Mizuho Says Synthetic Biologics IBS Treatment May Be 'Interesting' For Valeant

As previously reported, Mizuho analyst Irina Koffler raised her price target for Valeant (VRX) Pharmaceuticals to $31 to reflect higher Xifaxan estimates and reiterated her Buy rating on the shares. The analyst views the Xifaxan franchise, and not Valeant's dermatology portfolio, as the key growth driver for the company.

She also contends that investors shouldn't rule out M&A potential and she identified an "interesting late stage" program that she believes could be a "low risk" opportunity for Valeant.

IBS-C ASSET OPPORTUNITY: Synthetic Biologics (SYN), a company with a current market capitalization of about $30M and approximately $11M in cash, has already said it will need to collaborate with a partner to advance SYN-010, its treatment of irritable bowel syndrome with constipation, or IBS-C, into Phase 3 trials.

Mark Pimentel, who is the chair of the advisory board for SYN-010, is also a Key Opinion Leader for Valeant's Salix franchise and helped to develop Xifaxan, noted Koffler. She views Synthetic's SYN-010 program as a low-risk way for Valeant to pursue a late-stage asset in a strategically complementary disease state, she told investors in her note earlier this morning.

PRICE ACTION: In morning trading, shares of micro-cap Synthetic Biologics are up fractionally to 21c per share, while Valeant shares have risen 31c, or 1%, to $23.68.

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