Synergy Pharmaceuticals – Hold Your Stalking Horse: Equity Committee Objects to Chapter 11 Sale, Cites Growing Drug Sales as Grounds for Restructuring Option

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December 31, 2018 – The Ad Hoc Committee of Equity Holders (the “Ad Hoc Committee”) has objected [Docket No. 137] to the Debtors’ sale motion [Docket No. 17], arguing that, given the recent success of certain drugs, the Debtors have been too quick to seek Chapter 11 protection.
 
The objection states, “The Ad Hoc Committee believes the Debtors’ management made a terrible strategic decision by committing the Debtors to a chapter 11 sale process at this early stage of the commercialization of TRULANCE (the Debtors’ FDA-approved drug) and development of Dolcanitide (the Debtors’ valuable development-stage cancer treatment drug), particularly given the series of upcoming near term events which promise to substantially increase the Debtors’ sales. Rather than attempting to reduce the Debtors’ cash burn to capitalize on these events, however, the Debtors accepted the terms of an ultra-quick chapter 11 sale process demanded by either the prepetition lenders or the Stalking Horse Purchaser or both, which if not modified will seriously reduce the chance of having an auction and thereby undermine the Debtors’ ability to realize the fair market value of their assets.
 
The Ad Hoc Committee believes that with a properly guided process, a restructuring would have been (and may still be) possible. Since June 9, 2017, the weekly scripts for TRULANCE have been growing an average of 2.43% per week. If that trajectory continues, the Debtors would achieve sales close to $150 million in 2019, and with other developments would have been enough to support a restructuring.”

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