SYNERGY PHARMACEUTICALS INC. (NASDAQ:SGYP) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

SYNERGY PHARMACEUTICALS INC. (NASDAQ:SGYP) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officer; Compensatory Arrangements of Certain Officers.

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As previously announced, on December12, 2018, Synergy Pharmaceuticals Inc., a Delaware corporation (the “Company”) and its wholly-owned subsidiary, Synergy Advanced Pharmaceuticals,Inc., a Delaware corporation (“Synergy Advanced” and together with the Company, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Court”).

As previously announced, in connection with the commencement of the Chapter 11 Cases, on December 11, 2018, the Debtors entered into an asset purchase agreement, as amended (the “Asset Purchase Agreement”) with Bausch Health Companies,Inc. (“BH”) and its wholly owned subsidiary, Bausch Health Ireland Limited (“Purchaser”), to which Purchaser agreed to acquire substantially all of the Debtors’ assets and certain liabilities for an aggregate purchase price of approximately $185 million, minus the Cure Costs Deduction (as defined in the Asset Purchase Agreement) and the GTN Adjustment Amount (as defined in the Asset Purchase Agreement), net of any Deposit Funds (as defined below) and an amount in cash equal to the lesser of (x)$15 million and (y)the amount of severance obligations payable to certain eligible employees (other than executive officers) to the extent such obligations constitute administrative expenses in the Chapter 11 Cases to Sections 503(b)(1)and 507(a)(2)of the Bankruptcy Code (the “Stalking Horse Bid”).

At a hearing held on January30, 2019, the Court entered an order (the “KEIP Order”) approving the implementation of the Debtor’s Key Employee Incentive Plan (the “KEIP”).

The KEIP provides five key employees of the Debtors with variable payouts based on the total value that a sale of substantially all the assets of the Debtor (the “Sale”) would yield. Participants in the KEIP will only receive a payout under the KEIP (the “Threshold Level”) if a competing bidder participates at an auction and increases the total value that the Sale yields by approximately $14 million from the total amount of consideration offered by BH which represents the Stalking Horse Bid plus the expense reimbursement and break-up fee plus $5 million. Payouts increase linearly between the Threshold Level and the turning point which is set at a $350 million purchase price, reflecting the estimated amount necessary to pay all creditors in full and to provide recoveries to equity holders above the market capitalization on or about December12, 2018 (the “Turning Point”). Payouts also increase linearly at a higher rate between the Turning Point and the maximum threshold which is set at a total value of $600 million (the “Maximum Threshold”). The aggregate amount payable to all participants under the KEIP will not exceed $2,684,000 and no amounts will be paid if the Sale does not exceed the Threshold Level. Troy Hamilton, Chief Executive Officer and Gary Gemignani, Chief Financial Officer of the Company, are participants in the KEIP and each is eligible for a bonus of up to $1,320,000 and $764,000, respectively, if the Maximum Threshold is achieved.

The foregoing description of the KEIP is qualified in its entirety by reference to the papers describing the KEIP filed on the docket of the Chapter 11 Cases with the Court.

Item 8.01 Other Events.

On February4, 2019, the Company received notification from the Nasdaq Hearings Panel that it has granted the Company’s request for continued listing on the Nasdaq Stock Market, subject to compliance with certain conditions.

Cautionary Information Regarding Trading in the Company’s Securities.

The Company’s securityholders are cautioned that trading in the Company’s securities during the pendency of the Chapter 11 Filings is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders thereof in the Company’s Chapter 11 Filings. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.

A plan of reorganization or liquidation may result in holders of the Company’s capital stock receiving no distribution on account of their interests and cancellation of their existing stock. If certain requirements of the Bankruptcy Code are met, a Chapter 11 plan can be confirmed notwithstanding its rejection by the Company’s

equity securityholders and notwithstanding the fact that such equity securityholders do not receive or retain any property on account of their equity interests under the plan.

Information about the Chapter 11 process, as well as court filings and other documents related to the reorganization proceedings, is available through the Company’s claims agent, Prime Clerk, at or 855-388-4579. Information contained on, or that can be accessed through, such web site or the Court’s web site is not part of this Current Report.


Synergy Pharmaceuticals Inc. (Synergy) is a biopharmaceutical company focused on the development and commercialization of gastrointestinal (GI) therapies. The Company’s GI platform includes two lead product candidates: plecanatide and dolcanatide. It is engaged in the discovery, research and development involving uroguanylin analogs for the treatment of functional GI disorders and inflammatory bowel disease. Plecanatide is the Company’s uroguanylin analog being evaluated for use as a once-daily tablet for two functional GI disorders, chronic idiopathic constipation (CIC) and irritable bowel syndrome with constipation (IBS-C). Plecanatide is a 16-amino acid peptide that is structurally identical to uroguanylin with the exception of a single amino acid change. Dolcanatide is also its uroguanylin analog being explored for inflammatory bowel disease (IBD). Dolcanatide is designed to be an analog of uroguanylin with resistance to standard digestive breakdown by proteases in the intestine.

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