Synergy Pharmaceuticals (SGYP) 10-Q 10 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 10, 2015
Document and Entity Information
Entity Registrant Name	SYNERGY PHARMACEUTICALS, INC.
Entity Central Index Key	1,347,613
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		112,466,896
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 61,695	$ 146,470
Available-for-sale securities	99,984	49,897
Prepaid expenses and other current assets	2,287	3,836
Total Current Assets	163,966	200,203
Property and equipment, net	584	642
Security deposits	219	163
Total Assets	164,769	201,008
Current Liabilities:
Accounts payable	10,606	13,869
Accrued expenses	3,934	1,962
Interest payable on Senior Convertible Debentures	2,222	2,500
Total Current Liabilities	16,762	18,331
Senior Convertible Debentures, net of deferred financing costs of $9,820 and $12,336 as of June 30, 2015 and December 31, 2014, respectively	167,967	187,664
Derivative financial instruments, at estimated fair value-warrants	1,981	172
Total Liabilities	$ 186,710	$ 206,167
Commitments and contingencies
Stockholders' Deficit:
Preferred stock, Authorized 20,000,000 shares and none outstanding, at June 30, 2015 and December 31, 2014
Common stock, par value of $.0001, 350,000,000 shares and 200,000,000 shares authorized at June 30, 2015 and December 31, 2014, respectively. Issued and outstanding 107,188,192 shares and 96,609,764 shares at June 30, 2015 and December 31, 2014, respectively.	$ 12	$ 11
Additional paid-in capital	305,989	261,715
Accumulated deficit	(327,942)	(266,885)
Total Stockholders' Deficit	(21,941)	(5,159)
Total Liabilities and Stockholders' Deficit	$ 164,769	$ 201,008

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Deferred financing costs	$ 9,820	$ 12,336
Preferred stock, authorized shares	20,000,000	20,000,000
Preferred stock, outstanding shares	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized shares	350,000,000	200,000,000
Common stock, Issued shares	107,188,192	96,609,764
Common stock, outstanding shares	107,188,192	96,609,764

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Costs and Expenses:
Research and development	$ 19,525	$ 24,479	$ 37,723	$ 37,778
General and administrative	7,394	2,279	12,000	5,457
Loss from Operations	(26,919)	(26,758)	(49,723)	(43,235)
Other Income/(Loss)
Interest and investment income/(expense), net (includes interest expense of $3,388 and $7,139 on Senior Convertible Debentures and $1,899 and $2,516 in amortization of deferred financing costs for the three and six months ended June 30, 2015)	(5,207)	(1)	(9,524)	28
State R&D tax credits		83		83
Change in fair value of derivative instruments-warrants	(1,542)	756	(1,810)	979
Total Other Income/(Loss)	(6,749)	838	(11,334)	1,090
Net Loss	$ (33,668)	$ (25,920)	$ (61,057)	$ (42,145)
Weighted Average Common Shares Outstanding
Basic and Diluted (in shares)	100,343,637	94,069,703	98,523,696	93,068,476
Net Loss per Common Share, Basic and Diluted
Net Loss per Common Share, Basic and Diluted (in dollars per share)	$ (0.34)	$ (0.28)	$ (0.62)	$ (0.45)

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Paranthetical) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Interest expense on Senior Convertible Debentures	$ 3,388	$ 7,139
Amortization of deferred financing costs	$ 1,899	$ 2,516

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Common Stock, Par Value	Additional Paid in Capital	Deficit Accumulated	Total
Balance at Dec. 31, 2014	$ 11	$ 261,715	$ (266,885)	$ (5,159)
Balance (in shares) at Dec. 31, 2014	96,609,764			96,609,764
Increase (Decrease) in Stockholders' Equity
Common stock issued pursuant to a controlled equity "at-the-market" sales agreement		14,672		$ 14,672
Common stock issued pursuant to a controlled equity "at-the-market" sales agreement (in shares)	3,435,998
Fees and expenses related to controlled equity sales		(404)		(404)
Shares issued in connection with conversion of Senior Convertible Debentures	$ 1	22,212		22,213
Shares issued in connection with conversion of Senior Convertible Debentures (in shares)	7,142,430
Stock based compensation expense		7,794		7,794
Net loss for the period			(61,057)	(61,057)
Balance at Jun. 30, 2015	$ 12	$ 305,989	$ (327,942)	$ (21,941)
Balance (in shares) at Jun. 30, 2015	107,188,192			107,188,192

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash Flows From Operating Activities:
Net loss	$ (61,057)	$ (42,145)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	67	57
Amortization of deferred financing costs	2,516
Stock-based compensation expense	7,794	2,264
Accretion of discount/premium on available for sale securities	(87)	28
Change in fair value of derivative instruments-warrants	1,810	(979)
Changes in operating assets and liabilities:
Security deposit	(56)	(69)
Accounts payable and accrued expenses	(1,294)	2,421
Prepaid expenses and other current assets	1,549	(1,086)
Accrued interest expense on Senior Convertible Debentures	(277)
Total Adjustments	12,022	2,636
Net Cash used in Operating Activities	(49,035)	(39,509)
Cash Flows From Investing Activities:
Net purchases of available-for-sale securities	(50,000)
Additions to property and equipment	(8)	(57)
Repayment on ContraVir loan receivable		455
Net Cash (used in) / provided by Investing Activities	(50,008)	398
Cash Flows From Financing Activities:
Proceeds of sale of common stock	14,672	22,795
Proceeds of sale of common stock - ContraVir		3,224
Fees and expenses - sale of common stock	(404)	(644)
Proceeds from exercise of stock options		36
Distribution associated with ContraVir Spinoff		(3,230)
Net Cash provided by Financing Activities	14,268	22,181
Net decrease in cash and cash equivalents	(84,775)	(16,930)
Cash and cash equivalents at beginning of period	146,470	18,130
Cash and cash equivalents at end of period	61,695	1,200
Supplementary disclosure of cash flow information:
Cash paid for interest on Senior Convertible Debentures	7,416
Cash paid for taxes	224	30
Supplementary disclosure of non-cash investing and financing activities:
Distribution of net assets of ContraVir		$ 84
Conversion of Senior Convertible Debentures to Synergy Common Stock	$ 22,213

Business Overview

Business Overview	6 Months Ended
	Jun. 30, 2015
Business Overview
Business Overview	1. Business Overview Synergy Pharmaceuticals Inc. (the “Company” or ‘Synergy”) is a biopharmaceutical company focused on the development of novel therapies to treat gastrointestinal (GI) diseases and disorders. Our proprietary GI platform is based on uroguanylin, a naturally occurring human peptide that plays a key role in regulating normal GI activity. We discovered and are developing two fully-owned late-stage clinical assets, plecanatide and dolcanatide (formerly SP-333), which are both analogues of natural uroguanylin. Plecanatide is our first generation uroguanylin analogue being developed for both chronic idiopathic constipation (CIC) and irritable bowel syndrome with constipation (IBS-C). Plecanatide is structured identical to uroguanylin with the exception of a single key amino acid substitution, resulting in improved activity but still retaining attribute of uroguanylin that are important for natural pH-regulated activity. Taken as a tablet once-a-day, plecanatide is designed to mimic the role of uroguanylin by working locally in the upper GI tract to activate and regulate fluid movement required for normal bowel function. We recently announced positive top-line data results in two phase 3 clinical trials of plecanatide in patients with CIC and we intend to file our first new drug application (NDA) with plecanatide in the CIC indication in January 2016. We are continuing to progress our two ongoing phase 3 clinical trials of plecanatide in patients with IBS-C and we intend to file our second NDA with plecanatide in the IBS-C indication in 4Q 2016. Dolcanatide is our next generation uroguanylin analogue designed to be highly stable and resistant to proteolysis in gastric and intestinal fluids but still operate in the same pH-dependent fashion as uroguanylin. Dolcanatide has successfully completed a phase 2 clinical trial in patients with opioid-induced constipation and is currently being evaluated in a phase 1b exploratory study for ulcerative colitis.

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Basis of Presentation
Basis of Presentation	2. Basis of Presentation These unaudited condensed consolidated financial statements include Synergy and its wholly-owned subsidiaries: (1) Synergy Advanced Pharmaceuticals, Inc., (2) ContraVir Pharmaceuticals, Inc. (through February 18, 2014) and (3) IgX, Ltd (Ireland—inactive). These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”) and United States generally accepted accounting principles (“GAAP”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly Synergy’s interim financial information. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2014 contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2015. All intercompany balances and transactions have been eliminated.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
	Jun. 30, 2015
Recent Accounting Pronouncements
Recent Accounting Pronouncements	3. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03 Simplifying the Presentation of Debt Issuance Costs , which changes the presentation of debt issuance costs in the financial statements. Under the standard, debt issuance costs are presented in the balance sheet as a direct deduction from the related debt liability rather than as an asset. In addition amortization of debt issuance costs are to be combined with interest expense in the statement of operations. The guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company adopted this guidance during the quarter ended June 30, 2015. (See Note 6) In August 2014, the Financial Accounting Standards Board (‘‘FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity s Ability to Continue as a Going Concern , which defines management’s responsibility to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The pronouncement is effective for annual reporting periods ending after December 15, 2016 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Jun. 30, 2015
Fair Value of Financial Instruments
Fair Value of Financial Instruments	4. Fair Value of Financial Instruments Financial instruments consist of cash and cash equivalents, marketable securities, accounts payable and derivative instruments. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short term nature, except for marketable securities and derivative instruments which are marked to market at the end of each reporting period. The value of Senior Convertible Debentures is stated at its carrying value at June 30, 2015. The Company believes it could obtain borrowings at June 30, 2015 at comparable interest rates as the November 2014 debentures, therefore, the carrying value approximates fair value.

Cash, Cash Equivalents and Avai

Cash, Cash Equivalents and Available-for-sale Securities	6 Months Ended
	Jun. 30, 2015
Cash, Cash Equivalents and Available-for-sale Securities
Cash, Cash Equivalents and Available-for-sale Securities	5 . Cash, Cash Equivalents and Available-for-sale Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. As of June 30, 2015 and December 31, 2014, the amount of cash and cash equivalents was $61.7 million and $146.5 million, respectively and consists of checking accounts and short-term money market mutual funds held at U.S. commercial banks. The Company’s available-for-sale securities as of June 30, 2015 and December 31, 2014 consist of approximately $100 million and $49.9 million, respectively, in U.S. Treasury securities with maturities of less than one year and have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the available-for-sale designations as of each balance sheet date. As of June 30, 2015, there were no unrealized losses on available-for-sale securities.

Senior Convertible Notes

Senior Convertible Notes	6 Months Ended
	Jun. 30, 2015
Senior Convertible Notes
Senior Convertible Notes	6. Senior Convertible Notes On November 3, 2014, Synergy closed a private offering of $200 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019 (including the full exercise of the over-allotment option granted to the initial purchasers to purchase an additional $25 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019, (the “Notes”), interest payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2015. The net proceeds from the offering were $187.3 million after deducting the initial purchasers’ discounts and offering expenses. The Notes are unsecured. Interest expense for three and six months ended June 30, 2015 was $3.4 million and $7.1 million, respectively. There was no such expense in the three and six months ended June 30, 2014. On May 1, 2015 Synergy made its first semiannual interest payment of $7.4 million. Accrued interest was $2.2 million and $2.5 million as of June 30, 2015 and December 31, 2015 respectively. A summary of quarterly activity is listed below (dollars in thousands): Interest payable on Senior Convertible Debenture at 1/1/2015 $ Accrued interest expense during the 3 months ended March 31, 2015 Interest Payable on Senior Convertible Debenture at March 31, 2015 Accrued interest expense during the 3 months ended June 30, 2015 Interest Payment on Senior Convertible Debenture at May 1, 2015 ) Interest payable on Senior Convertible Debenture as of June 30, 2015 $ The Notes will mature on November 1, 2019, unless earlier purchased or converted. The Notes are convertible, at any time, into shares of Synergy’s common stock at an initial conversion rate of 321.5434 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $3.11 per share. During the month of June 2015, $22.2 million aggregate principal amount was converted into approximately 7.1 million shares of Synergy common stock. Transaction costs associated with the Notes of $12.7 million have been deferred and are being recognized as expense over the expected term of the Notes, calculated using the effective interest rate method. Amortization expense, including amortization associated with reduction of the principal due to the conversion of the debentures on a prorated basis for three and six months ended June 30, 2015 were $1.9 million and $2.5 million, respectively. There were no such expenses in the three and six months ended June 30, 2014. The remaining transaction costs have been presented as a reduction of the Notes in accordance with the newly adopted Accounting Standards Update (“ASU”) No. 2015-03 “ Simplifying the Presentation of Debt Issuance Costs” . A summary of quarterly activity and balances associated with the Notes and related deferred transaction costs is presented below: ($ in thousands) Notes Balance Transactions Costs Notes, net of Transaction Costs Balance at issuance November 1, 2014 $ $ $ Less: amortization two months ended December 31, 2014 — ) — Balance December 31, 2014 Less: amortization three months ended March 31, 2015 — ) — Balance March 31, 2015 Less: amortization three months ended June 30, 2015 (1) — ) — Conversions ) — — Balance June 30, 2015 $ $ $ (1) Includes accelerated amortization of deferred financing costs attributable to conversions

Accounting for Shared-Based Pay

Accounting for Shared-Based Payments	6 Months Ended
	Jun. 30, 2015
Accounting for Shared-Based Payments
Accounting for Shared-Based Payments	7. Accounting for Shared-Based Payments Stock Options ASC Topic 718 “Compensation—Stock Compensation” requires companies to measure the cost of employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. Synergy accounts for shares of common stock, stock options and warrants issued to employees based on the fair value of the stock, stock option or warrant, if that value is more reliably measurable than the fair value of the consideration or services received. The Company accounts for stock options issued and vesting to non-employees in accordance with ASC Topic 505-50 “ Equity -Based Payment to Non-Employees” and accordingly the value of the stock compensation to non-employees is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Accordingly the fair value of these options is being “marked to market” quarterly until the measurement date is determined. Synergy adopted the 2008 Equity Compensation Incentive Plan (the “Plan”) during the quarter ended September 30, 2008. Stock options granted under the Plan typically vest after three years of continuous service from the grant date and have a contractual term of ten years. On June 8, 2015, Synergy amended its 2008 Equity Compensation Incentive Plan and increased the number of shares of its common stock reserved for issuance under the Plan from 15,000,000 to 30,000,000. Stock-based compensation has been recognized in operating results as follow: Three Months Ended June 30, Six Months Ended June 30 ($ in thousands) 2015 2014 2015 2014 Subtotal employee stock based compensation $ $ Subtotal non-employee stock based compensation Total stock-based compensation expense $ $ $ $ The unrecognized compensation cost related to non-vested stock options outstanding at June 30, 2015, net of expected forfeitures, was approximately $8.3 million to be recognized over a weighted-average remaining vesting period of approximately 1.7 years. This unrecognized compensation cost does not include amounts related to 4,346,000 shares of stock options which vest upon a change of control. The estimated fair value of stock option awards was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions during the periods indicated. Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Risk-free interest rate 1.46%-2.35% 1.78%-1.98% Dividend yield — — Expected volatility Expected term (in years) 6 years 6 years A summary of stock option activity and of changes in stock options outstanding under the Plan is presented below: Number of Options Exercise Price Per Share Weighted Average Exercise Price Per Share Intrinsic Value (in thousands) Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2014(1) $ 0.44-17.79 $ $ 7.29 years Granted $ 2.94-9.33 Forfeited ) $ 2.94-9.45 Balance outstanding, June 30, 2015(1) $ 0.44-9.12 $ $ 7.14 years Exercisable, at June 30, 2015 $ 0.44-9.12 $ $ 5.78 years (1) Number of options represented above includes 4,364,000 options vesting upon a change of control, granted during the years ended December 31, 2009 and 2010, at an exercise price of $0.70 per share. Because the probability of a change of control transaction is not predictable no stock based compensation expense associated with these options has been recognized since the grant date.

Stockholders' Deficit

Stockholders' Deficit	6 Months Ended
	Jun. 30, 2015
Stockholders' Deficit
Stockholders' Deficit	8. Stockholders’ Deficit On March 5, 2014, Synergy entered into Amendment No. 1 (the “Amendment”) to its Controlled Equity Offering Sales (“ATM”) Agreement, dated June 21, 2012 (as amended, the “Agreement”), with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which the Company may offer and sell, from time to time, through Cantor shares of the Company’s common stock, par value $0.0001 per share (the “Shares”), up to an additional aggregate offering price of $50.0 million. The Company will pay Cantor a selling agent fee of up to 3.0% of the gross sales price per share sold and has agreed to provide Cantor with customary indemnification and contribution rights. As of July 10, 2015, the Form S-3 registration statement related to the Agreement expired, effectively terminating the Company’s ATM program. From January 1, 2015 through June 30, 2015, Synergy sold 3,435,998 shares of common stock, pursuant to the Agreement with Cantor, yielding gross proceeds of $14.7 million, at an average selling price of $4.27 per share. Selling agent fees related to above financings from January 1, 2015 through June 30, 2015 were $0.4 million. From January 1, 2015 through June 30, 2015, $22.2 million aggregate principal amount of the Notes was converted into approximately 7.1 million shares of Synergy common stock. On June 8, 2015, Synergy amended its Articles of Incorporation and increased the number of shares of its common stock authorized for issuance from 200,000,000 to 350,000,000 shares. On July 2, 2015, Synergy filed a “shelf” registration statement on Form S-3 to offer and sell, from time to time in one or more offerings, any combination of common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities, having an aggregate initial offering price not exceeding $250,000,000. The registration statement was declared effective by the SEC on July 15, 2015. This shelf registration does not currently encompass a Controlled Equity Sales (ATM) program.

Research and Development Expens

Research and Development Expense	6 Months Ended
	Jun. 30, 2015
Research and Development Expense
Research and Development Expense	9. Research and Development Expense Research and development costs include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, regulatory and scientific consulting fees, as well as contract research, patient costs, drug formulation and tableting, data collection, monitoring, and clinical insurance. In accordance with FASB ASC Topic 730-10-55, Research and Development , Synergy recorded prepaid research and development costs of approximately $1.9 million as of June 30, 2015 and $3.6 million as of December 31, 2014, for nonrefundable pre-payments for production of drug substance and analytical testing services for its drug candidates. In accordance with this guidance, Synergy expenses these costs when drug compound is delivered and services are performed.

Derivative Financial Instrument

Derivative Financial Instruments	6 Months Ended
	Jun. 30, 2015
Derivative Financial Instruments
Derivative Financial Instruments	10. Derivative Financial Instruments Synergy Derivative Financial Instruments Effective January 1, 2009, the Company adopted provisions of ASC Topic 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity” (“ASC Topic 815-40”). ASC Topic 815-40 clarifies the determination of whether an instrument issued by an entity (or an embedded feature in the instrument) is indexed to an entity’s own stock, which would qualify as a scope exception under ASC Topic 815-10. Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, Synergy has determined that certain warrants issued in connection with sale of its common stock must be classified as derivative instruments. In accordance with ASC Topic 815-40, these warrants are also being re-measured at each balance sheet date based on estimated fair value, and any resultant changes in fair value are being recorded in the Company’s statement of operations. The Company estimates the fair value of certain warrants using the Black-Scholes option pricing model in order to determine the associated derivative instrument liability and change in fair value described above. The range of assumptions used to determine the fair value of the warrants at each period end was: Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Fair value of Synergy common stock $ $ Expected warrant term 0.25 — 2.9 years 1.0 — 3.7 years Risk-free interest rate 0.185%-1.01% 0.11%-1.32% Expected volatility 57%-80% Dividend yield — — Fair value of stock is the closing market price of the Company’s common stock at the end of each reporting period when the derivative instruments are marked to market. Expected volatility is a management estimate of future volatility, over the expected warrant term, based on historical volatility of Synergy’s common stock. The warrants have a transferability provision and based on guidance provided in SAB 107 for instruments issued with such a provision, Synergy used the full contractual term as the expected term of the warrants. The risk free rate is based on the U.S. Treasury security rates for maturities consistent with the expected remaining term of the warrants at the date quarterly revaluation. The following table sets forth the components of changes in the Synergy’s outstanding warrants which were deemed derivative financial instruments and the associated liability balance for the periods indicated: Date Description Warrants Derivative Instrument Liability (in thousands) 12/31/2014 Balance of derivative financial instruments liability $ 3/31/2015 Change in fair value of warrants during the quarter — 6/30/2015 Change in fair value of warrants during the quarter — 6/30/2015 Expiration of warrants ) ) 6/30/2015 Balance of derivative financial instruments liability $ Synergy Fair Value Measurements The following table presents the Company’s liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2014 and June 30, 2015: ($ in thousands) Description Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2014 Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of June 30, 2015 Derivative liabilities related to Warrants $ — $ — $ $ $ — $ — $ $ The following table sets forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the six months ended June 30, 2015: ($ in thousands) Description Balance at December 31, 2014 (Gain) or loss recognized in earning from Change in Fair Value Expiration of warrants Balance as of June 30, 2015 Derivative liabilities related to Warrants $ $ $ ) $ The unrealized gains or losses on the derivative liabilities are recorded as a change in fair value of derivative liabilities in the Company’s statement of operations. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, Synergy reviews the assets and liabilities that are subject to ASC Topic 815-40. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

Loss per Share

Loss per Share	6 Months Ended
	Jun. 30, 2015
Loss per Share
Loss per Share	11. Loss per Share Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share, (“ASC Topic 260”) for periods presented. In accordance with ASC Topic 260, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. Diluted weighted-average shares are the same as basic weighted-average shares because shares issuable pursuant to the exercise of stock options and warrants would be antidilutive. For the three and six months ended June 30, 2015 and 2014 the effect of 17,041,722 and 12,862,860, respectively outstanding stock options, at the end of each period, were excluded from the calculation of diluted loss per share because the effect was antidilutive. For the three months and six months ended June 30, 2015 and 2014, the effect of 5,246,703 and 5,647,203, respectively outstanding warrants (which include warrants accounted for as equity and derivative liabilities) were excluded from the calculation of diluted loss per share because the effect was antidilutive.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2015
Subsequent Events
Subsequent Events	12. Subsequent Events From July 1, 2015 through August 10, 2015, approximately $16 million aggregate principal amount of the Notes was converted into approximately 5 million shares of Synergy common stock. These conversions decreased the principal amount of the Notes to approximately $162 million as of August 10, 2015 from approximately $178 million as of June 30, 2015. From July 1, 2015 through August 10, 2015 warrants to purchase 189,412 shares of common stock were exercised, yielding proceeds to the Company of $1,011,343. In addition employee stock options to purchase 62,965 shares of common stock were exercised yielding proceeds of $353,234 .

Senior Convertible Notes (Table

Senior Convertible Notes (Tables)	6 Months Ended
	Jun. 30, 2015
Senior Convertible Notes
Schedule of interest activity	A summary of quarterly activity is listed below (dollars in thousands): Interest payable on Senior Convertible Debenture at 1/1/2015 $ Accrued interest expense during the 3 months ended March 31, 2015 Interest Payable on Senior Convertible Debenture at March 31, 2015 Accrued interest expense during the 3 months ended June 30, 2015 Interest Payment on Senior Convertible Debenture at May 1, 2015 ) Interest payable on Senior Convertible Debenture as of June 30, 2015 $
Schedule of activity and balances associated with the Notes and related deferred transaction costs	A summary of quarterly activity and balances associated with the Notes and related deferred transaction costs is presented below: ($ in thousands) Notes Balance Transactions Costs Notes, net of Transaction Costs Balance at issuance November 1, 2014 $ $ $ Less: amortization two months ended December 31, 2014 — ) — Balance December 31, 2014 Less: amortization three months ended March 31, 2015 — ) — Balance March 31, 2015 Less: amortization three months ended June 30, 2015 (1) — ) — Conversions ) — — Balance June 30, 2015 $ $ $ (1) Includes accelerated amortization of deferred financing costs attributable to conversions

Accounting for Shared-Based P21

Accounting for Shared-Based Payments (Tables)	6 Months Ended
	Jun. 30, 2015
Accounting for Shared-Based Payments
Schedule of stock-based compensation expense	Three Months Ended June 30, Six Months Ended June 30 ($ in thousands) 2015 2014 2015 2014 Subtotal employee stock based compensation $ $ Subtotal non-employee stock based compensation Total stock-based compensation expense $ $ $ $
Schedule of weighted-average assumptions used to estimate fair value of stock option awards using the Black-Scholes option valuation model	Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Risk-free interest rate 1.46%-2.35% 1.78%-1.98% Dividend yield — — Expected volatility Expected term (in years) 6 years 6 years
Summary of stock option activity and of changes in stock options outstanding under the Plan	Number of Options Exercise Price Per Share Weighted Average Exercise Price Per Share Intrinsic Value (in thousands) Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2014(1) $ 0.44-17.79 $ $ 7.29 years Granted $ 2.94-9.33 Forfeited ) $ 2.94-9.45 Balance outstanding, June 30, 2015(1) $ 0.44-9.12 $ $ 7.14 years Exercisable, at June 30, 2015 $ 0.44-9.12 $ $ 5.78 years (1) Number of options represented above includes 4,364,000 options vesting upon a change of control, granted during the years ended December 31, 2009 and 2010, at an exercise price of $0.70 per share. Because the probability of a change of control transaction is not predictable no stock based compensation expense associated with these options has been recognized since the grant date.

Derivative Financial Instrume22

Derivative Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2015
Derivative Financial Instruments
Schedule of range of assumptions used to determine the fair value of the warrants	Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Fair value of Synergy common stock $ $ Expected warrant term 0.25 — 2.9 years 1.0 — 3.7 years Risk-free interest rate 0.185%-1.01% 0.11%-1.32% Expected volatility 57%-80% Dividend yield — —
Schedule of changes in derivative financial instruments and associated liability balance	Date Description Warrants Derivative Instrument Liability (in thousands) 12/31/2014 Balance of derivative financial instruments liability $ 3/31/2015 Change in fair value of warrants during the quarter — 6/30/2015 Change in fair value of warrants during the quarter — 6/30/2015 Expiration of warrants ) 6/30/2015 Balance of derivative financial instruments liability $
Schedule of liabilities that are measured and recognized at fair value on a recurring basis	($ in thousands) Description Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2014 Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of June 30, 2015 Derivative liabilities related to Warrants $ — $ — $ $ $ — $ — $ $
Summary of changes in the fair value of Level 3 liabilities	The following table sets forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the six months ended June 30, 2015: ($ in thousands) Description Balance at December 31, 2014 (Gain) or loss recognized in earning from Change in Fair Value Expiration of warrants Balance as of June 30, 2015 Derivative liabilities related to Warrants $ $ $ ) $

Business Overview (Details)

Business Overview (Details)	Jun. 30, 2015item
Business Overview
Number of fully-owned late-stage clinical assets	2
Number of phase 3 clinical trials of plecanatide in patients with CIC	2
Number of phase 3 clinical trials of plecanatide in patients with IBS-C	2

Cash, Cash Equivalents and Av24

Cash, Cash Equivalents and Available-for-sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents	$ 61,695	$ 61,695	$ 146,470	$ 1,200	$ 18,130
Available-for-sale securities	99,984	99,984	$ 49,897
Unrealized losses		0
Net realized gains or losses	$ 0	$ 0

Senior Convertible Notes (Detai

Senior Convertible Notes (Details) $ / shares in Units, $ in Thousands, shares in Millions	May. 01, 2015USD ($)	Nov. 03, 2014USD ($)$ / shares	Jun. 30, 2015USD ($)shares	Dec. 31, 2014USD ($)	Jun. 30, 2015USD ($)	Mar. 31, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)shares	Jun. 30, 2014USD ($)	Nov. 01, 2014USD ($)
Interest on senior convertible notes
Interest payable on Senior Convertible Debenture, beginning of period						$ 2,500		$ 2,500
Accrued interest expense					$ 3,388			7,139
Interest Payment on Senior Convertible Debenture								(7,416)
Interest payable on Senior Convertible Debenture, end of period			$ 2,222	$ 2,500	2,222			2,222
Convertible Notes And Deferred Transaction Costs
Transaction Costs, Less: amortization					(1,899)			(2,516)
Notes Balance, Conversions								(22,213)
Transactions Costs, end of period			9,820	12,336	9,820			9,820
Convertible Senior Notes Due 2019
Convertible Senior Notes
Aggregate principal amount (in dollars)		$ 200,000	177,787	200,000	200,000	200,000		200,000		$ 200,000
Interest rate (as a percent)		7.50%
Additional aggregate principal amount pertaining to the over-allotment option granted (in dollars)		$ 25,000
Net proceeds from offering (in dollars)		$ 187,300
Interest on senior convertible notes
Interest payable on Senior Convertible Debenture, beginning of period					6,250	2,500		2,500
Accrued interest expense					3,388	3,750	$ 0	7,100	$ 0
Interest Payment on Senior Convertible Debenture	$ (7,416)
Interest payable on Senior Convertible Debenture, end of period			$ 2,222	2,500	2,222	6,250		$ 2,222
Conversion rate (as a percent)		0.3215434
Conversion price (in dollars per share) | $ / shares		$ 3.11
Number of shares issued on conversion of debt | shares			7.1					7.1
Convertible Notes And Deferred Transaction Costs
Notes Balance, beginning of period				200,000	200,000	200,000		$ 200,000
Transactions Costs, beginning of period										$ 12,747
Notes, net of Transaction Costs, beginning of period				187,253	188,281	187,664		187,664
Transaction Costs, Less: amortization				(411)	(1,899)	(617)	$ 0	(2,500)	$ 0
Notes Balance, Conversions			$ (22,200)		(22,213)			(22,200)
Notes Balance, end of period		$ 200,000	177,787	200,000	177,787	200,000		177,787
Transactions Costs, end of period			9,820	12,336	9,820	11,719		9,820
Notes, net of Transaction Costs, end of period			$ 167,967	$ 187,664	$ 167,967	$ 188,281		$ 167,967

Accounting for Shared-Based P26

Accounting for Shared-Based Payments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 08, 2015	Dec. 31, 2014
Shared-based payments
Total stock-based compensation expense (in dollars)	$ 5,389	$ 999	$ 7,794	$ 2,264
Employee
Shared-based payments
Total stock-based compensation expense (in dollars)	1,115	906	2,216	1,727
Nonemployee
Shared-based payments
Total stock-based compensation expense (in dollars)	4,274	$ 93	$ 5,578	$ 537
2008 Equity Compensation Incentive Plan
Shared-based payments
Number of shares reserved under the plan					30,000,000	15,000,000
Stock options
Shared-based payments
Vesting period			3 years
Contractual term			10 years
Unrecognized compensation cost related to non-vested employee stock options, net of expected forfeitures (in dollars)	$ 8,300		$ 8,300
Weighted-average remaining vesting period over which unrecognized compensation cost is to be recognized			1 year 8 months 12 days
Number of stock options which vest upon a change of control (in shares)	4,346,000		4,346,000
Weighted-average assumptions used to estimate fair value of stock option awards using the Black-Scholes option valuation model
Risk-free interest rate, minimum (as a percent)			1.46%	1.78%
Risk-free interest rate, maximum (as a percent)			2.35%	1.98%
Expected volatility (as a percent)			60.00%	60.00%
Expected term			6 years	6 years

Accounting for Shared-Based P27

Accounting for Shared-Based Payments (Details 2) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended	78 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Jun. 30, 2015
Weighted Average Remaining Contractual Term
Stock based compensation expense	$ 5,389,000	$ 999,000	$ 7,794,000	$ 2,264,000
Stock options | Contingent vesting
Weighted Average Exercise Price Per Share
Balance outstanding, end of period (in dollars per share)	$ 0.70		$ 0.70		$ 0.70	$ 0.70
Weighted Average Remaining Contractual Term
Stock based compensation expense						$ 0
Stock options | Exercise price per share 0.44 - 17.79
Number of Options
Balance outstanding, beginning of period (in shares)			16,567,020
Balance outstanding, end of period (in shares)					16,567,020
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)					$ 0.44
Exercise price, high end of the range (in dollars per share)					17.79
Weighted Average Exercise Price Per Share
Balance outstanding, end of period (in dollars per share)					$ 3.20
Intrinsic Value
Intrinsic value of options outstanding (in dollars)					$ 8,949,000
Weighted Average Remaining Contractual Term
Balance at the end of the period					7 years 3 months 15 days
Stock options | Exercise price per share 0.44 - 17.79 | Contingent vesting
Number of Options
Balance outstanding, beginning of period (in shares)			4,364,000
Balance outstanding, end of period (in shares)					4,364,000
Stock options | Exercise Price Range 2.94 - 9.33
Number of Options
Granted (in shares)			625,000
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)			$ 2.94
Exercise price, high end of the range (in dollars per share)			9.33
Weighted Average Exercise Price Per Share
Granted (in dollars per share)			$ 6.54
Stock options | Exercise Price Range 2.94 - 9.45
Number of Options
Forfeited (in shares)			(153,631)
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)			$ 2.94
Exercise price, high end of the range (in dollars per share)			9.45
Weighted Average Exercise Price Per Share
Forfeited (in dollars per share)			$ 6.26
Stock options | Exercise Price Range 0.44 - 9.12
Number of Options
Balance outstanding, beginning of period (in shares)
Balance outstanding, end of period (in shares)	17,038,389		17,038,389			17,038,389
Exercisable at the end of the period (in shares)	7,703,334		7,703,334			7,703,334
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)			$ 0.44
Exercise price, high end of the range (in dollars per share)			9.12
Weighted Average Exercise Price Per Share
Balance outstanding, end of period (in dollars per share)	$ 3.30		3.30			$ 3.30
Exercisable at the end of the period (in dollars per share)	$ 3.20		$ 3.20			$ 3.20
Intrinsic Value
Intrinsic value of options outstanding (in dollars)	$ 80,864,000		$ 80,864,000			$ 80,864,000
Intrinsic value of options exercisable (in dollars)	$ 35,550,000		$ 35,550,000			$ 35,550,000
Weighted Average Remaining Contractual Term
Balance at the end of the period			7 years 1 month 21 days
Exercisable at the end of the period			5 years 9 months 11 days
Stock options | Exercise Price Range 0.44 - 9.12 | Contingent vesting
Number of Options
Balance outstanding, beginning of period (in shares)
Balance outstanding, end of period (in shares)	4,364,000		4,364,000			4,364,000

Stockholders' Deficit (Details)

Stockholders' Deficit (Details) - USD ($)	Mar. 05, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Stockholders' Deficit
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001		$ 0.0001
Gross proceeds from sale of common stock by the entity (in dollars)		$ 14,672,000	$ 22,795,000
Selling agent fees		$ 404,000
June 2012 Amended Controlled Equity Offering Sales Agreement
Stockholders' Deficit
Additional aggregate offering price of common stock	$ 50,000,000
Common stock sold by the entity (in shares)		3,435,998
Gross proceeds from sale of common stock by the entity (in dollars)		$ 14,700,000
Common stock price (in dollars per share)		$ 4.27
Selling agent fees		$ 400,000
June 2012 Amended Controlled Equity Offering Sales Agreement | Maximum
Stockholders' Deficit
Selling agent fee as a percentage of gross sales price per share sold	3.00%

Stockholders' Deficit (Details

Stockholders' Deficit (Details 2) - Jun. 30, 2015 - USD ($) $ in Thousands, shares in Millions	Total	Total	Total
Stockholders' Deficit
Debt conversion amount			$ 22,213
Convertible Senior Notes Due 2019
Stockholders' Deficit
Debt conversion amount	$ 22,200	$ 22,213	$ 22,200
Number of shares issued on conversion of debt	7.1		7.1

Stockholders' Deficit (Detail30

Stockholders' Deficit (Details 3)	Jul. 02, 2015USD ($)item	Jun. 30, 2015shares	Jun. 08, 2015shares	Dec. 31, 2014shares
Stockholders' Deficit
Number of common shares authorized for issuance | shares		350,000,000	350,000,000	200,000,000
Shelf Registration
Stockholders' Deficit
Minimum number of offerings	1
Minimum number of securities	1
Maximum offering price | $	$ 250,000,000

Research and Development Expe31

Research and Development Expense (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Research and Development Expense
Prepaid research and development costs	$ 1.9	$ 3.6

Derivative Financial Instrume32

Derivative Financial Instruments (Details) - Derivative instrument liability - Warrants - Black-Scholes option pricing model - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Range of assumptions used to determine the fair value of the warrants
Fair value of Synergy common stock (in dollars per share)	$ 8.30	$ 4.07
Expected volatility (as a percent)		60.00%
Minimum
Range of assumptions used to determine the fair value of the warrants
Expected warrant term	3 months	1 year
Risk-free interest rate (as a percent)	0.185%	0.11%
Expected volatility (as a percent)	57.00%
Maximum
Range of assumptions used to determine the fair value of the warrants
Expected warrant term	2 years 10 months 24 days	3 years 8 months 12 days
Risk-free interest rate (as a percent)	1.01%	1.32%
Expected volatility (as a percent)	80.00%

Derivative Financial Instrume33

Derivative Financial Instruments (Details 2) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Changes in derivative instrument liability
Balance at the beginning of the period		$ 172		$ 172
Change in fair value of warrants during the quarter	$ 1,542		$ (756)	1,810	$ (979)
Balance at the end of the period	$ 1,981			$ 1,981
Derivative instrument liability | Warrants
Changes in warrants
Balance at the beginning of the period (in shares)		858,469		858,469
Expiration of warrants ( in shares)	(324,000)
Balance at the end of the period (in shares)	534,469			534,469
Changes in derivative instrument liability
Balance at the beginning of the period		$ 172		$ 172
Change in fair value of warrants during the quarter	$ 1,542	$ 268
Expiration of warrants	(1)
Balance at the end of the period	$ 1,981			$ 1,981

Derivative Financial Instrume34

Derivative Financial Instruments (Details 3) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair value measurements
Derivative liabilities related to Warrants	$ 1,981	$ 172
Derivative instrument liability | Warrants
Fair value measurements
Derivative liabilities related to Warrants	1,981	172
Fair value on a recurring basis | Significant Unobservable Inputs (Level 3) | Derivative instrument liability | Warrants
Fair value measurements
Derivative liabilities related to Warrants	1,981	172
Fair value on a recurring basis | Total Fair Value | Derivative instrument liability | Warrants
Fair value measurements
Derivative liabilities related to Warrants	$ 1,981	$ 172

Derivative Financial Instrume35

Derivative Financial Instruments (Details 4) - Derivative instrument liability - Warrants - Significant Unobservable Inputs (Level 3) $ in Thousands	6 Months Ended
	Jun. 30, 2015USD ($)
Changes in the fair value of Level 3 liabilities
Balance at the beginning of the period	$ 172
(Gain) or loss recognized in earning from Change in Fair Value	1,810
Expiration of Warrants	(1)
Balance at the end of the period	$ 1,981

Loss per Share (Details)

Loss per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Stock options
Loss per Share
Number of antidilutive securities excluded from the calculation of diluted loss per share (in shares)	17,041,722	12,862,860	17,041,722	12,862,860
Warrants
Loss per Share
Number of antidilutive securities excluded from the calculation of diluted loss per share (in shares)	5,246,703	5,647,203	5,246,703	5,647,203

Subsequent Events (Details)

Subsequent Events (Details) - USD ($)	1 Months Ended		3 Months Ended	6 Months Ended
	Aug. 10, 2015	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2015	Dec. 31, 2014	Nov. 03, 2014	Nov. 01, 2014
Subsequent events
Debt conversion amount				$ 22,213,000
Proceeds from exercise of stock options					$ 36,000
Convertible Senior Notes Due 2019
Subsequent events
Debt conversion amount		$ 22,200,000	$ 22,213,000	$ 22,200,000
Number of shares issued on conversion of debt		7,100,000		7,100,000
Aggregate principal amount (in dollars)		$ 177,787,000	$ 177,787,000	$ 177,787,000		$ 200,000,000	$ 200,000,000	$ 200,000,000	$ 200,000,000
Subsequent Event | Convertible Senior Notes Due 2019
Subsequent events
Debt conversion amount	$ 16,000,000
Number of shares issued on conversion of debt	5,000,000
Aggregate principal amount (in dollars)	$ 162,000,000
Subsequent Event | Warrants
Subsequent events
Number of shares purchased in exercise of warrants	189,412
Proceeds from exercise of warrants	$ 1,011,343
Subsequent Event | Employee Stock Option
Subsequent events
Number of shares purchased in exercise of options	62,965
Proceeds from exercise of stock options	$ 353,234