Synergy Phama (SGYP) is down roughly 5% following the release of Q4 earnings. The approval of Trulance hasn't exactly rewarded shareholders with the stock dipping below $5.50. The small biotech traded up at $7 on the drug approval. The issue is that commercial launch is not a guaranteed success. Research by Baird suggests that 25% of all drug launches fall 50% below peak sales expectations. Sure Trulance treats a growing market for constipation, but drug sales aren't guaranteed and reaching targets of peak sales in excess of $1 billion is a real risk. The drug will compete with LInzess from Ironwood Pharma (IRWD). Though Trulance is shown to have fewer side effects, it doesn't guarantee that doctors will prescribe the drug. The company ramped up sales and marketing expenses in Q4 to plan for the commercial launch. The operating loss was $42 million during the quarter so the $200 million cash balance after the secondary offering at $6.15 goes fast without sales meeting targets. If Synergy has a bad launch that is 50% below expectations that is surprisingly very common, the drug approval will do nothing for the stock. Regardless, Synergy appears appealing at these levels when price targets are above $10, but no guarantees exist. Despite an approved drug, biotechs are highly risky stocks. Synergy probably continues to pause until more bullish signs exist regarding drug sales in the future. Disclosure: No position