe direct-to-consumer marketing efforts from Sucampo (NASDAQ:SCMP) and Actavis (NYSE:ACT) (and maybe Salix (NASDAQ:SLXP) down the road) will raise awareness of prescription treatments for constipation and IBS. Moreover, I think plecanatide offers some meaningful quality-of-life advantages that may be underappreciated today. It seems to me that the market currently values Synergy as though it will be forced to market plecanatide on its own (an expensive proposition), but I believe some sort of partnering arrangement, if not an outright sale of the company, is more likely and these shares look undervalued today.

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Synergy Pharmaceuticals Could Be A Diamond In The Rough

Seeking Alpha: Lundbeck Remains A High-Risk/High-Reward Specialty Pharmaceutical Play

There isn't that much middle ground when it comes to Danish CNS specialty pharmaceutical company H Lundbeck A/S (OTCPK:HLUYY) - sell-side analysts either think it is an overvalued company with little chance of differentiating its new products in the market or they think it is an undervalued company that can drive significant value through advanced drug design methods that lead to products with better efficacy and/or safety profiles. With the recent clinical failure of desmoteplase and an unimpressive initial ramp for Brintellix and Abilify Maintena the bears are looking stronger of late, but I believe this risky specialty pharma company still has a few strong cards left to play.

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Lundbeck Remains A High-Risk/High-Reward Specialty Pharmaceutical Play

The Motley Fool: Fleeing Taxes, Salix Pharmaceuticals Moves to Ireland

Large companies like Actavis have done it, small companies like Auxilium have done it, and huge companies like Medtronic have done it (and Pfizer wants to do it). Now count mid-cap specialty pharmaceutical company Salix Pharmaceuticals (NASDAQ: SLXP  )  is among the companies using M&A to shift their formal headquarters to a country with a lower tax rate. 

While there's more to Salix's merger with Cosmo Tech than just a tax inversion, that's the value driver to the transaction. This move appears to add about 5% to 10% to Salix's value, but it also makes it less likely that the company gets a buyout bid of its own, and that may be disappointing to some investors.

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Fleeing Taxes, Salix Pharmaceuticals Moves to Ireland

The Motley Fool: For Forest Labs, Inc, Deals Are Coming Fast And Furiex

This is definitely a season of deals in the health care space, with Forest Labs (NYSE: FRX  ) choosing to add another asset to its GI business ahead of its anticipated merger with Actavis (NYSE: ACT  ) . Forest Labs is offering a significant premium for Furiex Pharmaceuticals (NASDAQ: FURX  ) and there are still FDA-related risks in play, but it seems like a reasonable offer for what could prove to be a highly synergistic asset.

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For Forest Labs, Inc, Deals Are Coming Fast And Furiex

The Motley Fool: Is the Market Undervaluing Celgene?

Celgene (NASDAQ: CELG  ) admittedly does not leap off the page as a cheap stock, at least not with a cursory glance. The shares are up about 40% over the past year (and more than 100% over the past two years) and trade at more than nine times sales and 11 times book, not to mention more than 16 times forward earnings.

Look closer, though, as this oncology-focused bio/pharma not only has a deep early stage pipeline of oncology drugs, but meaningful label expansion opportunities for approved drugs. Celgene is also preparing to launch its first immunology drug and the Street's expectations are quite a bit lower than those of management. A patent challenge to the company's lead drug is definitely a serious matter, but the shares appear undervalued even amid an ongoing bull market in the health care space.

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Is the Market Undervaluing Celgene?

The Motley Fool: Is Mylan a Good Buy?

As branded drugs have become more complicated and global growth has become more important to generic franchises, scale matters more than ever. That's a definite check mark in the plus column for Mylan (NASDAQ: MYL  ) , as it is among the largest generic drug makers in the world and one of the few with the scale and capability to operate not only efficiently, but to crack the code on hard-to-manufacture generics.

Wall Street is definitely keen on the shares right now. The stock has risen almost 80% over the last year, and more than 140% over the last two years, as investors have gotten excited about the potential for generic Lidoderm, Copaxone, and Advair, as well as the potential for additional value-creating M&A deals.

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Is Mylan a Good Buy?

The Motley Fool: Actavis PLC Buys Pricey Lumber with Forest Labs

Investors were greeted with an intriguing rumor early Tuesday morning, as the Wall Street Journal and other financial news sources were reporting that Actavis (NYSE: ACT  ) and Forest Labs (NYSE: FRX  ) were closing in on a deal. It didn't take long for this to play out, as Actavis announced the deal before the market opened.

This is a bold move for Actavis, as Forest Labs substantially expands its therapeutic end-markets, its addressable health care markets, and its balance sheet. There are definitely rich opportunities for operational and financial synergy here, but successful execution on this premium deal is an absolute must.

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Actavis PLC Buys Pricey Lumber with Forest Labs

Seeking Alpha: Endo Health Scores A Huge Win

It really is a new Endo Health (ENDP).

I've gone on at length about how past management did their best to try to ruin a once-strong specialty pharmaceutical business, but the announcement of a deal to acquire Paladin Labs (OTC:PLDLF) is a true transformational deal in all of the right ways. Endo still has challenges to deal with, including generic competition for two major products and surgical mesh litigation, but the company seems to be handling the generic issue pretty well and the acquisition of Paladin will significantly expand the company's specialty pharma business and generate substantial tax savings by redomiciling in Ireland.

The only "but" is valuation. While I do believe that Endo Health's guidance on synergies are pretty conservative, the nearly 30% move in the shares is a pretty solid recognition of the value this deal will create. It's tough to buy a stock at an all-time high after such a big move, but the post-deal valuation doesn't seem unreasonable and Endo will still have the financial flexibility to do additional deals to rebuild the pipeline and patented product portfolio.

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Endo Health Scores A Huge Win

Seeking Alpha: Endo Health Has A Lot Of Work To Do

How do you ruin a specialty pharmaceutical business? Take a ridiculously lucrative stream of free cash flow generated by a strong pain franchise and reinvest it badly-reasoned acquisitions in the device space. To be fair, though, "ruin" in the case of Endo Health Solutions (ENDP) still means a stock that has climbed almost 150% over the past ten years and left both the S&P 500 and drug companies like Teva (TEVA) and Mylan (MYL) in the dust.

The relevant question now is where Endo Health goes from here. The company's one-time fortress of pain medications is now due to erode away in the face of generic competition, while the company's device business has not only failed to generate good cash flows but has actually created potentially large product liability claims. New management has already laid out bold cost-cutting moves and explicitly intends to close multiple M&A transactions. At this point, then, this stock is basically a referendum on management - if you believe they can acquire a better future for Endo, you probably like the stock. If you believe Endo won't be able to acquire enough growth, it probably looks like a hold at best.

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Endo Health Has A Lot Of Work To Do

Investopedia: A Good Deal For Actavis, But Warner Chilcott Goes A Little Cheap

Confirming a pretty active recent rumor mill in the generic and specialty drug space, Actavis (NYSE:ACT) announced on Monday that it had reached an agreement to acquire Warner Chilcott (Nasdaq:WCRX) in an all-stock deal. This deal should bring real long-term value for Actavis, while giving the owners of long-struggling Warner Chilcott an honorable exit.

The Deal To Be
Assuming that the deal gets the request approvals and a rival suitor doesn't break things up, Actavis will acquire Warner Chilcott in an $8.5 billion all-stock deal that values Warner Chilcott at $20.08 a share – a roughly 5% premium to Friday's close, but closer to a 50% premium relative to where the shares were trading before spiking on M&A rumors.

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Investopedia: Teva Still Too Cheap, But Still Too Uncertain

The story on the generics giant Teva Pharmaceutical (Nasdaq:TEVA) really hasn't changed all that much over the past year. For investors who can just buy, ignore the volatility, and maintain a long-term perspective, the shares look too cheap. On the other hand, the generic drug business has clearly lost momentum, and it's uncertain if “bio-similar” and a more focused approach to drug development will deliver the promised returns for this company. Consequently, value investors have a lot to like here, but they have to accept that the Street is probably not going to share that enthusiasm for some time yet.

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Seeking Alpha: Can Anything Stop Novo Nordisk?

Novo Nordisk (NVO) is a company for the record books and MBA lesson plans. This Danish biopharmaceueticals company doesn't try to do very many things, but it does them very, very well. With modest near-term competitive risks and substantial potential value in the pipeline, operationally there is little to fear at Novo Nordisk. The question for investors, as is so often the case with this stock, is what is the proper price to pay for that excellence.

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Can Anything Stop Novo Nordisk?