WB cuts Synthetic Biologics price target

William Blair lowered its price target for Synthetic Biologics (NYSE:SYN) to $7 from $10, citing potential delays to commercialize the company’s two programs. The stock closed at $1.67 on Wednesday.

“We maintain our ‘outperform’ rating as we believe the fundamentals remain strong,” writes analyst Katherine Xu. “Meanwhile, the financing overhang will keep pressure on the stock in the near term.”

The company’s ribaxamase (SYN-004) Phase 2b study in C. difficile prevention is now going to completion due to unexpected accelerated enrollment; top-line data is now expected in first quarter 2017. If the data are adequately positive, the Phase 2b study could serve as one of the pivotal studies for eventual ribaxamase approval, Ms. Xu said.

For SYN-010 in irritable bowel syndrome-constipation, an end-of-Phase-2 meeting was completed with the FDA and an adaptive design proposed for a Phase 2b/3 study to evaluate multiple doses in stratified patient populations.

“Financing concerns remain a major overhang on the stock, with the company running out of cash before year-end, according to our model,” she said.

Synthetic is continuing discussions with potential partners to bring in non-dilutive capital in the near future, with discussions mainly focused on the SYN-010 program, she added. Meanwhile, the company might also resort to the public market or existing investors to extend the cash runway.