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The following is a guest post by Mobile Guru.

Previously I had written about Synergy Pharmaceuticals (SGYP.OB) and their current status of their drug trials. Biotech’s advancing out of successful Phase II/III trials have the best opportunity for significant increases in shareholder value. In the case of Synergy, they provided a very important update to their testing schedule on Friday. When I last reported on them in November, they were planning their next Phase IIb trials. Typically Phase IIb trials are specifically designed to study efficacy (how well the drug works at the prescribed dose(s). On Friday they made this announcement.

Synergy Pharmaceuticals, Inc, a developer of new drugs to treat gastrointestinal (GI) disorders and diseases, today announced that the next clinical trial of plecanatide to treat chronic idiopathic constipation patients, planned to begin in the second quarter of 2011, has been designed as a Phase II/III trial.

This change should not be lost on investors. Phase III studies are randomized, controlled multi-center trials on large patient groups (300–3,000 or more depending upon the disease/medical condition studied) and are aimed at being the definitive assessment of how effective the drug is, in comparison with current ‘gold standard’ treatment. This change greatly accelerates their potential time to approval. The fact that they did this after further review of their Phase IIa data, and discussion with the FDA indicates to me that there are no issues about dosages, and they have a high confidence in their ability to meet Phase III end points. Keep in mind no severe adverse events were observed, and notably no patients receiving plecanatide reported diarrhea.

Another company working on Phase III testing of a new drug in this same market is Ironwood Pharmaceuticals Inc (IRWD).They currently have a market cap of $1.06B. Phase 3 clinical trials assessing the efficacy and safety of linaclotide in patients with irritable bowel syndrome with constipation (IBS) met all primary and secondary endpoints, including multiple endpoints assessing linaclotide’s effect on abdominal pain. Diarrhea was the most common adverse event in linaclotide-treated patients in these trials. Keep in mind Ironwood has already partnered with Forest Laboratories (FRX) and only will receive 50% of any revenue generated in the future if they submit and receive FDA approval for linaclotide.

As I have stated in my previous article I like Biotechs that are targeting solutions for large market opportunities. In this case the potential market is well over $25B/year. I also like companies that are well along in their testing either approaching Phase III trials or finishing Phase II. The fact that the trials are 90 day trials with data being available soon after completion is another plus. This indicates much quicker results with additional Phase III trials or even in some cases immediate application for approval. Both companies have opportunity for significant advancement upon getting their first approval.

Ironwood has a market cap of slightly over $1B and is in Phase III testing but has already sold 50% of the potential drug revenues to partner Forest Laboratories. Synergy with a market cap of $500M is just entering Phase III testing and while it may be slightly behind in development may have a better end product since no adverse events have been seen during any of the efficacy trials. Currently shares in Synergy are thinly traded but it is likely that interest will increase as Phase III trials are entered and results are released.

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I’m a long time investor with investment experience in high tech, biotechs and precious metals. I blog on topics that are of interest to me and my goal is to generate intelligent discussion. I don’t consider myself an expert in any one area, but know a little about a lot of things. I believe as soon as we stop learning, we stop living. You can connect with me at SeekingAlpha.

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