Bausch is keen on Synergy, after troubled constipation drug maker files for Chapter 11

Synergy Pharmaceuticals $SGYP has filed for bankruptcy, capping a miserable year for the constipation drug maker which in October suggested it did not anticipate receiving any takeover offers, despite displaying a for-sale sign for months. On Wednesday, Bausch Health $BHC — formerly Valeant — emerged from the shadows, with a stalking horse bid for the bulk of Synergy’s assets for a cool $200 million.

Synergy has long struggled. Since lead drug Trulance secured FDA approval in January 2017 for chronic idiopathic constipation (CIC), it brought in a paltry $16.8 million over the course of the year, in which Synergy also launched Poop Troop — a series of animated emojis designed to encourage conversation about the impact of CIC.

After winning approval for the drug in irritable bowel syndrome with constipation (IBS-C) this January, sales were expected to perk up. But Ironwood Pharma’s $IRWD 2012-approved Linzess has remained in its pole position, and Trulance failed to perform in line with Synergy’s expectations, forcing the company to shave its full-year net sales forecast for the drug.

The New York-based company has also been trying to negotiate its term loan agreement with CRG, which was announced in September 2017 as $300 million in debt financing structured as senior secured loans. This morning’s announcement (that Synergy has filed under Chapter 11) suggests that negotiation was in vain.

Synergy’s shares tumbled about 23% before the bell.

A stalking horse bid is an initial bid on the assets of a bankrupt company that sets the base price, so that other bidders (if any) cannot pay lower than that price. If the bid succeeds, the deal will be consummated by the first quarter of 2019 and will complement Laval, Quebec-based Bausch’s GI business, housed under Salix Pharma.

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