NEW YORK, NY / ACCESSWIRE / March 14, 2018 / Pomerantz LLP announces that a class action lawsuit has been filed against Synergy Pharmaceuticals Inc. ("Synergy" or the "Company") (NASDAQ: SGYP) and certain of its officers. The class action, filed in United States District Court, for the Eastern District of New York, and Docketed under 18-cv-00873, is on behalf of a class consisting of investors who purchased or otherwise acquired Synergy securities, seeking to recover compensable damages caused by defendants' violations of the Securities Exchange Act of 1934.
If you are a shareholder who purchased Synergy securities between September 5, 2017, and November 14, 2017, both dates inclusive, you have until April 10, 2018, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
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Synergy is a biopharmaceutical company focused on development and commercialization of therapies to treat Gastro-Intestinal disorders and diseases. Throughout the Class Period, Synergy had only one FDA-approved commercial product, TRULANCE™ (plecanatide) ("Trulance"), a drug for the once-daily treatment of chronic idiopathic constipation ("CIC"). Trulance was approved by the FDA on January 19, 2017, and became available for purchase at the end of the first quarter of 2017. on September 5, 2017, the beginning of the Class Period, Synergy announced that it closed on a $300 million senior secured loan from CRG Partners III L.P. ("CRG" and the "CRG Loan"), providing an immediate cash infusion of $100 million with a second $100 million tranche of CRG Loan financing less than six months later, on or before February 28, 2018, and a third tranche of up to $100 million in the following 13 months. The Company's Executive Vice President Guy Gemignani extolled the newly-secured loan as "non-dilutive" to the equity interests of the Company's shareholders while providing a material boost to Synergy's "cash position."
As a result of these and further assurances that Synergy had: (i) arranged ample debt financing to keep its operations running through 2019; (ii) maintained a large capital cushion to achieve its business objectives; and (iii) had a manageable cash burn rate, the investing public was led to believe that Synergy could and would successfully develop and profit from Trulance without needing to raise additional capital through additional equity offerings and without diluting stockholders' outstanding equity interests.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: the CRG Loan had critical undisclosed terms and conditions that prevented the Company from accessing funds "when needed," and that all but assured that Synergy would be required to conduct a dilutive secondary equity offering or offerings to fund its operations through 2019 and achieve its business objectives and secure the second $100 million tranches of the CRG Loan.
On November 9, 2017, after market hours, Synergy filed with the SEC its Quarterly Report on Form 10-Q for the third quarter ending September 30, 2017, and attached as an exhibit the underlying CRG Loan. The Form 10-Q reported that net cash used in operating activities over the entire nine-month period was slightly over $180 million, double the amount expended for the same period in the prior year.
On November 10, 2017, the very next day, Synergy's share price plunged to as low as $2.68, closing at $2.72 per share.
On November 13, 2017, Synergy filed with the SEC an automatic shelf registration statement on Form S-3 (the "Registration Statement") allowing future offerings of securities to the public from time to time (pursuant to Rule 415 of the SEC's General Rules and Regulations), as needed and authorized by the Board of Directors over the ensuing three years, including shares of common stock, preferred stock, debt, warrants and units.
On the very next day, November 14, 2017, the end of the Class Period, the Company filed a takedown prospectus supplement to the prior day's shelf registration, disclosing completion of a secondary offering of approximately 22 million Synergy shares at $2.58 per share, with warrants to purchase another 22 million shares in the future at $2.86 per share, for gross proceeds of approximately $56 million and net proceeds of $52.4 million, after deducting underwriting discounts and commissions and estimated offering expenses. The effect of this secondary offering was to increase the Company's outstanding stock and thereby dilute the prior stockholders' equity interests by approximately 10%, resulting in an immediate 10% drop in the Company's stock price, which fell below $2.50 per share.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
SOURCE: Pomerantz LLP