Penny stocks in the pharmaceutical industry can be some of the most exciting. The reason is that they tend to follow the simplest of models; if a new product/formula tests well or gets approved, the stocks tend to rise. But if it fails a test or doesn’t get approved, the stocks fall. Nowhere is this trend more obvious than the pharma sector.

Proving the theory is Synergy Pharmaceuticals (NASDAQ:SGYP); the SGYP penny stock gained almost 50% overnight on the back of some positive company news.

Pharmaceutical Penny Stocks: Synergy Pharmaceuticals

The New York-based company surged almost 50% yesterday after news broke regarding its product Plecanatide. The drug, which treats constipation, was submitted and accepted by Health Canada. The news has excited investors, and there is an assumption that the drug will get approval in Canada as it already has approval in the United States.

If this happens, it will open the door for royalty revenue, and from here a ball could roll, likely leading to “multiple milestone payments” in the future. The SGYP penny stock could be set to skyrocket.

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Plecanatide

Plecanatide was submitted to Health Canada as a treatment option for constipation. This condition is said to affect 38% of Canadians at least once a year. The laxative and antispasmodic market in Canada has an estimated value of $200 million CAD. So should the drug be approved, Synergy Pharmaceuticals is in line to earn significant revenue.

The SGYP Penny Stock

At the time of writing, the Synergy penny stock is selling for $0.11 USD, down 2 cents (12%) from yesterday’s high of $0.13 USD. Losing some of those gains is normal the day after such a surge. What’s exciting about this stock is the future prospects. Should Plecanatide receive Canadian approval, and all signs suggest it will, this penny stock could be worth a lot more than it is now.

This is what is so exciting about pharmaceutical penny stocks. They can be very black and white. If your product gets approved, your stock tends to always reflect it.

Featured Image: Depositphotos/doudkin