What happened

Shares of Synergy Pharmaceuticals (NASDAQ: SGYP) rose more than 14% last month, according to data provided by S&P Global Market Intelligence. The sub-$500 million company reported second-quarter and first-half 2018 operating results that were carried by impressive product revenue growth for Trulance, which is approved to treat two different gastrointestinal diseases.

The biopharma also announced that Trulance had been added to the Express Scripts 2019 National Preferred Formulary List, which should help to increase prescriptions of the medication, and a licensing deal for the product in China, which provided $12 million up front and will provide future royalties on sales.

A hand pulling the last bar in a bar chart taller than the rest.

Image source: Getty Images.

So what

The business delivered encouraging product revenue growth in the first half of this year compared to the same period of 2017, with sales up an astounding 764% to $20.8 million. In that same span, research-and-development expenses dropped 85%, and selling, general, and administrative expenses fell 22%. Rising sales and falling expenses helped to narrow the company's first-half 2018 net loss to $65.8 million, compared to $138.5 million in the prior-year period.

The gap should shrink further in the near future thanks to the expanded insurer coverage of Trulance and potential sales in China. If Synergy Pharmaceuticals can continue to execute on the product's commercialization and keep expenses to a minimum, then it will go a long way to helping the business inch toward profitability.

Now what

Synergy Pharmaceuticals appears to be on the right path. However, after reporting a first-half 2018 operating loss of nearly $68 million, there's a long way to go before the company can have a shot at profitability. Seeing as the company had just $61 million at the end of June 2018, it's likely that another capital raise will be needed before the end of the year -- even after accounting for the up-front payment for the licensing deal in China.

That shouldn't be dismissed by investors, especially considering the company has more than doubled its share count in the last three years, which has sapped potential gains for long-term shareholders. Given the sliding stock price in September so far, it seems Mr. Market is already preparing.