Shares of Ardelyx (ARDX 0.36%) are hitting a new all-time low  following the results of a "positive" phase 3 trial read out earlier this month. While shares of competitor Synergy Pharmaceuticals (NASDAQ: SGYP) saw a slight increase the day of Ardelyx's announcement, Synergy has fared little better, with shares down almost to their lowest point this year.

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However, with the fall of Ardelyx, is this move for Synergy only temporary? As Synergy continues to execute on its rollout of Trulance, shares seem poised to move higher.

Money and pills on a balance beam

Image source: Getty Images.

What happened with Ardelyx?

Ardelyx is a small-cap biotech focused on creating therapies for gastro-instestinal and cardiorenal indications. The company's lead compound is tenapanor, a product being progressed as treatment for irritable bowel syndrome with constipation (IBS-C) and hyperphosphatemia in patients with end-stage renal disease (ESRD).

On May 12 of this year, Ardelyx released positive phase 3 data from the first of two studies evaluating tenapanor as treatment of IBS-C. While the trial did reach its primary endpoint (IBS-C patients taking tanapanor showed a significant reduction in abdominal pain), investors were disappointed to see that 14.6% of trial participants reported adverse events related to diarrhea. Following the release of this news, shares of Ardelyx nose-dived and have yet to find a bottom.

What does this mean for Synergy Pharmaceuticals?

On the day Ardelyx released the data from its phase 3 study of tenapanor, shares of Synergy rose 11%. The reason? Synergy submitted its supplemental New Drug Application (sNDA) for its main drug Trulance to the FDA in March as treatment for IBS-C. Should Trulance receive approval (Trulance is already approved as treatment of chronic idiopathic constipation (CIC)), Trulance would compete directly with tenapanor.

More importantly, however, while the two drugs showed similar efficacy in abdominal pain reduction, Trulance displayed a much lower risk of diarrhea of between 3.2% and 5.4%, which compares well with Ardelyx's rate of 14.6%. While Ardelyx still has another phase 3 trial for tenapanor to read out, the competitive outlook for Synergy's Trulance in IBS-C looks to be significantly less risky.

What's next for Synergy and Ardelyx?

As mentioned earlier, Ardelyx is currently progressing tenapanor in another phase 3 trial as treatment for IBS-C. This trial is currently running, with data expected in the fourth quarter of 2017. In addition, the company also reported positive phase 3 data for tenapanor in hyperphosphatemia in patients with ESRD back in February. Ardelyx expects to begin a second phase 3 study for tenapanor in this indication later on this year.

Synergy, meanwhile has been executing well on its launch of Trulance. Although commercialization of the product only began in March, early signs and commentary from management are promising. Just a few highlights from the first quarter earnings call:

  • Synergy's 250-person sales force has reached over 80% of top prescribers
  • 1 month into launch, Trulance has exceeded expectations in terms of both adoption and penetration statistics
  • 60% of adult CIC patients with commercial insurance have unrestricted coverage for Trulance
  • The U.S. patent office has issued three new patients for Trulance, the earliest of which expires in September of 2031.

The better of the two?

While Ardelyx does have data from its second phase 3 trial for tenapanor in IBS-C coming out later on this year, I would choose Synergy as the better horse in this race. Synergy's Trulance has already been commercialized in CIC and has a much better safety profile in IBS-C as compared to tenapanor. With the threat of Ardelyx significantly reduced, I believe Synergy's path to success is more clear. For the investor looking to pull the trigger, I'd say Synergy's a solid long-term bet.