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TABLE OF CONTENTS
FORM 10-K TABLE OF CONTENTS
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
CALLISTO PHARMACEUTICALS, INC. (A Development Stage Company) Index to the Consolidated Financial Statements
CALLISTO PHARMACEUTICALS, INC. FORM 10-Q

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Filed pursuant to Rule 424(b)(3)
Registration No. 333-184593

PROXY STATEMENT/PROSPECTUS
OF
SYNERGY PHARMAECUTICALS INC
.
  PROXY STATEMENT
OF
CALLISTO PHARMACEUTICALS, INC.
2012 ANNUAL MEETING OF STOCKHOLDERS   SPECIAL MEETING OF STOCKHOLDERS


YOUR VOTE IS VERY IMPORTANT

         Synergy Pharmaceuticals Inc., which we refer to as Synergy, and Callisto Pharmaceuticals, Inc., which we refer to as Callisto, have entered into a merger agreement, as amended, pursuant to which Callisto will merge with and into Synergy, which transaction is referred to as the merger. Synergy and Callisto believe that the merger will enhance stockholders value for both Synergy and Callisto stockholders by (i) providing a method by which the Callisto stockholders can more directly share in the growth of Synergy and (ii) improving the share price of Synergy's common stock as a result of intended cost savings synergies. Before we complete the merger, the stockholders of Synergy and Callisto must approve and adopt the merger agreement. Callisto stockholders will vote to approve and adopt the merger agreement, as amended, and the other transactions and matters described below at a special meeting of stockholders to be held on January 3, 2013. Synergy stockholders will vote to approve and adopt the merger agreement and the other transactions and matters described below at an annual meeting of stockholders to be held on January 3, 2013.

         The holders of Callisto common stock will receive in the merger 0.1799 of a share of Synergy common stock in exchange for each share of Callisto common stock (the "Exchange Ratio") and the 22,295,000 shares of Synergy common stock held by Callisto will be canceled. In addition, each stock option exercisable for shares of Callisto common stock that is outstanding at the effective time of the merger will be assumed by Synergy and converted into a stock option to purchase the number of shares of Synergy's common stock that the holder would have received if such holder had exercised such stock option for shares of Callisto common stock prior to the merger and exchanged such shares for shares of Synergy's common stock in accordance with the Exchange Ratio. In addition, each Callisto stock option exercisable for shares of Synergy common stock that is outstanding at the effective time of the merger will be assumed by Synergy and each outstanding warrant or obligation to issue a warrant to purchase shares of Callisto common stock, whether or not vested, shall be cancelled.

         Synergy common stock is currently listed on The NASDAQ Capital Market under the symbol "SGYP." On November 30, 2012, the most recent practicable trading day prior to the printing of this Joint Proxy Statement/Prospectus, the closing price of Synergy common stock was $5.53 per share. The market price of the Synergy common stock may fluctuate before the completion of the merger, therefore, you are urged to obtain current market quotations for Synergy common stock. Synergy expects to issue an aggregate of 28,597,905 shares of its common stock in the merger upon completion of the merger, not including assumed stock options. We anticipate that the closing of the merger will occur not later than three business days following the affirmative Synergy and Callisto stockholder votes.

         We are asking stockholders of Synergy to adopt and approve the merger agreement at the annual meeting of stockholders to take place on January 3, 2013, at 10:00 am Eastern Time, at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, New York 10006. As this will be the annual meeting of Synergy stockholders, Synergy stockholders will also be asked to vote on Synergy director nominees, vote to approve an amendment to Synergy's 2008 Equity Compensation Incentive Plan to increase the number of shares of Synergy common stock reserved for issuance from 7,500,000 to 15,000,000, vote to amend Synergy's Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 100,000,000 to 200,000,000, to ratify the appointment of BDO USA, LLP as Synergy's independent registered public accounting firm, approve, on an advisory basis, the compensation of Synergy's named executive officers and recommend, on an advisory basis, the frequency with which Synergy should conduct future stockholder advisory votes on named executive officer compensation.

         We are asking stockholders of Callisto to adopt and approve the merger agreement at a special meeting of Callisto stockholders to take place on January 3, 2013, at 1:00 pm Eastern Time, at the offices of Callisto Pharmaceuticals, Inc., 420 Lexington Avenue, Suite 1609, New York, New York 10170. We cannot complete the merger unless Callisto and Synergy stockholders adopt and approve the merger agreement.

         After careful consideration, the Synergy and Callisto Boards of Directors have unanimously approved the merger agreement and the respective proposals referred to above, and each of the Synergy and Callisto Boards of Directors has determined that it is advisable to enter into the merger. Each of the Board of Directors of Synergy and the Board of Directors of Callisto recommends that its respective stockholders vote "FOR" the respective proposals described in the accompanying Joint Proxy Statement/Prospectus.

         PLEASE GIVE ALL OF THE DETAILED INFORMATION ON SYNERGY, CALLISTO AND THE MERGER CONTAINED IN THE JOINT PROXY STATEMENT/PROSPECTUS YOUR CAREFUL ATTENTION, ESPECIALLY THE DISCUSSION IN THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE 31 OF THIS JOINT PROXY STATEMENT/PROSPECTUS.

         Neither the Securities and Exchange Commission nor any state securities regulators has approved or disapproved the Synergy common stock to be issued under this Joint Proxy Statement/Prospectus or passed upon the adequacy or accuracy of this Joint Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.

         This Joint Proxy Statement/Prospectus is not an offer to sell the Synergy common stock and it is not soliciting an offer to buy the Synergy common stock in any state where the offer or sale is not permitted.

         Joint Proxy Statement/Prospectus dated December 3, 2012 and to be mailed on or around December 5, 2012.

         Please also see "Where You Can Find More Information" on page 178.


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ADDITIONAL INFORMATION

        This Joint Proxy Statement/Prospectus incorporates business and financial information about Synergy and Callisto that is not included in or delivered with this document. This information is available from Synergy or Callisto without charge by first class mail or equally prompt means within one business day of receipt of your request, excluding exhibits unless the exhibit has been specifically incorporated by reference into the information that this document incorporates. To obtain timely delivery, you must request the information no later than five business days before you must make your investment decision. In the case of Synergy stockholders, this means that you must make your request no later than December 27, 2012, and in the case of Callisto stockholders, this means that you must make your request no later than December 27, 2012. If you want to receive a copy of any document incorporated by reference, please request it in writing or by telephone from the appropriate company at the following address:

Synergy Pharmaceuticals Inc.
420 Lexington Avenue, Suite 1609
New York, New York 10170
Attention: Bernard F. Denoyer, Secretary
Telephone: (212) 297-0020
  Callisto Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 1609
New York, New York 10170
Attention: Bernard F. Denoyer, Secretary
Telephone: (212) 297-0010

        Stockholders may also consult Synergy's or Callisto's websites for more information concerning the merger described in this Joint Proxy Statement/Prospectus and each of the parties thereto. Synergy's website is www.synergypharma.com and Callisto's website is www.callistopharma.com. Information included on these websites is not incorporated by reference into this Joint Proxy Statement/Prospectus.

        This Joint Proxy Statement/Prospectus is dated December 3, 2012 and is first being mailed to the stockholders of Callisto and the stockholders of Synergy on or about December 5, 2012.


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Synergy Pharmaceuticals Inc.
420 Lexington Avenue, Suite 1609
New York, New York 10170
(212) 297-0020

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
SYNERGY PHARMACEUTICALS INC.
TO BE HELD ON JANUARY 3, 2013

To the Stockholders of Synergy Pharmaceuticals Inc.:

        The annual meeting of Synergy Pharmaceuticals Inc., a Delaware corporation, will be held on January 3, 2013, at 10:00 a.m., Eastern Time, at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, New York 10006 for the following purposes:

            1.     To consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as of July 20, 2012, as amended on October 15, 2012, by and between Synergy Pharmaceuticals Inc. and Callisto Pharmaceuticals, Inc, as described in the attached Joint Proxy Statement/Prospectus;

            2.     To consider and vote upon an adjournment of the meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1;

            3.     To amend Synergy's 2008 Equity Compensation Incentive Plan to increase the number of shares of Synergy common stock reserved for issuance from 7,500,000 to 15,000,000, as described in the attached Joint Proxy Statement/Prospectus;

            4.     To amend Synergy's Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 100,000,000 to 200,000,000, as described in the attached Joint Proxy Statement/Prospectus;

            5.     To re-elect seven (7) current Synergy directors whose terms will continue until the 2013 Annual Meeting of Stockholders;

            6.     To ratify the appointment by the Audit Committee of the Board of Directors of BDO USA, LLP as the independent registered public accounting firm of Synergy Pharmaceuticals Inc. for its fiscal year ending December 31, 2012;

            7.     To approve, on an advisory basis, the compensation of Synergy's named executive officers;

            8.     To recommend, on an advisory basis, a three-year frequency with which Synergy should conduct future stockholder advisory votes on named executive officer compensation; and

            9.     To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

        The Board of Directors of Synergy has fixed November 29, 2012 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Synergy annual meeting and any adjournment or postponement thereof. Only stockholders of record at the close of business on the record date are entitled to notice of, and to vote at, the Synergy annual meeting. Only stockholders or their proxy holders and Synergy guests may attend the meeting. A list of stockholders entitled to vote will be kept at the offices of Synergy Pharmaceuticals Inc., 420 Lexington Avenue, Suite 1609, New York, New York for ten days before the meeting. At the close of business on the record date, Synergy had * shares of common stock outstanding and entitled to vote.

  /s/ GARY S. JACOB

Gary S. Jacob, Chief Executive Officer

December 3, 2012


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Your vote is important.

        The affirmative vote of the holders of a majority of the votes cast in person or by proxy at the Synergy annual meeting is required to approve Proposal No. 2 regarding an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1, Proposal No. 3, Proposal No. 6, Proposal No. 7 and Proposal No. 8. In addition, the affirmative vote of the holders of a majority of the votes cast in person or by proxy at the Synergy annual meeting is required for approval of Proposal No. 3, Proposal No. 6, Proposal No. 7 and Proposal No. 8. The affirmative vote of the holders of a majority of the shares of Synergy common stock outstanding on the record date for the Synergy annual meeting is required for approval of Proposal No. 1 and 4. For the election of directors (Proposal No. 5), the seven nominees receiving the most "For" votes from the shares having voting power present in person or represented by proxy will be elected. You are urged to attend the annual meeting in person, but if you are unable to do so, the Board of Directors would appreciate the prompt return of the enclosed proxy card, dated and signed, or, if your proxy card or voting instruction form so indicates, your prompt vote electronically via the Internet or telephone. We strongly encourage you to vote electronically if you have that option.


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Callisto Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 445
New York, NY 10170
(212) 297-0010

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
CALLISTO PHARMACEUTICALS, INC.
TO BE HELD ON JANUARY 3, 2013

To the Stockholders of Callisto Pharmaceuticals, Inc:

        A special meeting of stockholders of Callisto Pharmaceuticals, Inc., a Delaware corporation, will be held on January 3, 2013, at 1:00 p.m., Eastern Time, at the offices of Callisto Pharmaceuticals, Inc., 420 Lexington Avenue, Suite 1609, New York, New York 10170, for the following purposes:

            1.     To consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as of July 20, 2012, as amended on October 15, 2012, by and between Synergy Pharmaceuticals Inc. and Callisto Pharmaceuticals, Inc., as described in the attached Joint Proxy Statement/Prospectus;

            2.     To consider and vote upon an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1; and

            3.     To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

        Only stockholders of record at the close of business on November 29, 2012 may vote at the special meeting or any adjournment or postponement thereof. A list of stockholders entitled to vote will be kept at Callisto, 420 Lexington Avenue, Suite 1609, New York, NY 10170, for ten days before the special meeting.


Please do not send any certificates for your stock at this time.

  /s/ GARY S. JACOB

Gary S. Jacob, Chief Executive Officer

December 3, 2012

Your vote is important.

        The affirmative vote of the holders of a majority of the outstanding shares of common stock in person or by proxy at the Callisto special meeting is required to approve Proposal No. 1, regarding adoption and approval of the merger agreement. The affirmative vote of the holders of a majority of the votes cast in person or by proxy at the Callisto special meeting is required to approve Proposal No. 2 regarding an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1. You are urged to attend the special meeting in person, but if you are unable to do so, the Board of Directors would appreciate the prompt return of the enclosed proxy card, dated and signed, or, if your proxy card or voting instruction form so indicates, your prompt vote by telephone or internet. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of the adoption of the merger agreement and an adjournment of the Callisto special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1. If you fail to return your proxy card or vote by telephone or internet, the effect will be a vote against the adoption of the merger agreement and your shares will not be counted for purposes of determining whether a quorum is present at the Callisto special meeting. If you do attend the Callisto special meeting and wish to vote in person, you may withdraw your proxy and vote in person. If your shares are held in "street name" by your broker or other nominee, only that holder can vote your shares and the vote cannot be cast unless you provide instructions to your broker. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares.


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TABLE OF CONTENTS

Chapter One—The Merger

    1  

Questions and Answers about the Merger

    1  

Summary

    8  

Cautionary Statement Regarding Forward-Looking Information

    20  

Selected Historical Financial Data

    21  

Selected Historical Financial Data of Synergy

    21  

Selected Historical Financial Data of Callisto

    22  

Unaudited Pro Forma Combined Consolidated Financial Information of Synergy and Callisto

    23  

Comparative Historical and Unaudited Pro Forma Per Share Data

    28  

Market Price and Dividend Information

    29  

Risk Factors

    31  

Risks Related to the Merger

    31  

Risks Related to the Synergy and Callisto as a Combined Entity

    36  

Risks Related to the Business of Synergy and the Combined Entity

    36  

Risks Related to the Intellectual Property of Synergy and the Combined Entity

    53  

Risks Related to the Ownership of Synergy's Common Stock

    56  

The Merger Transaction

    60  

General

    60  

Background of the Merger

    60  

Recommendation of the Synergy Board of Directors and its Reasons for the Merger

    64  

Opinion of Synergy's Financial Advisor

    66  

Recommendation of the Callisto Board of Directors and its Reasons for the Merger

    72  

Opinion of Callisto's Financial Advisor

    74  

Accounting Treatment

    82  

Certain U.S. Federal Income Tax Consequences of the Merger

    82  

Effective Time of the Merger

    85  

Regulatory Approvals

    85  

Appraisal Rights

    86  

Board of Directors and Executive Officers of Synergy After Completion of the Merger

    88  

Interests of Synergy Directors and Executive Officers in the Merger

    88  

Interests of Callisto Directors and Executive Officers in the Merger

    89  

Restrictions on Sales of Shares of Synergy Common Stock Received in the Merger

    89  

NASDAQ Capital Market Listing of Synergy Common Stock; Delisting and Deregistration of Callisto Common Stock

    89  

Legal Proceedings Related to the Merger

    90  

The Merger Agreement

    91  

General

    91  

Closing and Effective Time of Merger

    91  

Merger Consideration

    91  

Conversion of Callisto Options, Warrants and Stock Appreciation Rights

    93  

Directors and Officer of Callisto Following the Merger

    93  

Certificate of Incorporation

    93  

Conditions to the Completion of the Merger

    93  

No Solicitation

    94  

Meeting of Stockholders

    95  

Covenants; Conduct of Business Pending the Merger

    95  

Other Agreements

    96  

Termination

    97  

Expenses

    98  

Representations and Warranties

    98  

Agreements Related to the Merger Agreement

    99  

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Chapter Two—Information About the Meetings and Voting

    100  

Matters Relating to the Meetings

    100  

Vote Necessary to Approve Synergy and Callisto Proposals

    102  

Voting

    104  

How to Vote by Proxy

    104  

Other Business; Adjournments

    106  

Appraisal Rights

    106  

Chapter Three—Other Information Regarding Synergy

    107  

Business of Synergy

    107  

Legal Proceedings Relating to Synergy

    107  

Management's Discussion and Analysis of Financial Condition and Results of Operations of Synergy

    107  

Quantitative and Qualitative Disclosures About Market Risk

    107  

New Directors Following the Merger

    107  

Performance Graph

    107  

Equity Compensation Information

    108  

Chapter Four—Other Information Regarding Callisto

    109  

General

    109  

History

    109  

Government Regulations

    110  

Competition

    113  

Research and Development Expenses

    113  

Patents and Proprietary Rights

    113  

License Agreements

    115  

Compensation of Directors

    118  

Audit Committee

    119  

Compensation Committee

    119  

Corporate Governance/Nominating Committee

    120  

Compliance with Section 16(A) of the Exchange Act

    120  

Code of Business Conduct and Ethics

    120  

Executive Compensation

    120  

Outstanding Equity Awards at Fiscal Year-End

    122  

Director Compensation

    123  

Employment Agreements and Change in Control Agreements

    123  

Stock Option Plans

    123  

Callisto's Management's Discussions and Analysis of Financial Condition and Results of Operations

    124  

Quantitative and Qualitative Disclosures About Market Risk

    133  

Chapter Five—Certain Additional Information

    134  

Security Ownership of Certain Beneficial Owners and Management of Synergy, Callisto, and the Combined Company

    134  

Ownership of Synergy Common Stock Prior to Merger

    134  

Ownership of Callisto Common Stock Prior to Merger

    135  

Ownership of Synergy Common Stock Following the Merger

    136  

Description of Synergy Capital Stock

    138  

Comparison of Rights of Holders of Synergy Common Stock and Callisto Common Stock

    140  

Chapter Six—Synergy Annual Meeting Proposals

    151  

Synergy Proposal No. 1—Merger Proposal

    151  

Synergy Proposal No. 2—Possible Adjournment of the Synergy Annual Meeting

    151  

Synergy Proposal No. 3—Approval of an Increase to the Number of Authorized Shares Issuable under Synergy's 2008 Equity Compensation Incentive Plan

    151  

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Synergy Proposal No. 4—Approval of an Increase to the Number of Authorized Shares of Synergy common stock under Synergy's Second Amended and Restated Certificate of Incorporation

    153  

Synergy Proposal No. 5—Election of Directors

    155  

Nominees for Election at the 2012 Annual Meeting

    155  

Board Leadership Structure and Board's Role in Risk Oversight

    157  

Director Independence

    158  

Compensation of Director

    158  

Audit Committee

    158  

Compensation Committee

    159  

Corporate Governance/Nominating Committee

    159  

Code of Business Conduct and Ethics

    160  

Stockholder Communications

    160  

Compliance with Section 16(A) of the Exchange Act

    160  

Executive Officers

    160  

Compensation of Executive Officers

    161  

Director Compensation

    170  

Certain Relationships and Related Transactions

    172  

Conflicts of Interest

    172  

Synergy Proposal No. 6—Ratification of Appointment of Independent Registered Public Accounting Firm

    173  

Synergy Proposal No. 7—Advisory Vote on the Approval of Executive Compensation

    174  

Synergy Proposal No. 8—Advisory Vote on the Frequency of Holding an Advisory Vote on Executive Compensation

    175  

Householding of Proxy Materials

    175  

Other Matters

    176  

Chapter Seven—Callisto Special Meeting Proposals

    177  

Callisto Proposal No. 1—Adoption and Approval of the Merger Agreement

    177  

Callisto Proposal No. 2—Possible Adjournment of the Special Meeting

    177  

Chapter Eight—Additional Information for Stockholders

    178  

Future Stockholder Proposals

    178  

Legal Matters

    178  

Experts

    178  

Where You Can Find More Information

    178  

Annex A—Agreement and Plan of Merger, dated July 20, 2012

       

Annex B—Amendment No. 1 to the Agreement and Plan of Merger, dated October 15, 2012

       

Annex C—Opinion of Canaccord Genuity Inc.

       

Annex D—Opinion of Brean Murray, Carret & Co., LLC

       

Annex E—Synergy's 2008 Equity Compensation Incentive Plan

       

Annex F—Synergy's Amendment to the Second Amended and Restated Certificate of Incorporation

       

Annex G—Appraisal Rights under Delaware General Corporation Law

       

Annex H—Callisto's Annual Report on Form 10-K for the year ended December 31, 2011

       

Annex I—Callisto's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012

       

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CHAPTER ONE—THE MERGER

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:
What is the merger?

A:
Synergy and Callisto have entered into an Agreement and Plan of Merger, dated as of July 20, 2012, as amended on October 15, 2012, which is referred to as the merger agreement. The merger agreement contains the terms and conditions of the proposed business combination of Synergy and Callisto. Under the merger agreement, Callisto will merge with Synergy, which transaction is referred to as the merger. At the effective time of the merger, each share of Callisto common stock outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.1799 of a share of Synergy common stock and the 22,295,000 shares of Synergy common stock held by Callisto will be canceled. In addition, each stock option exercisable for shares of Callisto common stock that is outstanding at the effective time of the Merger will be assumed by Synergy and converted into a stock option to purchase the number of shares of Synergy's common stock that the holder would have received if such holder had exercised such stock option for shares of Callisto common stock prior to the Merger and exchanged such shares for shares of Synergy common stock in accordance with the Exchange Ratio. In addition, each Callisto stock option exercisable for shares of Synergy common stock that is outstanding at the effective time of the Merger will be assumed by Synergy and each outstanding warrant or obligation to issue a warrant to purchase shares of Callisto common stock, whether or not vested, shall be cancelled.

Q:
Why are the two companies proposing to merge?

A:
Synergy and Callisto are proposing the merger because, among other things, it is believed that the merger will enhance stockholders value for both Synergy and Callisto stockholders by (i) providing a method by which the Callisto stockholders can more directly share in the growth of Synergy and (ii) resulting in improvement in the share price of Synergy's common stock as a result of anticipated cost savings synergies. Callisto has not been able to fund itself since early 2008 and has relied solely on advances from Synergy to continue its operating activities. From July 2008 through September 30, 2012, Callisto has accumulated $2,655,594 in indebtedness to Synergy, primarily to fund the cost of being a public company. Management estimates that the ongoing cost of a public audit, D&O insurance, printers, transfer agents and other administrative costs associated with being a publicly traded company have totaled between $250,000 and $300,000 per annum. For a discussion of Synergy's and Callisto's reasons for the merger, please see the sections entitled "Chapter One—The Merger Transaction—Recommendation of the Synergy Board of Directors and the Reasons for the Merger" and "Chapter One—The Merger Transaction—Recommendation of the Callisto Board of Directors and the Reasons for the Merger" in this Joint Proxy Statement/Prospectus.

Q:
What will happen in the merger?

A:
In the merger, Callisto will be merged into Synergy and will cease to exist. Based solely upon the outstanding shares of Synergy common stock on November 29, 2012 and Callisto's outstanding shares of common stock on November 29, 2012, immediately following the completion of the merger, Callisto stockholders will own approximately 39.5% of the combined company's outstanding common stock. Based upon the fully-diluted outstanding shares of Synergy and Callisto on November 29, 2012, immediately following the completion of the merger, Callisto security holders would own approximately 38.8% of the combined company's fully diluted outstanding common stock.

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Q:
Why am I receiving this Joint Proxy Statement/Prospectus?

A:
You are receiving this Joint Proxy Statement/Prospectus because you have been identified as a stockholder of either Synergy or Callisto as of the applicable record date, and you are entitled to vote at such company's stockholder meeting. This document serves as both a joint proxy statement of Synergy and Callisto used to solicit proxies for the stockholder meetings, and as a prospectus of Synergy used to offer shares of Synergy common stock in exchange for shares of Callisto common stock in the merger. This Joint Proxy Statement/Prospectus contains important information about the merger and the stockholder meetings of Synergy and Callisto, and you should read it carefully.

Q:
Is my vote necessary to complete the Merger?

A:
Yes. The companies have agreed to combine the two companies upon the terms and conditions of the merger agreement that is described in this Joint Proxy Statement/Prospectus. You are receiving these proxy materials to help you decide, among other matters, how to vote your shares with respect to the proposed merger.

    The merger cannot be completed unless, among other things, the stockholders of both Synergy and Callisto approve the merger agreement and the transactions contemplated thereby. Your vote is important. Synergy and Callisto encourage you to vote as soon as possible.

Q:
On what matters are Synergy stockholders being asked to vote?

A:
Synergy stockholders are asked to vote on the following items:

the adoption and approval of the merger agreement, described under "Chapter One—The Merger Agreement" on page 91;

the adjournment of the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the adoption of the merger agreement;

the approval of the increase in the number of shares authorized under Synergy's 2008 Equity Compensation Incentive Plan, as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 3—Approval of an Increase in the number of authorized shares issuable under the Synergy's 2008 Equity Compensation Incentive Plan" beginning on page 151;

the approval of the increase in the number of shares of common stock authorized for issuance from 100,000,000 to 200,000,000, as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 4" beginning on page 153;

the re-election of seven (7) current Synergy directors to hold office until the 2013 Synergy annual meeting as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 5" beginning on page 155;

the ratification of the appointment of BDO USA, LLP as the independent registered public accounting firm of Synergy for its fiscal year ending December 31, 2012 as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 6" beginning on page 173;

the approval, on an advisory basis, of the compensation of Synergy's named executive officers as described in the compensation discussion and analysis, the compensation tables, and the related disclosures contained in this Joint Proxy Statement/Prospectus as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 7" beginning on page 174;

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    approval of a three-year frequency for holding an advisory vote on executive compensation as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 8" beginning on page 175; and

    such other matters as may properly come before the Synergy meeting.

Q:
What vote of Synergy stockholders is required to approve the proposals?

A:
The vote required of Synergy stockholders for each of (i) the adoption and approval of the merger agreement with Callisto and (ii) the approval of an amendment to Synergy's Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 100,000,000 to 200,000,000, is the approval of a majority of the outstanding common stock of the corporation entitled to vote.

    The vote required of Synergy stockholders for each of (i) the approval of an increase to the number of authorized shares issuable under Synergy's 2008 Equity Incentive Compensation Plan, (ii) the ratification of BDO USA, LLP as the independent registered public accounting firm, (iii) the advisory vote on the approval of executive compensation, (iv) the advisory vote on the frequency of holding an advisory vote on executive compensation, and (v) an adjournment of the meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the issuance of the shares of Synergy common stock, is the approval of a majority of the votes present, in person or by proxy, and entitled to vote on the matter.

    Please note, however, that the proposals regarding the approval of executive compensation and the frequency of holding such an advisory vote are advisory only and will not be binding. The results of the votes on those two advisory proposals will be taken into consideration by the Board of Directors of Synergy when making future decisions regarding these matters.

    Director Elections:    Each director nominee receiving a majority of the votes cast will be elected as a director. This means that the number of shares voted "FOR" a director nominee must exceed the number of votes cast "AGAINST" that director nominee in order for that nominee to be elected as a director. If, however, the number of nominees exceeds the number of directors to be elected (a situation Synergy does not anticipate), the directors shall be elected by a plurality of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors. A plurality means that the seven (7) director nominees that receive the highest number of votes cast will be elected. In either event, shares not present at the meeting and shares voting "ABSTAIN" have no effect on the election of directors.

Q:
What constitutes a quorum for the Synergy Annual Meeting?

A:
A majority of the outstanding shares of Synergy's common stock entitled to vote being present in person or represented by proxy constitutes a quorum for the annual meeting. If a quorum is not present, the stockholders present, in person or by proxy, may adjourn the meeting, without notice other than announced at the meeting, to another place, if any, date or time.

Q:
On what matters are Callisto stockholders being asked to vote?

A:
Callisto stockholders will be asked to vote on the following items:

adoption and approval of the merger agreement as described under "Chapter One—The Merger—The Merger Agreement" on page 91;

adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement; and

such other matters as may be properly presented at the Callisto special meeting.

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Q:
What vote of Callisto stockholders is required to approve the proposals?

A:
The vote required of Callisto Stockholders for the adoption and the approval of the merger agreement is the approval of a majority of the outstanding common stock of the corporation entitled to vote and for an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the adoption and approval of the merger agreement, is the approval of a majority of the votes present, in person or by proxy, and entitled to vote on the matter.

Q:
What constitutes a quorum for the Callisto Special Meeting?

A:
A majority of the outstanding shares of Callisto's common stock entitled to vote being present in person or represented by proxy constitutes a quorum for the special meeting. If a quorum is not present, the stockholders present, in person or by proxy, may adjourn the meeting, without notice other than announced at the meeting, to another place, if any, date or time.

Q:
When and where are the stockholder meetings?

A:
The Synergy annual meeting will take place on January 3, 2013 at 10:00 a.m., Eastern Time, at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, New York 10006.

    The Callisto special meeting will take place on January 3, 2013 at 1:00 p.m., Eastern Time, at the offices of Callisto Pharmaceuticals, Inc., 420 Lexington Avenue, Suite 1609, New York, New York, 10170.

Q:
Who is entitled to vote at Synergy's Annual Meeting?

A:
Each outstanding share of Synergy's common stock entitles its holder to cast one vote on each matter to be voted upon at the annual meeting. Only stockholders of record at the close of business on the record date, November 29, 2012, are entitled to receive notice of the annual meeting and to vote the shares of common stock that they held on that date at the meeting, or any adjournment or postponement of the meeting. If your shares are held for you as a beneficial holder in "street name," please refer to the information forwarded to you by your bank, broker or other holder of record to see what you must do to vote your shares.

    A complete list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder at Synergy's corporate headquarters, 420 Lexington Avenue, Suite 1609, New York, New York, 10170, during normal business hours for a period of ten days before the annual meeting and at the time and place of the annual meeting.

Q:
Who is entitled to vote at Callisto's Special Meeting?

A:
Each outstanding share of Callisto's common stock entitles its holder to cast one vote on each matter to be voted upon at the special meeting. Only stockholders of record at the close of business on the record date, November 29, 2012, are entitled to receive notice of the special meeting and to vote the shares of common stock that they held on that date at the meeting, or any adjournment or postponement of the meeting. If your shares are held for you as a beneficial holder in "street name," please refer to the information forwarded to you by your bank, broker or other holder of record to see what you must do to vote your shares.

Q:
How do the boards of directors of Synergy and Callisto recommend I vote?

A:
The Boards of Directors of both companies have recommended that stockholders vote Yes for the merger. After careful consideration, Synergy's Board of Directors has determined by unanimous

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    vote the merger to be fair to Synergy stockholders and in their best interests, and declared the merger advisable. Synergy's Board of Directors approved the merger agreement and recommends that Synergy stockholders adopt and approve the merger agreement.

    After careful consideration, Callisto's Board of Directors has determined, by unanimous vote, the merger to be fair to Callisto stockholders and in their best interests, and declared the merger advisable. Callisto's Board of Directors approved the merger agreement and recommends the adoption and approval of the merger agreement by Callisto stockholders. In considering the recommendation of the Callisto Board of Directors with respect to the merger agreement, Callisto stockholders should be aware that certain directors and officers of Callisto have certain interests in the merger that are different from, or are in addition to, the interests of Callisto stockholders generally. We encourage you to read the sections titled "Interests of Synergy Directors and Executive Officers in the Merger" and "Interests of Callisto Directors and Executive Officers" on pages 89 and 90 for a discussion of these interests.

Q:
How do I vote?

A:
You may vote by mail by completing, signing and dating your proxy card and returning it in the enclosed, postage-paid and addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted:

as you instruct; and

according to the best judgment of the proxy holders if a proposal comes up for a vote at the annual or special meeting that is not on the proxy card.

    If you return a signed card, but do not provide voting instructions, your shares will be voted:

    if you are a Synergy stockholder, FOR the issuance of shares of Synergy common stock in the merger, FOR the approval of an increase to the number of authorized shares issuable under Synergy's 2008 Equity Incentive Compensation Plan, FOR the approval of an increase in the number of authorized shares of common stock, FOR the re-election of the current Synergy directors, FOR the ratification of BDO USA, LLP as the independent registered public accounting firm, FOR the advisory vote on the approval of executive compensation, FOR the recommendation, on an advisory basis, a three-year frequency with which Synergy should conduct future stockholder advisory votes on executive officer compensation and FOR an adjournment of the meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the issuance of the shares of Synergy common stock;

    if you are a Callisto stockholder, FOR the adoption and approval of the merger agreement and FOR adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement; and

    according to the best judgment of the proxy holders if a proposal properly comes up for a vote at the annual or special meeting that is not on the proxy card.

    If you are a stockholder of record of Synergy, you may also vote on the Internet at www.pstvote.com/synergy2012. If you are a stockholder of record of Callisto, you may also vote on the internet at www.pstvote.com/callisto2012. See the instructions on your proxy card or voting instruction form. You are strongly encouraged to vote electronically.

Q:
What do I do if I want to change my vote?

A:
You may send in a later-dated, signed proxy or proxy card to your company's Secretary before your meeting or you can attend your meeting in person and vote. You may also revoke your proxy by

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    sending a notice of revocation to your company's Secretary at 420 Lexington Ave., Suite 1609, New York, NY 10170. If you voted by the Internet, you can submit a later vote using such method.

Q:
If my shares are held in "street name" by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

A:
If you do not provide your broker, bank or nominee with instructions on how to vote your "street name" shares, your broker, bank or nominee will not be permitted to vote them on the matters that are to be considered by the Synergy stockholders and the Callisto stockholders at their respective meetings relating to the merger. You should therefore be sure to provide your broker with instructions on how to vote your shares.

    If you wish to vote your shares in person, you must bring to the meeting a letter from the broker, bank or nominee confirming your beneficial ownership in the shares to be voted.

Q:
What is the effect of abstentions and broker non-votes?

A:
Abstentions with respect to Synergy Proposal No. 1 and Proposal No. 4 and Callisto Proposal No. 1 will have the same effect as an AGAINST vote. Abstentions with respect to all other proposals will have no effect on the outcome of the vote. Abstentions will be counted for the purpose of determining a quorum at the stockholder meetings.

    Matters subject to stockholder vote are classified as "routine" or "non-routine." In the case of non-routine matters, brokers may not vote shares held in "street name" for which they have not received voting instructions from the beneficial owner ("Broker Non-Votes"), whereas they may vote those shares in their discretion in the case of any routine matter. Broker Non-Votes will be counted for purposes of calculating whether a quorum is present at the stockholder meetings, but will not be counted for purposes of determining the numbers of votes present in person or represented by proxy and entitled to vote with respect to a particular proposal. Broker Non-Votes for Synergy Proposals No. 1 and 4 and Callisto Proposal No. 1 will have the same effect as an AGAINST vote. Synergy Proposals No. 1, 2, 3, 4, 5, 7 and 8 as well as Callisto Proposals No. 1 and 2 are non-routine matters, but the Synergy Proposal No. 6 is a routine matter. Therefore, it is important that you complete and return your proxy early so that your vote may be recorded.

    Votes cast by proxy or in person at the stockholder meetings will be tabulated by the inspectors of election appointed for the stockholder meetings, who also will determine whether a quorum is present.

Q:
What appraisal rights do stockholders have in connection with the merger?

A:
The holders of Synergy common stock do not have any right to an appraisal of the value of their shares in connection with the merger. The holders of Callisto common stock do have a right to an appraisal of the value of their shares in connection with the merger if they do not vote for the merger and if they follow certain procedures described in the section entitled "Chapter One—The Merger—The Merger Transaction—Appraisal Rights" beginning on page 85.

Q:
What happens if I do not return a proxy card or otherwise provide proxy instructions?

A:
If you are a Synergy stockholder, the failure to return your proxy card or otherwise provide proxy instructions could be a factor in establishing a quorum for the annual meeting of Synergy stockholders for purposes of approving the issuance of shares pursuant to the merger agreement or other actions sought to be taken, which is required to transact business at the meeting. If you are a Callisto stockholder, the failure to return your proxy card or otherwise provide proxy instructions could be a factor in establishing a quorum for the special meeting of Callisto stockholders for purposes of approving the merger agreement, which is required to transact business at the meeting.

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Q:
Should I send in my stock certificates now?

A:
No. If the merger is completed, Synergy will send Callisto stockholders written instructions for exchanging their stock certificates. Synergy stockholders will keep their existing certificates.

Q:
When do you expect the merger to be completed?

A:
Both Synergy and Callisto are working towards completing the merger as quickly as possible. We hope to complete the merger by February 14, 2013. However, the exact timing of completion of the merger cannot be determined yet because completion of the merger is subject to a number of conditions.

Q:
How many authorized but unissued shares of Synergy common stock will exist after the closing of the merger?

A:
Following the closing of the merger, we anticipate that there will be approximately 127,591,006 shares of authorized but unissued Synergy common stock. In addition to the number of issued and outstanding shares of Synergy common stock after the closing of the merger, Synergy will be required to reserve approximately 16,446,756 shares for future issuance following the merger as follows: (i) approximately 8,461,930 shares for issuance of Synergy common stock as a result of outstanding Synergy stock options; (ii) approximately 5,647,203 shares for issuance of Synergy common stock as a result of outstanding Synergy warrants; (iii) 1,000,000 shares for issuance of outstanding Callisto warrant to purchase shares of Synergy Common Stock to be assumed in connection with the merger and (iv) 1,337,623 shares for issuance of outstanding stock options assumed in connection with the merger.

Q:
What are the federal income tax consequences of the merger?

A:
Neither Synergy nor Callisto has requested or received a ruling from the Internal Revenue Service that the merger will qualify as a reorganization. The merger is intended to qualify as a reorganization pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code. Assuming that the merger qualifies as a reorganization, Callisto stockholders should not recognize any gain or loss for U.S. federal income tax purposes if they exchange their Callisto shares solely for shares of Synergy common stock.

    Tax matters are very complicated, and the tax consequences of the merger to each Callisto stockholder will depend on the facts of that stockholder's particular situation. You are urged to consult your own tax advisors regarding the specific tax consequences of the merger, including tax return reporting requirements, the applicability of federal, state, local and foreign tax laws and the effect of any proposed changes in the tax laws. See "Chapter One—The Merger—The Merger Transaction—Certain U.S. Federal Income Tax Consequences of the Merger" beginning on page 82.

Q:
Whom do I call if I have questions about the meetings or the merger?

A:
Synergy stockholders may call Synergy Investor Relations at 212-297-0020. Callisto stockholders may call Callisto Investor Relations at 212-297-0010.

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SUMMARY

        This summary highlights selected information from this Joint Proxy Statement/Prospectus and may not contain all of the information that is important to you. This summary discusses all of the material aspects of the merger. However, to understand the merger fully and for a more complete description of the legal terms of the merger, you should read this Joint Proxy Statement/Prospectus and the documents we have referred you to carefully. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled "Chapter Eight—Additional Information for Stockholders—Where You Can Find More Information" on page 178.


The Companies

Synergy Pharmaceuticals Inc.
420 Lexington Avenue, Suite 1609
New York, New York 10170
(212) 297-0020

        Synergy Pharmaceuticals Inc. is a development stage biopharmaceutical company focused primarily on the development of drugs to treat gastrointestinal, or GI, disorders and diseases. Synergy's lead product candidate is plecanatide (formerly called SP-304), a guanylyl cyclase C, or GC-C, receptor agonist, to treat GI disorders, primarily chronic constipation, or CC, and constipation-predominant-irritable bowel syndrome, or IBS-C. CC and IBS-C are functional gastrointestinal disorders that afflict millions of sufferers worldwide. CC is primarily characterized by constipation symptoms but a majority of these patients report experiencing bloating and abdominal discomfort as among their most bothersome symptoms. IBS-C is characterized by frequent and recurring abdominal pain and/or discomfort associated with chronic constipation. Synergy is also developing SP-333, its second generation GC-C receptor agonist for the treatment of gastrointestinal inflammatory diseases, such as ulcerative colitis, or UC.

Callisto Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 1609
New York, New York 10170
(212) 297-0010

        Callisto Pharmaceuticals, Inc. is a development stage biopharmaceutical company that until May 9, 2012, focused primarily on the development of drugs to treat gastrointestinal disorders and diseases. Prior to May 9, 2012, Callisto operated as a holding company through two controlled subsidiaries: Synergy and Callisto Research Labs, LLC (100% owned). On May 9, 2012, Synergy closed an underwritten public offering of 10 million shares of common stock at an offering price of $4.50 per share, resulting in gross proceeds of $45 million before deducting underwriting discounts, commissions and other estimated offering expenses of approximately $3 million (the "Offering"). As a result Callisto's equity ownership in Synergy decreased to approximately 34% and Callisto's management determined that Callisto no longer had control over the operations and decision making of Synergy. Therefore, Callisto deconsolidated Synergy and derecognized the Synergy assets, liabilities, and non-controlling interest from its financial statements (the "Deconsolidation").


The Merger Agreement (see page 91)

        A copy of the merger agreement, as amended, is attached as Annex A and Annex B to this Joint Proxy Statement/Prospectus and is incorporated herein by reference. Synergy and Callisto encourage you to read the entire merger agreement, as amended, carefully because it is the principal document governing the merger. We currently expect that the merger will be completed during the first quarter of 2013. However, we cannot predict the actual timing of the completion of the merger.

 

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Merger Consideration (see page 91)

        If the merger is completed, Callisto will merge with and into Synergy, and Synergy will survive the merger. Each Callisto stockholder will receive, in exchange for each share of Callisto common stock held or deemed to be held by such stockholder immediately prior to the closing of the merger, 0.1799 shares of Synergy Common Stock and the 22,295,000 shares of Synergy common stock held by Callisto will be canceled. As a result, immediately after the merger Callisto stockholders will own approximately 38.8% of the outstanding shares of the combined company on a fully diluted basis and Synergy stockholders will own approximately 61.2% of the outstanding shares of the combined company on a fully diluted basis.

        In addition, each stock option exercisable for shares of Callisto common stock that is outstanding at the effective time of the Merger will be assumed by Synergy and converted into a stock option to purchase the number of shares of Synergy's common stock that the holder would have received if such holder had exercised such stock option for shares of Callisto common stock prior to the Merger and exchanged such shares for shares of Synergy's common stock in accordance with the Exchange Ratio, respectively. In addition, each Callisto stock option exercisable for shares of Synergy common stock that is outstanding at the effective time of the Merger will be assumed by Synergy and each outstanding warrant or obligation to issue a warrant to purchase shares of Callisto common stock, whether or not vested, shall be cancelled.

        For a more complete description of the merger consideration to be issued by Synergy and the treatment of Callisto options , please see the section entitled "Chapter One—The Merger—The Merger Agreement" in this Joint Proxy Statement/Prospectus.


Risks Relating to the Merger (see page 31)

        In evaluating the adoption of the merger agreement or the issuance of shares of Synergy common stock in the merger, you should carefully read this Joint Proxy Statement/Prospectus and especially consider the factors discussed in the section titled "Chapter One—The Merger—Risk Factors," starting on page 31, for a description of risks relating to the merger, the combined company's businesses, and Synergy's common stock.


Reasons for the Merger

Recommendation of the Synergy Board of Directors and its Reasons for the Merger (see page 64)

        The Synergy Board of Directors approved the merger based on a number of factors, including, among other factors, the following:

    the potential opportunity for the two companies to integrate their operations and development processes and to combine their technological resources to increase functionality and bring drug therapies to market faster;

    the competitive and market environments in which Synergy and Callisto operate, and the potential for the merger to enhance the scale of Synergy's ability to compete effectively in those environments;

    historical and current information about each of the combining companies and their businesses, prospects, financial performance and condition, operations, technology, management and competitive position, before and after giving effect to the merger and the merger's potential effect on stockholder value, including public reports filed with the SEC, analyst estimates, market data and management's knowledge of the industry;

    the potential cost savings synergies derived from the Merger, thus enhancing stockholders value. Callisto has not been able to fund itself since early 2008 and has relied solely on advances from

 

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      Synergy to continue its operating activities. From July 2008 through June 30, 2012, Callisto has accumulated $1,936,609 of indebtedness to Synergy, primarily to fund the cost of being a public company. Management estimates that the ongoing cost of a public audit, D&O insurance, printers, transfer agents and other administrative costs associated with being a publicly traded company have totaled between $250,000 and $300,000 per annum;

    the results of the due diligence review of Callisto's business and operations by Synergy's management, legal advisors and financial advisors;

    the terms and conditions of the merger agreement;

    the likelihood that the merger will be consummated on a timely basis; and

    the opinion of Synergy's financial advisor, dated October 15, 2012, to the Synergy board of directors that, as of such date and based on and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, the exchange ratio of 0.1799 shares of Synergy common stock to be issued in exchange for each share of Callisto common stock pursuant to the merger agreement was fair to Synergy from a financial point of view.

        The Synergy Board of Directors considered the potential risks of the merger, including, but not limited to, the following:

    the risks, challenges and costs inherent in combining the operations of two companies and the substantial expenses to be incurred in connection with the merger, including the possibility that delays or difficulties in completing the integration could adversely affect the combined company's operating results and preclude the achievement of some benefits anticipated from the merger;

    the possible volatility, at least in the short term, of the trading price of Synergy's common stock resulting from the merger announcement;

    the possible loss of key management, technical or other personnel of either of the combining companies as a result of the management and other changes that will be implemented in integrating the businesses;

    the risk of diverting management's attention from other strategic priorities to implement merger integration efforts;

    the possibility that the reactions of existing and potential competitors to the combination of the two businesses could adversely impact the competitive environment in which the companies operate;

    the risk that the merger might not be consummated in a timely manner, or that the merger might not be consummated at all;

    the risk to Synergy's business, operations and financial results in the event that the merger is not consummated;

    the risk that the anticipated benefits of product integration and interoperability and cost savings will not be realized;

    the potential incompatibility of business cultures; and

    various other applicable risks associated with the combined company and the merger, including those described in the section of this Joint Proxy Statement/Prospectus entitled "Risk Factors" beginning on page 31.

 

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Recommendation of the Callisto Board of Directors and its Reasons for the Merger (see page 72)

        The Callisto Board of Directors approved the merger based on a number of factors, including, among other factors, the following:

    the strategic rationale for the merger and the potential benefits of the contemplated transaction;

    the possible alternatives to the merger, including the possibility of continuing to operate as an independent entity and the perceived risks thereof, and the potential for an alternative combination transaction to the merger based upon the discussions held by Callisto and senior management, with the assistance of Callisto's financial advisor;

    current and historical information concerning Callisto's and Synergy's respective businesses, operations, management, financial performance and conditions, technology, operations, prospects and competitive position, before and after giving effect to the merger and the merger's potential effect on stockholder value;

    the potential business, operational and financial synergies that may be realized over time by the combined company following the merger. Callisto has not been able to fund itself since early 2008 and has relied solely on advances from Synergy to continue its operating activities. From July 2008 through September 30, 2012, Callisto has accumulated $2,655,594 of indebtedness to Synergy, primarily to fund the cost of being a public company. Management estimates that the ongoing cost of a public audit, D&O insurance, printers, transfer agents and other administrative costs associated with being a publicly traded company have totaled between $250,000 and $300,000 per annum;

    its knowledge of the business, operations, financial condition and earnings of Synergy, taking into account the results of the due diligence review of Synergy;

    the likelihood that the merger will be completed;

    current financial market conditions and historical market prices, volatility and trading information with respect to Callisto's and Synergy's common stock;

    the terms of the merger agreement, including the parties' representations, warranties and covenants, and the conditions to their respective obligations;

    the consideration to be received by Callisto stockholders in the merger, including the form of such consideration, which enables Callisto's stockholders to continue to have a substantial equity interest in the combined company following the merger, as well as the fact that the shares of Synergy common stock to be received by Callisto's stockholders will be received in a tax-free exchange; and

    the opinion of Callisto's financial advisor, dated October 11, 2012 to the Callisto special committee of the board of directors that as of July 20, 2012, based on and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, the exchange ratio of 0.1799 shares of Synergy common stock to be issued in exchange for each share of Callisto common stock pursuant to the merger agreement was fair to the Callisto stockholders from a financial point of view.

        The Callisto Board of Directors considered the potential risks of the merger, including, but not limited to, the following:

    the fact that because of the fixed exchange ratio of 0.1799 shares of Synergy common stock for each share of Callisto common stock, if Synergy's share price declines prior to the consummation of the merger, the consideration to be received by the stockholders of Callisto would also decline;

 

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    the inability of Callisto's stockholders to realize the long-term value of the successful execution of Callisto's current strategy as an independent company;

    the risks associated with remaining an independent company, including increased competition, industry consolidation trends, difficulties of achieving scale, the significant and increasing cost of complying with obligations as a publicly traded company, anticipated operating performance and a review of ongoing product development initiatives;

    the possibility that the merger might not be completed and the potential effects of the public announcement and pendency of the merger on management attention;

    the trading values of Callisto's common stock relative to trading values of Synergy's common stock;

    the fact that certain of the directors and executive officers of Callisto may have conflicts of interest in connection with the merger, as they may receive certain benefits that are different from, and in addition to, those of the other stockholders of Callisto;

    that, while the merger is expected to be completed, there can be no assurance that all conditions to the parties' obligations to complete the merger will be satisfied, and as a result, it is possible that the merger may not be completed, even if the merger agreement is adopted by the stockholders of Callisto;

    the risk of not realizing all of the anticipated strategic benefits between Callisto and Synergy and the risk that other anticipated benefits might not be realized;

    the risk that the merger may not be consummated in a timely manner or that the merger may not be consummated at all;

    the substantial costs to be incurred in connection with the merger, including the costs of integrating the businesses of Callisto and Synergy and the transaction expenses arising from the merger; and

    various other applicable risks associated with the combined company and the merger, including the risks described in the section titled "Risk Factors" beginning on page 42.


Opinion of Synergy's Financial Advisor (see page 66)

        In connection with the merger, Canaccord Genuity Inc., or Canaccord Genuity, Synergy's financial advisor, delivered to the Special Project Committee of the Synergy Board of Directors an opinion, dated July 20, 2012, as to the fairness, from a financial point of view and as of the date of such opinion, to Synergy of the issuance of the shares of Synergy common stock to be issued in the merger pursuant to the terms of the merger agreement entered into on July 20, 2012 (prior to being amended). Subsequently, Canaccord Genuity delivered to the Special Project Committee of the Synergy Board of Directors an opinion, dated October 15, 2012, as to the fairness, from a financial point of view and as of the date of such opinion, to Synergy of the issuance of the shares of Synergy common stock to be issued in the merger pursuant to the merger agreement, as amended by amendment no. 1 entered into on October 15, 2012. The full text of Canaccord Genuity's opinion is attached to this Joint Proxy Statement/Prospectus as Annex C and is incorporated into this Joint Proxy Statement/Prospectus by reference. Holders of Synergy common stock are encouraged to read Canaccord Genuity's opinion carefully in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Canaccord in connection with its opinion. Canaccord Genuity's opinion was addressed to the Special Project Committee of the Synergy Board of Directors, was only one of many factors considered by the Special Project Committee and the Synergy Board of Directors in their evaluation of the merger and only addresses the fairness, from a financial point of view, to Synergy of the issuance of the shares of Synergy common stock to be

 

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issued in the merger. Canaccord Genuity's opinion does not address the merits of the underlying decision by Synergy to engage in the merger or related transactions or the relative merits of the merger or related transactions as compared to any other transaction or business strategy in which Synergy might engage and is not intended to, and does not, constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or related transactions or any other transaction or business strategy in which Synergy might engage.


Opinion of Callisto's Financial Advisor (see page 74)

        In connection with the merger, the Callisto Board of Directors originally received an opinion, dated July 20, 2012, from Brean Murray, Carret & Co., LLC, Callisto's financial advisor, as to the fairness, from a financial point of view and as of the date of such opinion, to Callisto of the Exchange Ratio provided for in the merger which at the time was .17 of a share of Synergy common stock for each share of Callisto common stock. Subsequently, Synergy and Callisto entered into an amendment to the merger agreement dated October 15, 2012, which among other things, increased the Exchange Ratio to .1799 of a share of Synergy common stock in exchange for each share of Callisto common stock, and extended the stockholder lock up period to 24 months. In connection with the amendment to the merger agreement, the Callisto Board of Directors received an opinion, dated October 11, 2012, from Brean Murray that as of the execution of the merger agreement on July 20, 2012, prior to the impact of the merger announcement on the market, the increased Exchange Ratio, from a financial point of view was fair to Callisto. See "Chapter One—The Merger—Risk Factors—Risk Factors Related to the Merger" on page 31. The full text of Brean Murray's opinion is attached to this Joint Proxy Statement/Prospectus as Annex D and is incorporated into this Joint Proxy Statement/Prospectus by reference. Holders of Callisto common stock are encouraged to read Brean Murray's opinion carefully in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Brean Murray in connection with its opinion. Brean Murray's opinion was addressed to the Special Committee of the Callisto Board of Directors, was only one of many factors considered by the Callisto Board of Directors in its evaluation of the merger and only addresses the fairness of the exchange ratio from a financial point of view to Callisto. Brean Murray's opinion does not address the merits of the underlying decision by Callisto to engage in the merger or related transactions or the relative merits of the merger or related transactions as compared to any other transaction or business strategy in which Callisto might engage and is not intended to, and does not, constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or related transactions or any other transaction or business strategy in which Callisto might engage.


Interests of Certain Persons in the Merger

        In considering the recommendation of the Callisto board of directors with respect to approving the merger, Callisto stockholders should be aware that certain members of the board of directors and executive officers of Callisto have interests in the merger that may be different from, or in addition to, interests they have as Callisto stockholders. For example, following the consummation of the merger, certain directors and executive officers of Callisto will continue to serve on the board of directors and management, respectively, of the combined company. In addition, certain executive officers and directors of Callisto entered into voting agreements with Callisto in connection with the merger.

 

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        The following table sets forth the beneficial ownership interest of the principal stockholders in Callisto, Synergy and the combined company:

 
  Synergy   Callisto   Combined Company  
Name
  Number of
shares
  Percentage**   Number of
shares
  Percentage***   Number of
shares
  Percentage****  

Gabriele M. Cerrone

    1,389,378 (1)   2.1 %   3,417,292 (2)   2.1 %   2,004,149     2.7 %

Gary S. Jacob

    813,670 (3)   1.2 %   1,851,745 (4)   1.2 %   1,146,799     1.6 %

Bernard Denoyer

    79.445 (5)   *     300,000 (6)   *     133,415        

                                  *  

John P. Brancaccio

    135,688 (7)   *     283,759 (8)   *     186,736        

                                  *  

Randall K. Johnson

            260,636 (9)   *     46,888     *  

Kunwar Shailubhai

    538,331 (10)   *     325,000 (11)   *     596,799     1.0 %

Chris McGuigan

    119,401 (11)   *             119,401     *  

Thomas Adams

    117,492 (11)   *             117,492     *  

Melvin K. Spigelman

    172,247 (11)   *             172,247     *  

Alan F. Joslyn

    55,000 (11)   *             55,000     *  

R. Merrill Hunter

    3,305,200     5.0 %   25,376,872     16.0 %   7,870,499     10.9 %

*
Less than one percent (1%)

**
Percentage of Synergy is based upon 66,130,746 shares of common stock outstanding as of November 29, 2012.

***
Percentage of Callisto is based upon 158,965,565 shares of common stock outstanding as of November 29, 2012.

****
Percentage of common stock of the combined company is based on 72,433,621 shares of common stock of the combined company outstanding upon the consummation of the merger and assumes that the exchange ratio to be used in connection with the merger is approximately 0.1799 shares of Synergy common stock for each share of Callisto common stock.

(1)
Consists of 187,470 shares of common stock held by Mr. Cerrone, 462,531 shares of common stock issuable upon exercise of stock options held by Mr. Cerrone, 443,760 shares of common stock held by Panetta Partners, Ltd and 295,617 shares of common stock issuable upon exercise of warrants held by Panetta Partners, Ltd. Mr. Cerrone is the sole director of Panetta Partners, Ltd. and in such capacity exercises voting and dispositive control over securities owned by Panetta Partners, Ltd. despite him having only a small pecuniary interest in such securities.

(2)
Includes 1,368,055 shares of common stock issuable upon exercise of stock options.

(3)
Consists of 288,296 shares of common stock, 50,413 shares of common stock issuable upon exercise of warrants and 474,961 shares of common stock issuable upon exercise of stock options.

(4)
Includes 1,597,500 shares of common stock issuable upon exercise of stock options.

(5)
Consists of 2,952 shares of common stock, 1,476 shares of common stock issuable upon exercise of warrants and 75,017 shares of common stock issuable upon exercise of stock options.

(6)
Consists of shares of common stock issuable upon exercise of stock options.

(7)
Consists of shares of common stock issuable upon exercise of stock options.

(8)
Includes 170,123 shares of common stock issuable upon exercise of stock options.

(9)
Includes 140,500 shares of common stock issuable upon exercise of stock options.

(10)
Consists of 88,018 shares of Synergy common stock, 12,788 shares of Synergy common stock issuable upon exercise of warrants and 437,526 shares of Synergy common stock issuable upon exercise of stock options.

(11)
Consists of shares of common stock issuable upon exercise of stock options.

 

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Regulatory Approvals

        Synergy must comply with applicable federal and state securities laws in connection with the issuance of shares of Synergy common stock to Callisto's stockholders and the filing of this Joint Proxy Statement/Prospectus with the Securities and Exchange Commission, or the SEC. As of the date hereof, the registration statement of which this Joint Proxy Statement/Prospectus is a part has not become effective.

        Please see the section entitled "Chapter One—The Merger Transaction—Regulatory Approvals" in this Joint Proxy Statement/Prospectus.


Accounting Treatment of the Merger

        As Callisto does not meet the definition of a business under ASC 805, the merger will not be accounted for as a business combination. The merger is expected to be accounted for as a recapitalization of Synergy, effected through exchange of Callisto shares for Synergy shares, and the cancellation of Synergy shares held by Callisto. The excess of Synergy shares issued to Callisto shareholders over the Synergy shares held by Callisto is the result of a discount associated with the restricted nature of the Synergy shares to be received by Callisto shareholders. Therefore, considering this discount, the share exchange has been determined to be equal from a fair value stand point. Upon the effective date of the Merger, Synergy will account for the merger by assuming Callisto's net liabilities. Synergy's financial statements will reflect the operations of Callisto prospectively and will not be restated retroactively to reflect the historical financial position or results of operations of Callisto.


Material U.S. Federal Income Tax Consequences

        It is expected that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code, and the completion of the merger is conditioned on the receipt by Callisto of an opinion from its outside counsel to the effect that the merger will qualify as such a reorganization. If the merger qualifies as a reorganization, Callisto stockholders generally will not recognize gain or loss upon the receipt of Synergy common stock in exchange for Callisto common stock in connection with the merger.

        Tax matters are very complicated, and the tax consequences of the merger to a particular stockholder will depend in part on such stockholder's circumstances. Accordingly, you are urged to consult your own tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of federal, state, local and foreign income and other tax laws. For more information on the federal income tax effect of the merger, see the section entitled "Chapter One—The Merger Transaction—Certain U.S. Federal Income Tax Consequences of the Merger."


Comparison of Stockholder Rights

        If Synergy and Callisto successfully complete the merger, holders of Callisto common stock will become Synergy stockholders, and their rights as stockholders will be governed by Synergy's second amended and restated certificate of incorporation and bylaws. There are differences between the certificates of incorporation and bylaws of Synergy and Callisto. Since Callisto and Synergy are both Delaware corporations, the rights of Callisto stockholders will continue to be governed by Delaware law after the completion of the merger. See "Chapter Five—Comparison of Rights of Holders of Synergy Common Stock and Callisto Common Stock" in this Joint Proxy Statement/Prospectus for more information.

 

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Appraisal Rights in Connection with the Merger

        Under Delaware law, Callisto common stockholders are entitled to appraisal rights in connection with the merger. Holders of Synergy common stock are not entitled to appraisal rights in connection with the merger. For more information about appraisal rights, see the provisions of Section 262 of the DGCL, attached as Annex G to this Joint Proxy Statement/Prospectus, and the section entitled "Chapter One—The Merger Transaction—Appraisal Rights" in this Joint Proxy Statement/Prospectus.


Conditions to Completion of the Merger

        Synergy and Callisto are required to complete the merger only if certain customary conditions are satisfied or waived, including, but not limited to:

    approval of the merger by stockholders holding a majority of the outstanding shares of Callisto common stock in person or by proxy at Callisto's special meeting;

    approval of the merger by stockholders holding a majority of the outstanding shares of Synergy common stock in person or by proxy at Synergy's annual meeting;

    the filing and effectiveness of a registration statement under the Securities Act of 1933, as amended, in connection with the issuance of Synergy common stock in the merger;

    the respective representations and warranties of Synergy and Callisto, shall be true and correct in all material respects as of the date of the merger agreement and the closing;

    each executive of Synergy or any of its subsidiaries and Callisto or any of its subsidiaries shall have delivered a waiver of rights to payments, bonuses, vesting, acceleration or other similar rights that are or may be triggered by the merger;

    the shares of Synergy common stock to be issued in the merger and such other shares of Synergy common stock to be reserved for issuance in connection with the merger shall have been approved for listing on The NASDAQ Capital Market;

    no material adverse effect with respect to Synergy or Callisto or their respective subsidiaries shall have occurred since the date of the merger agreement and the closing of the merger;

    performance or compliance in all material respects by Synergy and Callisto with their respective covenants and obligations in the merger agreement; and

    Callisto shall have obtained any consents or waivers of approvals required in connection with the merger.


Termination of the Merger Agreement

        The merger agreement may be terminated at any time before the completion of the merger, whether before or after the required stockholder approval to complete the merger has been obtained, as set forth below:

    by mutual written consent of Synergy and Callisto, duly authorized by their respective boards of directors;

    by either Synergy or Callisto if the merger is not consummated by the date that is 6 months after the signing date of the merger agreement for any reason; provided, however, that this right to terminate is not available to any party whose action or failure to act has been a principal cause of the failure of the merger to occur on or before such date;

    by either Synergy or Callisto if a court, administrative agency, commission, governmental or regulatory authority issues a final and nonappealable order, decree or ruling or taken, any other

 

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      action having the effect of permanently restraining, enjoining or otherwise prohibiting the merger;

    by either Synergy or Callisto if the requisite approval of the stockholders of Callisto is not obtained by reason of the failure to obtain the requisite vote at a meeting of the stockholders of Callisto, duly convened therefore or at any adjournment or postponement; provided, however, that this right to terminate is not available to Callisto if the failure to obtain the requisite approval of the stockholders of Callisto was caused by the action or failure to act of Callisto, and such action or failure to act constitutes a breach of the merger agreement;

    by Synergy if a triggering event (as defined below) occurs;

    by Callisto, upon a breach of any representation, warranty, covenant or agreement on the part of Synergy set forth in the merger agreement, or if any representation or warranty of Synergy becomes untrue, such that the conditions to the merger would not be satisfied as of the time of such breach or as of the time such representation or warranty becomes untrue; provided, however, that if such inaccuracy in Synergy's representations and warranties or breach by Synergy is curable by Synergy through the exercise of its commercially reasonable efforts, then Callisto may not terminate the merger agreement for thirty (30) calendar days following the delivery of written notice from Callisto to Synergy of such breach, provided Synergy continues to exercise commercially reasonable efforts to cure such breach (it being understood that Callisto may not terminate the agreement if such breach by Synergy is cured during such thirty (30) calendar day period); or

    by Synergy, upon a breach of any representation, warranty, covenant or agreement on the part of Callisto set forth in the merger agreement, or if any representation or warranty of Callisto becomes untrue, such that the conditions to the merger would not be satisfied as of the time of such breach or as of the time such representation or warranty becomes untrue; provided, however, that if such inaccuracy in Callisto' representations and warranties or breach by Callisto is curable by Callisto through the exercise of its commercially reasonable efforts, then Synergy may not terminate the merger agree-ment for thirty (30) calendar days following the delivery of written notice from Synergy to Callisto of such breach, provided Callisto continues to exercise commercially reasonable efforts to cure such breach (it being understood that Synergy may not terminate the agreement if such breach by Callisto is cured during such thirty (30) calendar day period); or

    by Synergy if a change that is materially adverse to the business, assets, capitalization, financial condition or results of operations with respect to Callisto or its subsidiaries occurs since the date of the merger agreement; provided, however, that if such change is curable by Callisto through commercially reasonable efforts, then Synergy may not terminate the merger agreement for thirty (30) calendar days following the occurrence of such change, provided Callisto continues to exercise commercially reasonable efforts to cure the effect that is materially adverse to the business, assets, capitalization, financial condition or results of operations with respect to Callisto (it being understood that Synergy may not terminate the agreement if such breach by Callisto is cured during such thirty (30) calendar day period).

    a "triggering event" has occurred if (i) the board of directors of Callisto or any of its committees has withdrawn or has amended or modified in a manner adverse to Synergy its recommendation in favor of the adoption and approval of the merger agreement or the approval of the merger; (ii) Callisto failed to include in the proxy statement/prospectus the recommendation of the board of directors of Callisto in favor of the adoption and approval of the merger agreement and the approval of the merger; (iii) the board of directors of Callisto failed to reaffirm its recommendation in favor of the adoption and approval of the merger agreement and the approval of the merger within five (5) business days after Synergy requests in writing that such

 

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      recommendation be reaffirmed at any time following the announcement of a superior offer; (iv) the board of directors of Callisto or any of its committees has approved or recommended any superior offer; (v) Callisto has entered into any letter of intent or similar document accepting any acquisition proposal; or (vi) a tender or exchange offer relating to securities of Callisto has been commenced by a person unaffiliated with Synergy or its stockholders and Callisto has not sent to its security holders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10) business days after such tender or exchange offer is first published, a statement indicating that Callisto recommends rejection of such tender or exchange offer.


Voting Agreements

        In connection with the execution of the merger agreement, certain stockholders of Callisto, indicated below, entered into voting agreements with Synergy and Callisto pursuant to which, among other things, each of these stockholders agreed, to vote all of their shares of Callisto capital stock in favor of the approval of the merger and against any matter that would result in a breach of the merger agreement by Callisto and any proposal made in opposition to, or in competition with, the consummation of the merger and the other transactions contemplated by the merger agreement. As of November 29, 2012, these stockholders owned an aggregate of 27,680,354 shares of the issued and outstanding Callisto capital stock, representing approximately 17.4% of the issued and outstanding shares of Callisto capital stock. The stockholders who have entered into Voting Agreements, include, Gabriele Cerrone, Gary Jacob, Bernard Denoyer, John Brancaccio, Randall Johnson and R. Merrill Hunter.


Management of the Combined Company Following the Merger

        Effective as of the closing of the merger, the combined company will have a seven member board of directors, which is anticipated to be comprised of Thomas Adams, Chris McGuigan, Melvin Spigelman and Alan Joslyn, from Synergy's board of directors, and Gabriele Cerrone, Gary Jacob and John Brancaccio, current members of both Callisto's and Synergy's board of directors. In addition, effective as of the closing of the merger, the combined company's executive officers, is anticipated to be comprised of Kunwar Shailubhai, from Synergy and Gary Jacob and Bernard Denoyer, current officers of both Callisto and Synergy.


Matters to Be Considered at the Meetings

Synergy

        Synergy stockholders will be asked to vote on proposals related to the following:

    the approval of the merger agreement;

    an adjournment of the meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the issuance of the shares of Synergy common stock;

    the approval of an increase to the number of authorized shares issuable under Synergy's 2008 Equity Incentive Compensation Plan;

    the approval of an increase in the number of shares of common stock authorized for issuance;

    the re-election of seven current Synergy directors;

    the ratification of BDO USA, LLP as the independent registered public accounting firm.

 

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    the approval, on an advisory basis, of the compensation of Callisto's named executive officers as described in the compensation discussion and analysis, the compensation tables, and the related disclosures contained in this Joint Proxy Statement/Prospectus; and

    approval of a three-year frequency for holding an advisory vote on executive compensation;

        The Synergy board of directors recommends that Synergy stockholders vote "FOR" all of the proposals set forth above. For further discussion of the Synergy annual meeting, see "Chapter Six—Synergy Annual Meeting Proposals," beginning on page 151.

Callisto

        Callisto stockholders will be asked to consider and vote on the following proposals:

    the adoption and approval of the merger agreement; and

    adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement.

        The Callisto board of directors recommends that Callisto stockholders vote "FOR" all of the proposals set forth above. For further discussion of the Callisto special meeting, see "Chapter Seven—Callisto Special Meeting Proposals," beginning on page 177.


Where You Can Find More Information

        If you would like more information about Synergy or Callisto, you should refer to the documents filed by each company with the SEC. The companies have identified these documents and have set out instructions as to how you can obtain copies of these documents beginning on page 178 under the section "Chapter Eight—Additional Information for Stockholder—Where You Can Find More Information."

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

        This document contains certain forward-looking information about Synergy, Callisto and the combined company that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These statements may include statements for the period after the completion of the merger. Representatives of Synergy and Callisto may also make forward-looking statements. Forward-looking statements are statements that are not historical facts. Words such as "expect," "believe," "will," "may," "anticipate," "plan," "estimate," "intend," "should," "can," "likely," "could" and similar expressions are intended to identify forward-looking statements. These statements include statements about the expected benefits of the merger, information about the combined company's objectives, plans and expectations, the likelihood of satisfaction of certain conditions to the completion of the merger and whether and when the merger will be completed. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of the management of each of Synergy and Callisto and are subject to risks and uncertainties, including the risks described in this Joint Proxy Statement/Prospectus under the section "Risk Factors," that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

        In light of these risks, uncertainties, assumptions and factors, the results anticipated by the forward-looking statements discussed in this Joint Proxy Statement/Prospectus or made by representatives of Synergy or Callisto may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof or, in the case of statements made by representatives of Synergy or Callisto, on the date those statements are made. All subsequent written and oral forward-looking statements concerning the merger or the combined company or other matters addressed in this Joint Proxy Statement/Prospectus and attributable to Synergy or Callisto or any person acting on behalf of either are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, neither Synergy nor Callisto undertakes any obligation to update or publish revised forward-looking statements to reflect events or circumstances after the date hereof or the date of the forward-looking statements or to reflect the occurrence of unanticipated events.

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SELECTED HISTORICAL FINANCIAL DATA

SELECTED HISTORICAL FINANCIAL DATA OF SYNERGY

        The following table sets forth the selected consolidated financial data of Synergy and has been derived from Synergy's audited consolidated financial statements. Consolidated balance sheets as of December 31, 2011, 2010, 2009, 2008 and 2007, as well as consolidated statements of operations for the years ended December 31, 2011, 2010, 2009, 2008 and 2007 and the reports thereon incorporated by reference in this Joint Proxy Statement/Prospectus. You should read this information in conjunction with Synergy's consolidated financial statements and related notes included in Synergy's Annual Report on Form 10-K for the year ended December 31, 2011 which is incorporated herein by reference. The statement of operations data for the nine months ended September 30, 2012 and 2011 and the balance sheet data as of September 30, 2012 have been derived from unaudited financial statements contained in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 which is incorporated herein by reference. Historical results are not necessarily indicative of the results to be expected in the future.

 
  Year ended December 31,   Nine Months ended
September 30,
 
 
  2011   2010   2009   2008   2007   2012   2011  
 
  (in thousands, except per share data)
 

Consolidated Statement of Operations Data:

                                           

Revenues

  $   $   $   $   $   $   $  

Costs and Expenses:

                                           

Research and development

    13,419     9,559     3,733     1,773         21,210     7,715  

Purchased in-process research and development

                28,157              

General and administrative

    6,746     6,562     4,467     1,799         5,493     4,525  
                               

Loss from Operations

    (20,165 )   (16,121 )   (8,200 )   (31,729 )       (26,703 )   (12,240 )

Other income

    363     494                 255      

Interest and investment income

    90     108     75     5           150     64  

Interest expense

    (12 )                       (12 )

Change in Fair Value of Financial Instruments

    5,257     297                 (1,169 )   3,346  
                               

Loss from Continuing Operations

    (14,467 )   (15,222 )   (8,125 )   (31,724 )       (27,466 )   (8,842 )

Net Loss from Discontinued Operations

                  (32 )   (20 )        
                               

Net Loss

  $ (14,467 ) $ (15,222 ) $ (8,125 ) $ (31,756 ) $ (20 ) $ (27,466 ) $ (8,842 )
                               

Net Loss per common share, basic and diluted

  $ (0.30 ) $ (0.34 ) $ (0.22 ) $ (0.54 ) $   $ (0.46 ) $ (0.19 )

Weighted Average Common Shares Outstanding(a)

    47,598     44,875     36,641     59,300     82,541     60,194     46,708  

(a)
Restated for one for two (1:2) reverse stock split effective on November 30, 2011

 
  December 31,    
 
 
  September 30,
2012
 
 
  2011   2010   2009   2008   2007  
 
  (in thousands)
 

Consolidated Balance Sheet Data:

                                     

Cash and cash equivalents

  $ 13,245   $ 1,708   $ 7,153   $ 216   $ 2   $ 37,367  

Working capital

    11,561     (2,307 )   6,487     (1,172 )   (14 )   33,677  

Total assets

    15,870     4,401     9,211     922     4     41,330  

Total stockholder's equity

  $ 9,797   $ (4,099 ) $ 7,484   $ (1,156 ) $ (11 ) $ 31,691  

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SELECTED HISTORICAL FINANCIAL DATA OF CALLISTO

        The statement of operations data for the years ended December 31, 2011, 2010 and 2009 and the balance sheet data as of December 31, 2011 and 2010 have been derived from Callisto's audited financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2011 included as Annex H to this Joint Proxy Statement/Prospectus. The statement of operations data for the nine months ended September 30, 2012 and 2011 and the balance sheet data as of September 30, 2012 have been derived from unaudited financial statements contained in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 included as Annex I to this Joint Proxy Statement/Prospectus.

 
  Year ended December 31,   Nine Months Ended
September 30,
 
 
  2011   2010   2009   2012   2011  
 
  (in thousands except for per share data)
 

Revenues

  $   $   $   $   $  

Costs and Expenses:

                               

Research and development

    13,319     9,589     3,424     7,880     7,611  

Government grants

                3      

General and administrative

    7,610     7,343     5,106     3,177     5,124  
                       

Loss from Operations

    (20,929 )   (16,932 )   (8,530 )   (11,060 )   (12,735 )

Gain on deconsolidation of Synergy

                120,393      

Loss related to equity method investment

                (5,751 )    

Interest and investment income          

    2     26     25     21      

Other income/(expense)

    (12 )   (323 )   (437 )   45     (10 )

Tax credit (expense)

    368     1,026         (298 )    

Loss on debt extinguishment

        (2,100 )            

Change in fair value of derivative instruments

    5,257     (15,345 )   (9,414 )   (431 )   3,346  
                       

Net Income (Loss)

    (15,314 )   (33,648 )   (18,355 )   102,919     (9,399 )

Net Loss (income) of subsidiary attributable to non-controlling interest

    8,521     7,854         6,958     4,624  
                       

Net income/(loss) available to Callisto common stockholders

    (6,793 )   (25,794 )   (18,356 )   109,877     (4,775 )

Series A Preferred stock conversion rate change and beneficial conversion feature accreted as a dividend

            (137 )        

Series B Preferred stock conversion rate change and beneficial conversion feature accreted as a dividend

            (1,679 )        

Cumulative effect of adopting ASC Topic 815 January 1, 2009

                     
                       

Net Loss attributable to common stockholders

  $ (6,793 ) $ (25,794 ) $ (20,172 ) $ 109,877   $ 4,775 )
                       

Weighted Average Common Shares Outstanding

                               

Basic

    158,299     69,033     51,395     158,634     158,225  

Diluted

    158,299     69,033     51,395     159,201     158,225  

Net Loss per Common Share

                               

Basic and Diluted

  $ (0.10 ) $ (0.37 ) $ (0.39 ) $ 0.69   $ (0.03 )

 

 
  As of December 31,    
 
 
  September 30, 2012  
 
  2011   2010  
 
  (In thousands)
 

Selected Consolidated Balance Sheet Data:

                   

Cash and cash equivalents

  $ 13,245   $ 1,709   $  

Working (deficit) capital

    9,755     (3,807 )   (1,739 )

Total assets

    14,512     3,357     114,527  

Deficit accumulated during the development stage

    (142,366 )   (135,573 )   (59,105 )

Total stockholders' (deficiency) equity

    6,523     (7,198 )   110,132  

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UNAUDITED PRO FORMA
COMBINED CONSOLIDATED FINANCIAL INFORMATION OF SYNERGY AND CALLISTO

        The following unaudited pro forma combined consolidated financial information assumes that each share of Callisto common stock will be exchanged for 0.1799 shares of Synergy common stock. Utilizing the exchange ratio of 0.1799, it is anticipated that Callisto common stockholders will own approximately 39.5% of the voting stock of the combined company after the merger.

        The unaudited pro forma combined consolidated financial information is based upon the assumption that the total number of shares of Callisto common stock outstanding immediately prior to the completion of the merger will be 158,965,565 and utilizes the exchange ratio of 0.1799 which will result in 28,597,905 shares of Synergy common stock being issued in the transaction. Callisto options will convert into options to purchase Synergy common stock.

        The following unaudited pro forma combined consolidated financial statements as of September 30, 2012 combine the historical consolidated financial statements of Synergy and Callisto. The unaudited pro forma combined consolidated financial statements give effect to the proposed merger as if the merger occurred on September 30, 2012 with respect to the consolidated statement of condition, and at the beginning of the periods for the nine months ended September 30, 2012 and the twelve months ended December 31, 2011, with respect to the consolidated statements of income.

        The notes to the unaudited pro forma combined consolidated financial statements describe the pro forma amounts and adjustments presented below. This pro forma data is not necessarily indicative of the operating results that Synergy would have achieved had it completed the merger as of the beginning of the period presented and should not be considered as representative of future operations.

        The unaudited pro forma combined consolidated financial information presented below is based on, and should be read together with, the historical financial information that Synergy and Callisto have included in this Joint Proxy Statement/Prospectus as of and for the indicated periods.

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

$000's

 
  Synergy
Pharmaceuticals
Inc. September 30,
2012
  Callisto
Pharmaceuticals,
Inc. September 30,
2012
  Eliminations
and Merger
Adjustments
  Synergy
Pharmaceuticals
Inc. Pro Forma
September 30, 2012
 

ASSETS

                         

Current assets:

                         

Cash and cash equivalents

  $ 17,244   $   $   $ 17,244  

Available-for-sale securities

    20,124             20,124  

Prepaid expenses and other current assets

    1,285             1,285  
                   

Total current assets

    38,653             38,653  

Property and equipment—net

    2             2  

Security deposits

    19     74         93  

Due from related parties

    2,656         (2,656 )(2)    

Investment in Synergy

        114,453     (114,453 )(1)    
                   

Total assets

  $ 41,330   $ 114,527   $ (117,109 ) $ 38,748  
                   

LIABILITIES AND STOCKHOLDERS' EQUITY

                         

Current liabilities:

                         

Accounts payable

    2,506     1,625         4,131  

Accrued expenses and other

    2,470     114         2,584  
                   

Total current liabilities

    4,975     1,739         6,715  

Derivative Liability

    4,663             4,663  

Due to related parties

        2,656     (2,656 )(2)    
                   

Total liabilities

    9,639     4,395     (2,656 )   11,378  

Stockholder's equity:

                         

Common Stock

    7     16     (16 )(1)   7  

Additional paid-in-capital

    128,760     169,221     (173,543 )(1)   124,438  

Deficit accumulated during development stage

    (97,075 )   (59,105 )   59,105 (1)   (97,075 )
                   

Total stockholders' equity

    31,691     110,132     (114,454 )   27,370  
                   

Total Liabilities and Stockholders' equity

  $ 41,330   $ 114,527   $ (117,109 ) $ 38,748  
                   

(1)
Represents adjustment for (i) elimination of Callisto's investment in Synergy $114,453, (ii) elimination of Callisto accumulated deficit $59,105 and (iii) elimination of Callisto capital stock $16.

(2)
Represents elimination of Callisto note payable to Synergy.

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UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2012

$(000's) except earnings per share

 
  Synergy
Pharmaceutical, Inc.
Nine Months Ended
September 30,
2012
  Callisto
Pharmaceutical, Inc.
Nine Months Ended
September 30,
2012
  Eliminations
and Merger
Adjustments
  Synergy
Pharmaceutical, Inc.
Nine Months Ended
September 30,
2012 Pro
Forma
 

Revenues

  $   $   $   $  

Costs and Expenses

                         

Research and development

    21,210     7,880     (7,880 )(1)   21,210  

Government grants

        4         4  

General and administrative

    5,493     3,177     (2,401 )(1)   6,268  
                   

Loss from operations

    (26,703 )   (11,061 )   10,281     (27,482 )

Gain on deconsolidation of Synergy

        120,393     (120,393 )(2)    

Loss related to equity method investment

        (5,751 )   5,751 (2)    

Interest and investment income (expense)

    150     21     (21 )(3)   150  

Other income and (expenses)

    256     45     (45 )(3)   256  

Tax credit/(expense)

        (298 )       (298 )

Change in FV of financial instruments

    (1,169 )   (431 )   431 (4)   (1,169 )
                   

Net loss

    (27,466 )   102,919     (103,996 )   (28,543 )

less: Net loss attributable to non-controlling interest

          6,958     (6,958 )    
                   

Net Income/(loss) available to common stockholders

  $ (27,466 ) $ 109,877   $ (110,954 ) $ (28,543 )
                   

Weighted average common shares outstanding

                         

basic

    60,194     158,624     (152,331 )(5)   66,497  
                   

diluted(6)

    60,194     159,201     (152,898 )(5)   66,497  
                   

Net income (loss) per common share

                         

Basic

  $ (0.46 ) $ 0.69         $ (0.43 )
                   

diluted(6)

  $ (0.46 ) $ 0.69         $ (0.43 )
                   

(1)
Represents elimination of Synergy expenses that were consolidated with Callisto from January 1, 2012 through May 9, 2012 (date of deconsolidation).

(2)
Represents adjustment for elimination of gain on deconsolidation of investment in Synergy, upon deconsolidation on May 9, 2012, and loss related to equity method investment accounting from May 9, 2012 through September 30, 2012.

(3)
Represents adjustment for elimination of interest income and expense related to Callisto's note payable to Synergy.

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(4)
Represents adjustment of Synergy's change in fair value of financial instruments that were consolidated with Callisto from January 1, 2012 through May, 9, 2012.

(5)
Represents elimination of Callisto's weighted average shares outstanding, net of additional 6,302,905 Synergy shares issued as a result of the Merger, weighted as though these incremental shares had been issued on January 1, 2012.

(6)
Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share, ("ASC Topic 260"+A125). In accordance with this guide, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. Diluted weighted-average shares for Synergy are the same as basic weighted-average shares because shares issuable pursuant to the exercise of stock options would have been antidilutive.

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UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2011

$(000's) except earnings per share

 
  Synergy
Pharmaceuticals,
Inc. Year Ended
December 31,
2011
  Callisto
Pharmaceuticals,
Inc. Year Ended
December 31,
2011
  Eliminations
and Merger
Adjustments
  Synergy
Pharmaceuticals,
Inc. Year Ended
December 31,
2011 Pro
Forma
 

Revenues

  $   $   $   $  

Costs and Expenses

                         

Research and development

    13,419     13,318     (13419) (1)   13,318  

General and administrative

    6,745     7,610     (6,745) (1)   7,610  
                   

Loss from operations

    (20,164 )   (20,929 )   (20,164 )   (20,929 )

Interest and investment income (expense)

    87     2     (87) (2)   2  

Interest expense

    (12 )   (12 )   12 (1)   (12 )

Tax credit

    362     368     (362) (1)   368  

Change in FV of financial instruments

    5,257     5,257     (5,257) (3)   5,257  
                   

Total other income (expenses)

    5,697     5,615     (5,697 )   5,615  
                   

Net loss

    (14,467 )   (15,314 )   (14,467 )   (15,314 )

less: Net loss attributable to non-controlling interest

          8,521     (8,521 )    
                   

Net Income/(loss)attributable to common stockholders

  $ (14,467 ) $ (6,793 ) $ (5,946 ) $ (15,314 )
                   

Weighted average common shares outstanding

                         

Basic and Diluted(5)

    47,598     158,298     (151,995) (4)   53,901  
                   

Net income (loss) per common share

                         

Basic and Diluted(5)

  $ (0.30 ) $ (0.10 )       $ (0.28 )
                   

(1)
Represents elimination of Synergy income and expenses that were consolidated with Callisto for the year ended December 31, 2011.

(2)
Represents adjustment for elimination of Synergy interest income related to Callisto's note payable to Synergy.

(3)
Represents adjustment of Synergy's change in fair value of financial instruments that were consolidated with Callisto for the year ended December 31, 2011.

(4)
Represents elimination of Callisto's weighted average shares outstanding, net of additional 6,302,905 Synergy shares issued as a result of the Merger, weighted as though these incremental shares had been issued on January 1, 2012.

(5)
Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share , ("ASC Topic 260"+A125). In accordance with this guide, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. Diluted weighted-average shares for Synergy are the same as basic weighted-average shares because shares issuable pursuant to the exercise of stock options would have been antidilutive.

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

        The following tables set forth certain historical per share data of Synergy and Callisto combined per share data on an unaudited pro forma and pro forma equivalent basis after giving effect to the merger using the acquisition method of accounting, and assuming 0.1799 shares of Synergy common stock exchanged for each share of Callisto common stock outstanding as of the effective date of the merger. The following data should be read in conjunction with the separate historical consolidated financial statements of Synergy and Callisto included in this Joint Proxy Statement/Prospectus. The unaudited pro forma combined per share data do not necessarily indicate the operating results that would have been achieved had the merger been completed as of the beginning of the earliest period presented and should not be taken as representative of future operations. The results may have been different if the companies had always been combined. No cash dividends have ever been declared or paid on Synergy common stock or Callisto common stock.

 
  Nine Months Ended
September 30,
2012
  Year Ended
December 31,
2011
 

Synergy—Historical

             

Loss per share—basic and diluted

  $ (0.46 ) $ (0.30 )

Weighted average common shares outstanding—basic and diluted

    60,194,004     47,598,240  

Book value per share

  $ 0.53   $ 0.21  

Callisto—Historical

             

Income (Loss) per share—basic and diluted

  $ 0.69   $ (0.10 )

Weighted average common shares outstanding—basic

    158,633,596     158,298,920  

Weighted average common shares outstanding—diluted

    159,201,398     158,298,920  

Book value per share

  $ 0.69   $ 0.04  

Pro Forma Combined Consolidated

             

Loss per share from continuing operations—basic and diluted

  $ (0.43 ) $ (0.28 )

Weighted average common shares outstanding—basic and diluted

    66,496,909     53,901,145  

Book value per share

  $ 0.41   $ 0.12  

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MARKET PRICE AND DIVIDEND INFORMATION

Recent Share Prices

Synergy

        From August 11, 2008 until February 18, 2011, Synergy's common stock was quoted on the Over the Counter Bulletin Board under the symbol "SGYP.OB." From February 22, 2011 until November 30, 2011 Synergy's common stock was traded on the OTC QB under the symbol "SGYP." Since December 1, 2011 Synergy's common stock has been traded on The NASDAQ Capital Market under the symbol "SGYP". As of November 29, 2012, Synergy had approximately 83 holders of record of Synergy common stock. The following table shows the reported high and low closing prices per share for Synergy's common stock as reported on the Over the Counter Bulletin Board, the OTC QB and The NASDAQ Capital Market during the periods indicated.

 
  High*   Low*  

Year ended December 31, 2010

             

First quarter

  $ 16.90   $ 11.20  

Second quarter

  $ 22.00   $ 14.60  

Third quarter

  $ 15.00   $ 5.00  

Fourth quarter

  $ 10.10   $ 6.00  

Year ended December 31, 2011

             

First quarter

  $ 10.98   $ 5.72  

Second quarter

  $ 8.90   $ 6.00  

Third quarter

  $ 8.70   $ 4.10  

Fourth quarter

  $ 4.68   $ 3.35  

Year ended December 31, 2012

             

First quarter

  $ 4.48   $ 3.35  

Second quarter

  $ 5.93   $ 3.90  

Third quarter

  $ 5.00   $ 3.74  

Fourth quarter (through November 29, 2012)

  $ 5.53   $ 3.03  

*
All per share amounts have been restated to reflect a one for two (1:2) reverse stock split effective November 30, 2011.

Callisto

        Callisto's common stock currently trades on the OTC QB under the symbol "CLSP". As of November 29, 2012, Callisto had approximately 114 holders of record of Callisto common stock. The

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following table shows the reported high and low closing prices per share for Callisto's common stock as reported on the OTC QB.

 
  High   Low  

Year ended December 31, 2010

             

First quarter

  $ 0.49   $ 0.18  

Second quarter

  $ 0.43   $ 0.30  

Third quarter

  $ 0.41   $ 0.22  

Fourth quarter

  $ 0.86   $ 0.30  

Year ended December 31, 2011

             

First quarter

  $ 0.70   $ 0.54  

Second quarter

  $ 0.70   $ 0.49  

Third quarter

  $ 0.63   $ 0.41  

Fourth quarter

  $ 0.48   $ 0.25  

Year ended December 31, 2012

             

First quarter

  $ 0.4698   $ 0.23  

Second quarter

  $ 0.72   $ 0.415  

Third quarter

  $ 0.72   $ 0.40  

Fourth quarter (through November 30, 2012)

  $ 0.64   $ 0.44  

Market Value of Securities

        On July 19, 2012, the last trading day before the public announcement of the signing of the merger agreement, the last sale prices per share of Synergy common stock on The NASDAQ Capital Market and Callisto common stock on the OTC QB were $4.50 and $0.69, respectively. On November 30, 2012, the latest practicable date before the date of this Joint Proxy Statement/Prospectus, the closing prices per share of Synergy common stock on The NASDAQ Capital Market and Callisto common stock on the OTC QB were $5.53 and $0.53, respectively. Callisto stockholders are encouraged to obtain current market quotations for Synergy common stock and Callisto common stock and to review carefully the other information contained, or incorporated by reference, in this Joint Proxy Statement/Prospectus. See "Chapter Eight—Additional Information for Stockholders—Where You Can Find More Information," at page 178 of this Joint Proxy Statement/Prospectus. Following the merger, Synergy' common stock will continue to be listed on The NASDAQ Capital Market, and there will be no further market for Callisto common stock.

Penny Stock

        Callisto's common stock may be subject to the "penny stock" rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on a national securities exchange and trades at less than $5.00 per share and have a tangible net worth of at least $5,000,000, subject to certain exceptions. These rules require, among other things, that brokers who trade penny stock to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances.

Dividend Policy

        Synergy has never declared or paid any cash dividends on its common stock. Synergy currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, Synergy does not anticipate paying any cash dividends in the foreseeable future.

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RISK FACTORS

        In addition to the other information included in and incorporated by reference into this Joint Proxy Statement/Prospectus, Callisto's stockholders should consider carefully the matters described below in determining whether to approve the merger, and the transactions contemplated thereby, and Synergy's stockholders should consider carefully the matters described below in determining whether to approve the issuance of Synergy common stock to Callisto stockholders pursuant to the merger agreement. Please also refer to the information under the heading "Risk Factors" set forth in Item 1A in each of Synergy's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and Callisto's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, each of which is incorporated by reference into this Joint Proxy Statement/Prospectus. See "Where You Can Find More Information" on page 178.


RISKS RELATED TO THE MERGER

All of Callisto's executive officers and all but one of its directors have conflicts of interest that may influence them to support or approve the merger without regard to your interests.

        All of the Callisto officers will be employed by the combined company and certain directors will continue to serve on the board of directors of the combined company following the consummation of the merger. In addition, all of the Callisto officers and some of the directors have a direct or indirect financial interest in both Callisto and Synergy. These interests, among others, may influence such executive officers and directors of Callisto to support or approve the merger. For a more information concerning the interests of Callisto' executive officers and directors, see the sections entitled "The Merger—Interests of Callisto' Directors and Executive Officers in the Merger" in this Joint Proxy Statement/Prospectus.

The exchange ratio is not adjustable based on the market price of Synergy common stock so the merger consideration at the closing may have a greater or lesser value than it had at the time the merger agreement was signed.

        The parties to the merger agreement have set the exchange ratio for the Callisto common stock and the exchange ratio is not adjustable. Any changes in the market price of Synergy common stock will not affect the number of shares holders of Callisto common stock will be entitled to receive upon consummation of the merger. Therefore, if the market price of Synergy common stock declines from the market price on the date of the merger agreement prior to the consummation of the merger, Callisto stockholders could receive merger consideration with considerably less value. Similarly, if the market price of Synergy common stock increases from the market price on the date of the merger agreement prior to the consummation of the merger, Callisto stockholders could receive merger consideration with considerably more value than their shares of Callisto common stock and the Synergy stockholders immediately prior to the merger will not be compensated for the increased market value of the Synergy common stock. The merger agreement does not include a price-based termination right. Because the exchange ratio does not adjust as a result of changes in the value of Synergy common stock, for each one percentage point that the market value of Synergy common stock rises or declines, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration issued to the Callisto stockholders. For example, on July 20, 2012, the date of the execution of the merger agreement, the closing price of Synergy common stock, as reported on The NASDAQ Capital Market, was $4.34 per share. Assuming that a total of 28,597,905 shares of Synergy common stock are issued to Callisto stockholders upon the closing of the merger at a per share value of $4.34 per share (excluding the value of assumed stock options and warrants), the aggregate merger consideration to be issued to Callisto stockholders in the merger would be approximately $124.1 million. If, however, the closing price of Synergy common stock on the date of closing of the merger had declined from $4.34 per share to, for example, $3.46 per share, a decline of 20%, the

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aggregate merger consideration to be issued to Callisto stockholders in the merger would decrease approximately $24.8 million to approximately $99.3 million in total.

The combined company's stock price is expected to be volatile, and the market price of its common stock may drop following the merger.

        The market price of the combined company's common stock could be subject to significant fluctuations following the merger. Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the combined company's common stock.

        In the past, following periods of volatility in the market price of a company's securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm the combined company's profitability and reputation.

The market price of the combined company's common stock may decline as a result of the merger.

        The market price of the combined company's common stock may decline as a result of the merger if the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by Synergy or Callisto or investors, financial or industry analysts.

Synergy and Callisto stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.

        If the combined company is unable to realize the strategic and financial benefits currently anticipated from the merger, Synergy stockholders will have experienced an approximately 9.6% dilution of their ownership interests in Synergy.

The combined company may not experience the anticipated strategic benefits of the merger

        The respective management of Synergy and Callisto believes that the merger would provide certain strategic benefits that may not be realized by each of the companies operating as standalones. Specifically, Synergy believes the merger would provide certain strategic benefits which would enable Synergy to accelerate its business plan through an increased access to capital in the public equity markets. There can be no assurance that these anticipated benefits of the merger will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company.

During the pendency of the merger, Synergy and Callisto may not be able to enter into certain transactions with another party because of restrictions in the merger agreement, which could adversely affect their respective businesses.

        Covenants in the merger agreement impede the ability of Synergy and Callisto to complete certain transactions that are not in the ordinary course of business, pending completion of the merger. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors because the parties will have been prevented from entering into arrangements with possible financial and or other benefits to them. In addition, any such transactions could be favorable to such party's stockholders.

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If the conditions to the merger are not met, the merger will not occur.

        Even if the merger is approved by the stockholders of Synergy and Callisto, specified conditions must be satisfied or waived in order to complete the merger, including, among others:

    the filing and effectiveness of a registration statement under the Securities Act of 1933, as amended, in connection with the issuance of Synergy common stock in the merger;

    the respective representations and warranties of Synergy and Callisto, shall be true and correct in all material respects as of the date of the merger agreement and the closing;

    each executive of Synergy or any of its subsidiaries and Callisto or any of its subsidiaries shall have delivered a waiver of rights to payments, bonuses, vesting, acceleration or other similar rights that are or may be triggered by the merger;

    no material adverse effect with respect to Synergy or Callisto or its subsidiaries shall have occurred since the date of the merger agreement and the closing of the merger;

    performance or compliance in all material respects by Synergy and Callisto with their respective covenants and obligations in the merger agreement;

    Callisto shall have obtained any consents and waivers of approvals required in connection with the merger; and

    no material adverse effect with respect to Synergy or Callisto or its subsidiaries shall have occurred since the date of the merger agreement.

        These and other conditions are described in detail in the merger agreement, as amended, a copy of which is attached as Annex A and Annex B to this Joint Proxy Statement/Prospectus. Synergy and Callisto cannot assure you that all of the conditions to the merger will be satisfied. If the conditions to the merger are not satisfied or waived, the merger will not occur or will be delayed, and Synergy and Callisto each may lose some or all of the intended benefits of the merger.

If there are Callisto stockholders that exercise their appraisal rights, the surviving corporation in the merger will be responsible for the resulting cash payment obligation.

        If the merger is completed, holders of Callisto common stock are entitled to appraisal rights under Section 262 of the DGCL, or Section 262, provided that they comply with the conditions established by Section 262. If there are Callisto stockholders who exercise such rights and complete the process required by the DGCL, Synergy, as the surviving company in the merger, will be obligated to pay such stockholders the pre-merger cash value of their Callisto stock as determined by the Delaware Court of Chancery.

Should the merger not qualify as tax free reorganization, Callisto stockholders may recognize capital gain or loss with respect to the shares received in the merger.

        In connection with the merger, Callisto received a tax opinion of Wilk Auslaunder LLP that the merger will be treated as a "reorganization" within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended. The failure of the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code would result in a Callisto stockholder recognizing capital gain or loss with respect to the shares of Callisto stock surrendered by such stockholder equal to the difference between the stockholder's basis in the shares and the fair market value, as of the effective time of the merger, of the Synergy stock received in exchange for the Callisto stock on the closing date of the merger. In such event, a stockholder's aggregate basis in the Synergy common stock so received would equal its fair market value and such stockholder's holding period would begin the day after the merger.

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A dissenting stockholder who receives cash will be required to recognize gain or loss in the same manner as described above.

Synergy and Callisto will incur substantial expenses whether or not the merger is completed.

        Synergy and Callisto will incur substantial expenses related to the merger whether or not the merger is completed. Synergy currently expects to incur approximately $325,000 in transactional expenses and Callisto currently expects to incur approximately $300,000 in transactional expenses. See the section entitled "Chapter One—The Merger—The Merger Agreement—Termination" on page 97.

The pro forma financial statements are presented for illustrative purposes only and may not be an indication of the combined company's financial condition or results of operations following the merger.

        The pro forma financial statements contained in this Joint Proxy Statement/Prospectus are presented for illustrative purposes only and may not be an indication of the combined company's financial condition or results of operations following the merger for several reasons. For example, the pro forma financial statements have been derived from the historical financial statements of Synergy and Callisto and certain adjustments and assumptions have been made regarding the combined company after giving effect to the merger. The information upon which these adjustments and assumptions have been made is preliminary, and such adjustments and assumptions are difficult to make with complete accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the merger. For example, the impact of any incremental costs incurred in integrating the two companies is not reflected in the pro forma financial statements. As a result, the actual financial condition and results of operations of the combined company following the merger may not be consistent with, or evident from, these pro forma financial statements.

        In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the combined company's financial condition or results of operations following the merger. Any potential decline in the combined company's financial condition or results of operations may cause significant variations in the stock price of the combined company. See the section entitled "Chapter One—The Merger—Selected Historical Financial Data—Unaudited Pro Forma Condensed Combined Consolidated Financial Information" beginning on page 23.

The merger agreement limits Callisto's ability to pursue alternative business combinations.

        Certain "no shop" provisions included in the merger agreement make it difficult for Callisto to sell its business to a party other than Synergy. These provisions include the general prohibition on Callisto soliciting any acquisition transaction. See "Chapter One—The Merger—The Merger Agreement—Certain Covenants—No Solicitation" beginning on page 94 of this Joint Proxy Statement/Prospectus, and "Chapter One—The Merger—The Merger Agreement—Termination" beginning on page 97. These provisions might discourage a third party with an interest in acquiring all of or a significant part of Callisto from considering or proposing an acquisition, including a proposal that might be more advantageous to the stockholders of Callisto when compared to the terms and conditions of the merger described in this Joint Proxy Statement/Prospectus.

Although Brean Murray's opinion was given to Callisto's board of directors on July 20, 2012, the date of the execution of the merger agreement, and re-issued on October 11, 2012, it does not reflect any changes in market and economic circumstances after July 20, 2012.

        To the extent there may have been any changes in the operations and prospects of Synergy or Callisto and/or changes in general market and economic conditions subsequent to July 20, 2012, which could make Callisto's value now greater than its value as of July 20, 2012 (the date of the merger agreement and of the analysis conducted by Brean Murray), any such developments will have no effect

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whatsoever on Brean Murray's opinion or the Exchange Ratio, which was been fixed at $0.1799 under the merger agreement, as amended. Brean Murray's opinion, including the October 11, 2012 re-issued opinion, was based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to them on July 20, 2012, the date of the execution of the merger agreement. While neither the Callisto nor Synergy board of directors is aware of any changes in the operations and prospects of Synergy or Callisto and/or changes in general market and economic conditions subsequent to July 20, 2012, which could make Callisto's value greater than its value as of July 20, 2012 (the date of the merger agreement and the analysis conducted by Brean Murray), or lead to the conclusion that the consideration to be received in the merger by Callisto's shareholders is not fair, there can be no assurance given that changes in the operations and prospects of Synergy or Callisto and/or changes in general market and economic conditions subsequent to July 20, 2012, could make Callisto's value, on the effective date of the merger greater than its value as of July 20, 2012. Brean Murray has undertaken no obligation to update its opinion for changes subsequent to July 20, 2012 and similarly, Canaccord Genuity has undertaken no obligation to update its opinion, dated October 15, 2012, delivered to Synergy for changes subsequent to October 15, 2012. For a description of the opinion that the Callisto board of directors received from its financial advisor and a summary of the material financial analyses it provided to the Callisto board of directors in connection with rendering such opinion, please refer to the section entitled "Chapter One—The Merger—The Merger Transaction—Opinion of Callisto's Financial Advisor" beginning on page 74. For a description of the opinion that the Synergy board of directors received from its financial advisor and a summary of the material financial analyses it provided to the Synergy board of directors in connection with rendering such opinion, please refer to the section entitled "Chapter One—The Merger—The Merger Transaction— Opinion of Synergy's Financial Advisor" beginning on page 74.

The merger and related transactions are subject to approval by the stockholders of both Synergy and Callisto.

        In order for the merger to be completed, both Synergy's and Callisto's stockholders must approve the merger agreement, which requires the affirmative vote of the holders of at least a majority of the outstanding shares of Callisto common stock entitled to vote. In addition, under applicable NASDAQ rules, Synergy's stockholders must approve the issuance of the shares of Synergy common stock to Callisto stockholders as part of the merger consideration. Approval of the issuance of shares of Synergy common stock to Callisto stockholders requires approval by a majority of the outstanding shares of Synergy common stock entitled to vote.

Several lawsuits have been filed against Callisto and Synergy challenging the merger, and an adverse ruling in any such lawsuit may delay or prevent the merger from being completed.

        Callisto, members of Callisto's board of directors, or director defendants, and Synergy have been named as defendants in a number of putative class action lawsuits brought by certain Callisto stockholders challenging the merger and generally alleging, among other things, that the director defendants, aided and abetted by Synergy, breached their fiduciary duties to Callisto stockholders by entering into the merger agreement for merger consideration each plaintiff claims is inadequate and pursuant to a process the plaintiff claims to be flawed. The lawsuits seek, among other things, to enjoin the defendants from consummating the merger on the agreed-upon terms or to rescind the merger to the extent already implemented, as well as damages, expenses, and attorney's fees. The existence of these lawsuits could delay the completion of, or jeopardize Callisto's and Synergy's ability to complete, the merger. For more information about the lawsuits related to the merger, see "Chapter One—The Merger—The Merger Transaction—Legal Proceedings Relating to the Merger" beginning on page 90.

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RISKS RELATED TO SYNERGY AND CALLISTO AS A COMBINED ENTITY

Risks Related to the Business of Synergy and the Combined Entity

Synergy's business and stock price may be adversely affected if the acquisition of Callisto is not completed.

        Synergy's acquisition of Callisto is subject to several customary conditions, including the effectiveness of this registration statement and the approvals of the transaction by the stockholders of Callisto and Synergy.

        If Synergy's acquisition of Callisto is not completed, Synergy could be subject to a number of risks that may adversely affect Synergy's business and stock price, including:

    the current market price of shares of Synergy's common stock reflects a market assumption that the acquisition will be completed;

    Synergy must pay costs related to the merger; and

    Synergy would not realize the benefits it expects from acquiring Callisto.

Synergy is at an early stage of development as a company, currently has no source of revenue and may never become profitable.

        Synergy is a development stage biopharmaceutical company. Currently, it has no products approved for commercial sale and, to date, it has not generated any revenue. Its ability to generate revenue depends heavily on:

    demonstration in current and future clinical trials that its product candidate, plecanatide for the treatment of CC and IBS-C, is safe and effective;

    its ability to seek and obtain regulatory approvals, including with respect to the indications it is seeking;

    successful manufacture and commercialization of its product candidates; and

    market acceptance of its products.

        All of Synergy's existing product candidates are in various stages of development and will require extensive additional preclinical and clinical evaluation, regulatory review and approval, significant marketing efforts and substantial investment before they could provide Synergy with any revenue. As a result, if Synergy does not successfully develop, achieve regulatory approval and commercialize plecanatide, it will be unable to generate any revenue for many years, if at all. Synergy does not anticipate that it will generate revenue for several years, at the earliest, or that it will achieve profitability for at least several years after generating material revenue, if at all. If Synergy is unable to generate revenue, it will not become profitable, and it may be unable to continue its operations.

Synergy does not have any products that are approved for commercial sale and therefore does not expect to generate any revenues from product sales in the foreseeable future, if ever.

        Synergy currently does not have any products that are approved for commercial sale. To date, Synergy has funded its operations primarily from sales of its securities. Synergy has not received, and does not expect to receive for at least the next several years, if at all, any revenues from the commercialization of its product candidates. To obtain revenues from sales of its product candidates, Synergy must succeed, either alone or with third parties, in developing, obtaining regulatory approval for, manufacturing and marketing drugs with commercial potential. Synergy may never succeed in these activities, and may not generate sufficient revenues to continue its business operations or achieve profitability.

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Synergy has incurred significant losses since inception and anticipates that it will incur continued losses for the foreseeable future.

        As of September 30, 2012, Synergy had an accumulated deficit of $97,075,397. As of December 31, 2011, Synergy had an accumulated deficit of $69,609,018. Synergy expects to incur significant and increasing operating losses for the next several years as it expands its research and development, continues its clinical trials of plecanatide for the treatment of GI disorders, acquires or licenses technologies, advances other product candidates into clinical development, including SP-333, completes clinical trials, seeks regulatory approval and, if it receives FDA approval, commercializes its products. Because of the numerous risks and uncertainties associated with product development efforts, Synergy is unable to predict the extent of any future losses or when it will become profitable, if at all. If Synergy is unable to achieve and then maintain profitability, the market value of its common stock will likely decline.

Synergy's independent registered public accounting firm has expressed substantial doubt about its ability to continue as a going concern, which may hinder its ability to obtain future financing.

        Synergy's consolidated financial statements as of December 31, 2011 were prepared under the assumption that it will continue as a going concern for the next twelve months. Synergy's independent registered public accounting firm has issued a report that included an explanatory paragraph referring to its recurring losses from operations and expressing substantial doubt in its ability to continue as a going concern without additional capital becoming available. Synergy's ability to continue as a going concern is dependent upon its ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Synergy will need to raise substantial additional capital to fund its operations, and its failure to obtain funding when needed may force Synergy to delay, reduce or eliminate its product development programs.

        During the nine months ended September 30, 2012, Synergy's operating activities used net cash of $23,070,861. During the twelve months ended December 31, 2011, Synergy's operating activities used net cash of $21,231,254. Synergy expects to continue to spend substantial amounts to:

    continue clinical development of plecanatide to treat GI disorders;

    continue development of other product candidates, including SP-333;

    finance its general and administrative expenses;

    prepare regulatory approval applications and seek approvals for plecanatide and other product candidates, including SP-333;

    license or acquire additional technologies;

    manufacture product for clinical trials;

    launch and commercialize its product candidates, if any such product candidates receive regulatory approval; and

    develop and implement sales, marketing and distribution capabilities.

        Synergy will be required to raise additional capital to complete the development and commercialization of its current product candidates and to continue to fund operations at the current cash expenditure levels. Synergy future funding requirements will depend on many factors, including, but not limited to:

    the rate of progress and cost of its clinical trials and other development activities;

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    any future decisions Synergy may make about the scope and prioritization of the programs it pursues;

    the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

    the costs of manufacturing product;

    the costs and timing of regulatory approval;

    the costs of establishing sales, marketing and distribution capabilities;

    the effect of competing technological and market developments;

    the terms and timing of any collaborative, licensing and other arrangements that Synergy may establish; and

    general market conditions for offerings from biopharmaceutical companies.

        Worldwide economic conditions and the international equity and credit markets have recently significantly deteriorated and may remain depressed for the foreseeable future. These developments could make it more difficult for Synergy to obtain additional equity or credit financing, when needed.

        Synergy cannot be certain that funding will be available on acceptable terms, or at all. To the extent that Synergy raises additional funds by issuing equity securities, its stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impacts Synergy's ability to conduct its business. If Synergy is unable to raise additional capital when required or on acceptable terms, it may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of its product candidates. Synergy also may be required to:

    seek collaborators for its product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; and/or

    relinquish license or otherwise dispose of rights to technologies, product candidates or products that it would otherwise seek to develop or commercialize itself on unfavorable terms.

Synergy is largely dependent on the success of its lead product candidate, plecanatide, and it cannot be certain that this product candidate will receive regulatory approval or be successfully commercialized.

        Synergy currently has no products for sale, and it cannot guarantee that it will ever have any drug products approved for sale. Synergy and its product candidates are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries governing, among other things, research, testing, clinical trials, manufacturing, labeling, promotion, selling, adverse event reporting and recordkeeping. Synergy is not permitted to market any of its product candidates in or outside the United States until it receives approval of a new drug application, or NDA, for a product candidate from the FDA or the equivalent approval from a foreign regulatory authority. Obtaining FDA approval is a lengthy, expensive and uncertain process. Synergy currently has one lead product candidate, plecanatide for the treatment of GI disorders, and the success of its business currently depends on its successful development, approval and commercialization. This product candidate has not completed the clinical development process; therefore, Synergy has not yet submitted an NDA or foreign equivalent, or received marketing approval for this product candidate anywhere in the world.

        The clinical development program for plecanatide may not lead to commercial products for a number of reasons, including if Synergy fails to obtain necessary approvals from the FDA or foreign regulatory authorities because its clinical trials fail to demonstrate to their satisfaction that this product candidate is safe and effective. Synergy may also fail to obtain the necessary approvals if it has inadequate financial or other resources to advance its product candidates through the clinical trial process. Any failure or delay in completing clinical trials or obtaining regulatory approval for

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plecanatide in a timely manner would have a material adverse impact on Synergy's business and its stock price.

Synergy will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adversely impact its business.

        A pharmaceutical product cannot be marketed in the U.S. or other countries until it has completed rigorous and extensive regulatory review processes, including approval of a brand name. Any brand names Synergy intends to use for its product candidates will require approval from the FDA regardless of whether Synergy has secured a formal trademark registration from the U.S. Patent and Trademark Office, or the PTO. The FDA typically conducts a review of proposed product brand names, including an evaluation of potential for confusion with other product names. The FDA may also object to a product brand name if it believes the name inappropriately implies medical claims. If the FDA objects to any of Synergy's proposed product brand names, it may be required to adopt an alternative brand name for its product candidates. If Synergy adopts an alternative brand name, it would lose the benefit of its existing trademark applications for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. Synergy may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit its ability to commercialize its product candidates.

Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

        Synergy's product candidates may not prove to be safe and efficacious in clinical trials and may not meet all the applicable regulatory requirements needed to receive regulatory approval. In order to receive regulatory approval for the commercialization of its product candidates, Synergy must conduct, at its own expense, extensive preclinical testing and clinical trials to demonstrate safety and efficacy of these product candidates for the intended indication of use. Clinical testing is expensive, can take many years to complete, if at all, and its outcome is uncertain. Failure can occur at any time during the clinical trial process.

        The results of preclinical studies and early clinical trials of new drugs do not necessarily predict the results of later-stage clinical trials. The design of Synergy's clinical trials is based on many assumptions about the expected effects of its product candidates, and if those assumptions are incorrect may not produce statistically significant results. Preliminary results may not be confirmed on full analysis of the detailed results of an early clinical trial. Product candidates in later stages of clinical trials may fail to show safety and efficacy sufficient to support intended use claims despite having progressed through initial clinical testing. The data collected from clinical trials of Synergy's product candidates may not be sufficient to support the filing of an NDA or to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated with drug development and regulatory approval, Synergy cannot determine if or when it will have an approved product for commercialization or achieve sales or profits.

Delays in clinical testing could result in increased costs to Synergy and delay its ability to generate revenue.

        Synergy may experience delays in clinical testing of its product candidates. Synergy does not know whether planned clinical trials will begin on time, will need to be redesigned or will be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a clinical trial, in securing clinical trial agreements with prospective sites with acceptable terms, in obtaining institutional review board approval to conduct a clinical trial at a prospective site, in recruiting patients to participate in a clinical trial or in obtaining sufficient supplies of clinical trial materials. Many factors affect patient enrollment, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial,

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competing clinical trials and new drugs approved for the conditions Synergy is investigating. Clinical investigators will need to decide whether to offer their patients enrollment in clinical trials of Synergy's product candidates versus treating these patients with commercially available drugs that have established safety and efficacy profiles. Any delays in completing its clinical trials will increase Synergy's costs, slow down its product development and timeliness and approval process and delay its ability to generate revenue.

The FDA's expectations for clinical trials may change over time, complicating the process of obtaining evidence to support approval of Synergy's product candidates.

        In March 2010, the FDA's Center for Drugs Evaluation and Research, or CDER, released a draft guidance entitled: "Irritable Bowel Syndrome—Clinical Evaluation of Products for Treatment" to assist the product sponsors developing new drugs for the treatment of IBS. In pertinent part, this document provides recommendations for IBS clinical trial design and endpoints, and describes the need for the future development of patient-reported outcome, or PRO, instruments for use in IBS clinical trials. The clinical trials Synergy has planned for plecanatide are designed to follow the recommendations included in this draft guidance. Synergy cannot predict when the draft guidance will be finalized and, if it is finalized, whether the final version will include the same recommendations, or whether its currently planned clinical trials of plecanatide will meet the final recommendations.

        When finalized, the guidance document will represent the FDA's thinking on the clinical evaluation of products for the treatment of IBS. FDA guidance documents, however, do not establish legally enforceable requirements, should be viewed only as recommendations, and may be changed at any time. Therefore, even insofar as Synergy intends to follow the recommendations provided in the draft guidance document and the final guidance document when revealed, Synergy cannot be sure that the FDA will accept the results of its clinical research even if such research follows the recommendations in the guidance document.

Synergy may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety risks that could preclude approval of its product candidates.

        Synergy's clinical trials may be suspended at any time for a number of reasons. For example, it may voluntarily suspend or terminate its clinical trials if at any time it believes that they present an unacceptable risk to the clinical trial patients. In addition, the FDA or other regulatory agencies may order the temporary or permanent discontinuation of Synergy's clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable safety risk to the clinical trial patients.

        Administering any product candidate to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical trials of Synergy's product candidates and could result in the FDA or other regulatory authorities denying further development or approval of its product candidates for any or all targeted indications. Ultimately, some or all of Synergy's product candidates may prove to be unsafe for human use. Moreover, Synergy could be subject to significant liability if any volunteer or patient suffers, or appears to suffer, adverse health effects as a result of participating in Synergy's clinical trials.

If Synergy fails to comply with healthcare regulations ,it could face substantial enforcement actions, including civil and criminal penalties and its business, operations and financial condition could be adversely affected.

        As a developer of pharmaceuticals, even though Synergy does not intend to make referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse, false claims and patients' privacy rights are and will be applicable to Synergy's business. Synergy could be subject to healthcare

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fraud and abuse laws and patient privacy laws of both the federal government and the states in which it conducts its business. The laws include:

    the federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;

    federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, and which may apply to entities like us which provide coding and billing information to customers;

    the federal Health Insurance Portability and Accountability Act of 1996, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

    the Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug manufacturing and product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples; and

    state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.

        If Synergy's operations are found to be in violation of any of the laws described above or any governmental regulations that apply to us, it may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of its operations. Any penalties, damages, fines, curtailment or restructuring of Synergy's operations could adversely affect its ability to operate its business and its financial results. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against Synergy for violation of these laws, even if it successfully defends against it, could cause Synergy to incur significant legal expenses and divert management's attention from the operation of its business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.

If Synergy is unable to satisfy regulatory requirements, it may not be able to commercialize its product candidates.

        Synergy needs FDA approval prior to marketing its product candidates in the United States. If it fails to obtain FDA approval to market its product candidates, it will be unable to sell its product candidates in the United States and Synergy will not generate any revenue.

        The FDA's review and approval process, including among other things, evaluation of preclinical studies and clinical trials of a product candidate as well as the manufacturing process and facility, is lengthy, expensive and uncertain. To receive approval, we must, among other things, demonstrate with substantial evidence from well-designed and well-controlled pre-clinical testing and clinical trials that the product candidate is both safe and effective for each indication for which approval is sought. Satisfaction of these requirements typically takes several years and the time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the pharmaceutical product. Synergy cannot predict if or when it will submit an NDA for approval for any of its product candidates currently under development. Any approvals Synergy may obtain may not cover all of the clinical

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indications for which it is seeking approval or may contain significant limitations on the conditions of use.

        The FDA has substantial discretion in the NDA review process and may either refuse to file Synergy's NDA for substantive review or may decide that its data is insufficient to support approval of its product candidates for the claimed intended uses. Following any regulatory approval of its product candidates, Synergy will be subject to continuing regulatory obligations such as safety reporting, required and additional post marketing obligations, and regulatory oversight of promotion and marketing. Even if Synergy receives regulatory approvals, the FDA may subsequently seek to withdraw approval of Synergy's NDA if it determines that new data or a reevaluation of existing data show the product is unsafe for use under the conditions of use upon the basis of which the NDA was approved, or based on new evidence of adverse effects or adverse clinical experience, or upon other new information. If the FDA does not file or approve Synergy's NDA or withdraws approval of its NDA, the FDA may require that Synergy conducts additional clinical trials, preclinical or manufacturing studies and submit that data before it will reconsider Synergy's application. Depending on the extent of these or any other requested studies, approval of any applications that Synergy submits may be delayed by several years, may require Synergy to expend more resources than it has available, or may never be obtained at all.

        Synergy will also be subject to a wide variety of foreign regulations governing the development, manufacture and marketing of its products. Whether or not FDA approval has been obtained, approval of a product by the comparable regulatory authorities of foreign countries must still be obtained prior to marketing the product in those countries. The approval process varies and the time needed to secure approval in any region such as the European Union or in a country with an independent review procedure may be longer or shorter than that required for FDA approval. Synergy cannot assure you that clinical trials conducted in one country will be accepted by other countries or that an approval in one country or region will result in approval elsewhere.

If Synergy's product candidates are unable to compete effectively with marketed drugs targeting similar indications as its product candidates, Synergy's commercial opportunity will be reduced or eliminated.

        Synergy faces competition generally from established pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions. Many of its competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than Synergy does. Small or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Synergy's commercial opportunity will be reduced or eliminated if its competitors develop and commercialize GI drugs that are safer, more effective, have fewer side effects or are less expensive than Synergy's product candidates. These potential competitors compete with Synergy in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient enrollment for clinical trials, as well as in acquiring technologies and technology licenses complementary to Synergy's programs or advantageous to its business.

        If approved and commercialized, plecanatide will compete with at least two currently approved prescription therapies for the treatment of CC and IBS-C, Amitiza and Linzess. In addition, over-the-counter products are also used to treat certain symptoms of CC and IBS-C. Synergy believes other companies are developing products that will compete with plecanatide should they be approved by the FDA. For example, velusetrag, is being developed by Theravance, Inc. and has completed Phase 2 clinical trials for CC. To Synergy's knowledge, other potential competitors are in earlier stages of development. If potential competitors are successful in completing drug development for their product candidates and obtain approval from the FDA, they could limit the demand for plecanatide.

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        Synergy expects that its ability to compete effectively will depend upon its ability to:

    successfully and rapidly complete clinical trials and submit for and obtain all requisite regulatory approvals in a cost-effective manner;

    maintain a proprietary position for its products and manufacturing processes and other related product technology;

    attract and retain key personnel;

    develop relationships with physicians prescribing these products; and

    build an adequate sales and marketing infrastructure for its product candidates.

        Because Synergy will be competing against significantly larger companies with established track records, it will have to demonstrate that, based on experience, clinical data, side-effect profiles and other factors, its products, if approved, are competitive to other products. If Synergy is unable to compete effectively in the GI drug market and differentiate its products from other marketed GI drugs, it may never generate meaningful revenue.

Synergy currently has no sales and marketing organization. If it is unable to establish a direct sales force in the United States to promote its products, the commercial opportunity for its products may be diminished.

        Synergy currently has no sales and marketing organization. If any of its product candidates are approved by the FDA, it intends to market that product through its own sales force. Synergy will incur significant additional expenses and commit significant additional management resources to establish this sales force. Synergy may not be able to establish these capabilities despite these additional expenditures. It will also have to compete with other pharmaceutical and biotechnology companies to recruit, hire and train sales and marketing personnel. If Synergy elects to rely on third parties to sell its product candidates in the United States, it may receive less revenue than if it sold its products directly. In addition, although Synergy would intend to use due diligence in monitoring their activities, it may have little or no control over the sales efforts of those third parties. In the event Synergy is unable to develop its own sales force or collaborate with a third party to sell its product candidates, it may not be able to commercialize its product candidates which would negatively impact its ability to generate revenue.

Synergy may need others to market and commercialize its product candidates in international markets.

        Currently, Synergy does not have any plans to enter international markets. In the future, if appropriate regulatory approvals are obtained, Synergy intends to commercialize its product candidates in international markets. However, Synergy has not decided how to commercialize its product candidates in those markets. Synergy may decide to build its own sales force or sell its products through third parties. If Synergy decides to sell its product candidates in international markets through a third party, it may not be able to enter into any marketing arrangements on favorable terms or at all. In addition, these arrangements could result in lower levels of income to Synergy than if it marketed its product candidates entirely on its own. If Synergy is unable to enter into a marketing arrangement for its product candidates in international markets, it may not be able to develop an effective international sales force to successfully commercialize those products in international markets. If Synergy fails to enter into marketing arrangements for its products and is unable to develop an effective international sales force, itsability to generate revenue would be limited.

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If the manufacturers upon whom Synergy relies fail to produce plecanatide and its product candidates, including SP-333, in the volumes that it requires on a timely basis, or fails to comply with stringent regulations applicable to pharmaceutical drug manufacturers, Synergy may face delays in the development and commercialization of its product candidates.

        Synergy does not currently possess internal manufacturing capacity. It currently utilizes the services of contract manufacturers to manufacture its clinical supplies. With respect to the manufacturing of plecanatide, Synergy has executed supply agreements with two contract manufacturers sufficient to meet its foreseeable clinical trial requirements. Any curtailment in the availability of plecanatide, however, could result in production or other delays with consequent adverse effects on us. In addition, because regulatory authorities must generally approve raw material sources for pharmaceutical products, changes in raw material suppliers may result in production delays or higher raw material costs.

        Synergy continues to pursue additional API and drug product supply agreements with other manufacturers. Synergy may be required to agree to minimum volume requirements, exclusivity arrangements or other restrictions with the contract manufacturers. Synergy may not be able to enter into long-term agreements on commercially reasonable terms, or at all. If Synergy changes or adds manufacturers, the FDA and comparable foreign regulators may require approval of the changes. Approval of these changes could require new testing by the manufacturer and compliance inspections to ensure the manufacturer is conforming to all applicable laws and regulations, including good manufacturing practices, or GMP. In addition, the new manufacturers would have to be educated in or independently develop the processes necessary for the production of Synergy's product candidates. Peptide manufacturing is a highly specialized manufacturing business. While Synergy believes it will have long term arrangements with a sufficient number of contract manufacturers, if it loses a manufacturer, it would take Synergy a substantial amount of time to identify and develop a relationship, and seek regulatory approval, where necessary, for an alternative manufacturer.

        The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products may encounter difficulties in production, particularly in scaling up production. These problems include difficulties with production costs and yields, quality control, including stability of the product and quality assurance testing, shortages of qualified personnel, as well as compliance with federal, state and foreign regulations. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of Synergy's clinical trials, increase the costs associated with conducting its clinical trials and, depending upon the period of delay, require Synergy to commence new clinical trials at significant additional expense or to terminate a clinical trial.

        Synergy is responsible for ensuring that each of its contract manufacturers comply with the GMP requirements of the FDA and other regulatory authorities from which it seeks to obtain product approval. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. The approval process for NDAs includes a review of the manufacturer's compliance with GMP requirements. Synergy is responsible for regularly assessing a contract manufacturer's compliance with GMP requirements through record reviews and periodic audits and for ensuring that the contract manufacturer takes responsibility and corrective action for any identified deviations. Manufacturers of plecanatide and other product candidates, including SP-333, may be unable to comply with these GMP requirements and with other FDA and foreign regulatory requirements, if any.

        While Synergy will oversee compliance by its contract manufacturers, ultimately it will not have control over its manufacturers' compliance with these regulations and standards. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of

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plecanatide or other product candidates is compromised due to a manufacturers' failure to adhere to applicable laws or for other reasons, Synergy may not be able to obtain regulatory approval for or successfully commercialize plecanatide or other product candidates, and it may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of plecanatide or other product candidates, entail higher costs or result in Synergy being unable to effectively commercialize plecanatide or other product candidates. Furthermore, if Synergy's manufacturers fail to deliver the required commercial quantities on a timely basis and at commercially reasonable prices, it may be unable to meet demand for any approved products and would lose potential revenues.

Synergy may not be able to manufacture its product candidates in commercial quantities, which would prevent it from commercializing its product candidates.

        To date, Synergy's product candidates have been manufactured in small quantities for preclinical studies and clinical trials. If any of Synergy's product candidates is approved by the FDA or comparable regulatory authorities in other countries for commercial sale, it will need to manufacture such product candidate in larger quantities. Synergy may not be able to increase successfully the manufacturing capacity for any of its product candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If Synergy is unable to increase successfully the manufacturing capacity for a product candidate, the clinical trials as well as the regulatory approval or commercial launch of that product candidate may be delayed or there may be a shortage in supply. Synergy's product candidates require precise, high quality manufacturing. Synergy's failure to achieve and maintain these high quality manufacturing standards in collaboration with its third-party manufacturers, including the incidence of manufacturing errors, could result in patient injury or death, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could harm its business, financial condition and results of operations.

Materials necessary to manufacture Synergy's product candidates may not be available on commercially reasonable terms, or at all, which may delay the development and commercialization of its product candidates.

        Synergy relies on the third-party manufacturers of its product candidates to purchase from third-party suppliers the materials necessary to produce the bulk active pharmaceutical ingredients, or APIs, and product candidates for its clinical trials, and it will rely on such manufacturers to purchase such materials to produce the APIs and finished products for any commercial distribution of its products if it obtains marketing approval. Suppliers may not sell these materials to Synergy's manufacturers at the time they need them in order to meet Synergy's required delivery schedule or on commercially reasonable terms, if at all. Synergy does not have any control over the process or timing of the acquisition of these materials by its manufacturers. Moreover, it currently does not have any agreements for the production of these materials. If Synergy's manufacturers are unable to obtain these materials for its clinical trials, testing of the affected product candidate would be delayed, which may significantly impact its ability to develop the product candidate. If Synergy or its manufacturers are unable to purchase these materials after regulatory approval has been obtained for one of Synergy's products, the commercial launch of such product would be delayed or there would be a shortage in supply of such product, which would harm Synergy's ability to generate revenues from such product and achieve or sustain profitability.

Synergy's product candidates, if approved for sale, may not gain acceptance among physicians, patients and the medical community, thereby limiting Synergy's potential to generate revenues.

        If one of Synergy's product candidates is approved for commercial sale by the FDA or other regulatory authorities, the degree of market acceptance of any approved product by physicians,

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healthcare professionals and third-party payors and its profitability and growth will depend on a number of factors, including:

    demonstration of safety and efficacy;

    changes in the practice guidelines and the standard of care for the targeted indication;

    relative convenience and ease of administration;

    the prevalence and severity of any adverse side effects;

    budget impact of adoption of Synergy's product on relevant drug formularies and the availability, cost and potential advantages of alternative treatments, including less expensive generic drugs;

    pricing and cost effectiveness, which may be subject to regulatory control;

    effectiveness of Synergy's or any of its partners' sales and marketing strategies;

    the product labeling or product insert required by the FDA or regulatory authority in other countries; and

    the availability of adequate third-party insurance coverage or reimbursement.

        If any product candidate that Synergy develops does not provide a treatment regimen that is as beneficial as, or is perceived as being as beneficial as, the current standard of care or otherwise does not provide patient benefit, that product candidate, if approved for commercial sale by the FDA or other regulatory authorities, likely will not achieve market acceptance. Synergy's ability to effectively promote and sell any approved products will also depend on pricing and cost-effectiveness, including its ability to produce a product at a competitive price and its ability to obtain sufficient third-party coverage or reimbursement. If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, patients and third-party payors, Synergy's ability to generate revenues from that product would be substantially reduced. In addition, its efforts to educate the medical community and third-party payors on the benefits of its product candidates may require significant resources, may be constrained by FDA rules and policies on product promotion, and may never be successful.

Guidelines and recommendations published by various organizations can impact the use of Synergy's products.

        Government agencies promulgate regulations and guidelines directly applicable to Synergy and to its products. In addition, professional societies, practice management groups, private health and science foundations and organizations involved in various diseases from time to time may also publish guidelines or recommendations to the health care and patient communities. Recommendations of government agencies or these other groups or organizations may relate to such matters as usage, dosage, route of administration and use of concomitant therapies. Recommendations or guidelines suggesting the reduced use of Synergy's products or the use of competitive or alternative products that are followed by patients and health care providers could result in decreased use of Synergy's proposed products.

If product liability lawsuits are successfully brought against Synergy, it may incur substantial liabilities and may be required to limit commercialization of its product candidates.

        Synergy faces an inherent risk of product liability lawsuits related to the testing of its product candidates, and will face an even greater risk if it sells its product candidates commercially. Currently, Synergy is not aware of any anticipated product liability claims with respect to its product candidates. In the future, an individual may bring a liability claim against Synergy if one of its product candidates causes, or merely appears to have caused, an injury. If Synergy cannot successfully defend itself against

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the product liability claim, it may incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

    decreased demand for Synergy's product candidates;

    injury to its reputation;

    withdrawal of clinical trial participants;

    costs of related litigation;

    initiation of investigations by regulators;

    substantial monetary awards to patients or other claimants;

    distraction of management's attention from Synergy's primary business;

    product recalls;

    loss of revenue; and

    the inability to commercialize its product candidates.

        Synergy has clinical trial liability insurance with a $5,000,000 aggregate limit. Synergy intends to expand its insurance coverage to include the sale of commercial products if marketing approval is obtained for its product candidates. Synergy's current insurance coverage may prove insufficient to cover any liability claims brought against it. In addition, because of the increasing costs of insurance coverage, Synergy may not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy liabilities that may arise.

Synergy's failure to successfully discover, acquire, develop and market additional product candidates or approved products would impair its ability to grow.

        As part of its growth strategy, Synergy intends to develop and market additional products and product candidates. It is pursuing various therapeutic opportunities through its pipeline. Synergy may spend several years completing its development of any particular current or future internal product candidate, and failure can occur at any stage. The product candidates to which Synergy allocates its resources may not end up being successful. In addition, because Synergy's internal research capabilities are limited, it may be dependent upon pharmaceutical and biotechnology companies, academic scientists and other researchers to sell or license products or technology to it. The success of this strategy depends partly upon its ability to identify, select, discover and acquire promising pharmaceutical product candidates and products. Failure of this strategy would impair Synergy's ability to grow.

        The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex. Other companies, including some with substantially greater financial, marketing and sales resources, may compete with Synergy for the license or acquisition of product candidates and approved products. Synergy has limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into its current infrastructure. Moreover, Synergy may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or it may fail to realize the anticipated benefits of such efforts. Synergy may not be able to acquire the rights to additional product candidates on terms that it finds acceptable, or at all.

        In addition, future acquisitions may entail numerous operational and financial risks, including:

    exposure to unknown liabilities;

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    disruption of Synergy's business and diversion of its management's time and attention to develop acquired products or technologies;

    incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions;

    higher than expected acquisition and integration costs;

    difficulty in combining the operations and personnel of any acquired businesses with its operations and personnel;

    increased amortization expenses;

    impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and

    inability to motivate key employees of any acquired businesses.

        Further, any product candidate that Synergy acquires may require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to risks of failure typical of pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities.

Even if Synergy's product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

        Even if U.S. regulatory approval is obtained, the FDA may still impose significant restrictions on a product's indicated uses or impose ongoing requirements for potentially costly post-approval studies. Plecanatide and other product candidates, including SP-333, would also be subject to ongoing FDA requirements governing the labeling, packaging, storage, advertising, promotion, recordkeeping and submission of safety and other post-market information. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with GMP, regulations. If Synergy or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product or the manufacturer, including requiring withdrawal of the product from the market or suspension of manufacturing. If Synergy, its product candidates or the manufacturing facilities for its product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

    issue warning letters;

    impose civil or criminal penalties;

    suspend regulatory approval;

    suspend any ongoing clinical trials;

    refuse to approve pending applications or supplements to applications filed by Synergy;

    impose restrictions on operations, including costly new manufacturing requirements;

    seize or detain products or request us to initiate a product recall; or

    pursue and obtain an injunction.

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Drugs approved to treat IBS have been subject to considerable post-market scrutiny, with consequences up to and including voluntary withdrawal of approved products from the market. This may heighten FDA scrutiny of Synergy's product candidates before or following market approval.

        Products approved for the treatment of IBS have been subject to considerable post-market scrutiny. For example, in 2007, Novartis voluntarily discontinued marketing Zelnorm (tegaserod), a product approved for the treatment of women with IBS-C, after the FDA found an increased risk of serious cardiovascular events associated with the use of the drug. Earlier, in 2000, Glaxo Wellcome withdrew Lotronex (alosetron), which was approved for women with severe diarrhea-prominent IBS, after the manufacturer received numerous reports of adverse events or AEs, including ischemic colitis, severely obstructed or ruptured bowel, or death. In 2002, the FDA approved the manufacturer's application to make Lotronex available again, on the condition that the drug only be made available through a restricted marketing program.

        Although plecanatide is being investigated for IBS, plecanatide is from a different pharmacologic class than Zelnorm or Lotronex, and would not be expected to share the same clinical risk profile as those agents. Nevertheless, because these products are in the same or related therapeutic classes, it is possible that the FDA will have heightened scrutiny of plecanatide or any other agent under development for IBS. This could delay product approval, increase the cost of Synergy's clinical development program, or increase the cost of post-market study commitments for its IBS product candidates, including plecanatide.

Even if Synergy's product candidates receive regulatory approval in the United States, it may never receive approval to commercialize them outside of the United States.

        In the future, Synergy may seek to commercialize plecanatide and/or other product candidates, including SP-333, in foreign countries outside of the United States. In order to market any products outside of the United States, Synergy must establish and comply with numerous and varying regulatory requirements of other jurisdictions regarding safety and efficacy. Approval procedures vary among jurisdictions and can involve product testing and administrative review periods different from, and greater than, those in the United States. The time required to obtain approval in other jurisdictions might differ from that required to obtain FDA approval. The regulatory approval process in other jurisdictions may include all of the risks detailed above regarding FDA approval in the United States as well as other risks. Regulatory approval in one jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory processes in others. Failure to obtain regulatory approvals in other jurisdictions or any delay or setback in obtaining such approvals could have the same adverse effects detailed above regarding FDA approval in the United States. As described above, such effects include the risks that plecanatide or other product candidates may not be approved for all indications for use included in proposed labeling or for any indications at all, which could limit the uses of plecanatide or other product candidates and have an adverse effect on Synergy's products' commercial potential or require costly post-marketing studies.

Synergy relies on third parties to conduct its clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, Synergy may not be able to seek or obtain regulatory approval for or commercialize its product candidates.

        Synergy has agreements with third-party contract research organizations, or CROs, under which it has delegated to the CROs the responsibility to coordinate and monitor the conduct of its clinical trials and to manage data for its clinical programs. Synergy, its CROs and its clinical sites are required to comply with current Good Clinical Practices, or GCPs, regulations and guidelines issued by the FDA and by similar governmental authorities in other countries where it is conducting clinical trials. Synergy has an ongoing obligation to monitor the activities conducted by its CROs and at its clinical sites to

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confirm compliance with these requirements. In the future, if Synergy, its CROs or its clinical sites fail to comply with applicable GCPs, the clinical data generated in its clinical trials may be deemed unreliable and the FDA may require Synergy to perform additional clinical trials before approving oitsmarketing applications. In addition, Synergy's clinical trials must be conducted with product produced under cGMP regulations, and will require a large number of test subjects. Synergy's failure to comply with these regulations may require it to repeat clinical trials, which would delay the regulatory approval process.

        If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to Synergy's clinical protocols, regulatory requirements or for other reasons, Synergy's clinical trials may be extended, delayed or terminated, and it may not be able to obtain regulatory approval for or successfully commercialize its product candidates. As a result, its financial results and the commercial prospects for its product candidates would be harmed, its costs could increase, and its ability to generate revenue could be delayed.

If Synergy fails to attract and keep senior management and key scientific personnel, it may be unable to successfully develop its product candidates, conduct its clinical trials and commercialize its product candidates.

        Synergy's success depends in part on its continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel and on its ability to develop and maintain important relationships with leading academic institutions, clinicians and scientists. Synergy is highly dependent upon its senior management and scientific staff, particularly Gary S. Jacob, Ph.D., its President and Chief Executive Officer and Kunwar Shailubhai, Ph.D., its Chief Scientific Officer. The loss of services of Dr. Jacob or one or more of Synergy's other members of senior management could delay or prevent the successful completion of its planned clinical trials or the commercialization of its product candidates.

        The competition for qualified personnel in the biotechnology and pharmaceuticals field is intense. Synergy will need to hire additional personnel as it expands its clinical development and commercial activities. It may not be able to attract and retain quality personnel on acceptable terms given the competition for such personnel among biotechnology, pharmaceutical and other companies.

Synergy will need to increase the size of its organization, and it may experience difficulties in managing growth.

        Synergy is a small company with sixteen employees as of November 30, 2012. To continue its clinical trials and commercialize its product candidates, it will need to expand its employee base for managerial, operational, financial and other resources. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Over the next 12 months depending on the progress of its planned clinical trials, Synergy plans to add additional employees to assist it with its clinical programs. Synergy's future financial performance and its ability to commercialize its product candidates and to compete effectively will depend, in part, on its ability to manage any future growth effectively. To that end, Synergy must be able to:

    manage development efforts effectively;

    manage its clinical trials effectively;

    integrate additional management, administrative, manufacturing and sales and marketing personnel;

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    maintain sufficient administrative, accounting and management information systems and controls; and

    hire and train additional qualified personnel.

        Synergy may not be able to accomplish these tasks, and its failure to accomplish any of them could harm its financial results and impact its ability to achieve development milestones.

Reimbursement may not be available for Synergy's product candidates, which would impede sales.

        Market acceptance and sales of Synergy's product candidates may depend on coverage and reimbursement policies and health care reform measures. Decisions about formulary coverage as well as levels at which government authorities and third-party payors, such as private health insurers and health maintenance organizations, reimburse patients for the price they pay for Synergy's products as well as levels at which these payers pay directly for its products, where applicable, could affect whether Synergy is able to commercialize these products. Synergy cannot be sure that reimbursement will be available for any of these products. Also, Synergy cannot be sure that coverage or reimbursement amounts will not reduce the demand for, or the price of, its products. Synergy has not commenced efforts to have its product candidates reimbursed by government or third party payors. If coverage and reimbursement are not available or are available only at limited levels, Synergy may not be able to commercialize its products.

        In recent years, officials have made numerous proposals to change the health care system in the United States. These proposals include measures that would limit or prohibit payments for certain medical treatments or subject the pricing of drugs to government control. In addition, in many foreign countries, particularly the countries of the European Union, the pricing of prescription drugs is subject to government control. If Synergy's products are or become subject to government regulation that limits or prohibits payment for its products, or that subjects the price of its products to governmental control, it may not be able to generate revenue, attain profitability or commercialize its products.

        As a result of legislative proposals and the trend towards managed health care in the United States, third-party payers are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drugs. They may also impose strict prior authorization requirements and/or refuse to provide any coverage of uses of approved products for medical indications other than those for which the FDA has granted market approvals. As a result, significant uncertainty exists as to whether and how much third-party payers will reimburse patients for their use of newly-approved drugs, which in turn will put pressure on the pricing of drugs.

Healthcare reform measures could hinder or prevent Synergy's product candidates' commercial success.

        The U.S. government and other governments have shown significant interest in pursuing healthcare reform. Any government-adopted reform measures could adversely impact the pricing of healthcare products and services in the United States or internationally and the amount of reimbursement available from governmental agencies or other third party payors. The continuing efforts of the U.S. and foreign governments, insurance companies, managed care organizations and other payors of health care services to contain or reduce health care costs may adversely affect Synergy's ability to set prices for its products which it believes are fair, and its ability to generate revenues and achieve and maintain profitability.

        New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery or payment for products and services, or sales, marketing or pricing, may limit Synergy's potential revenue, and it may need to revise its research and development programs. The pricing and reimbursement environment may change in the future and become more challenging due to several reasons, including policies advanced by the

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current executive administration in the United States, new healthcare legislation or fiscal challenges faced by government health administration authorities. Specifically, in both the United States and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the health care system in ways that could affect Synergy's ability to sell its products profitably.

        For example, in March 2010, President Obama signed the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the PPACA. This law will substantially change the way healthcare is financed by both government health plans and private insurers, and significantly impact the pharmaceutical industry. The PPACA contains a number of provisions that are expected to impact Synergy's business and operations in ways that may negatively affect its potential revenues in the future. For example, the PPACA imposes a non-deductible excise tax on pharmaceutical manufacturers or importers that sell branded prescription drugs to U.S. government programs which Synergy believes will increase the cost of its products. In addition, as part of the PPACA's provisions closing a funding gap that currently exists in the Medicare Part D prescription drug program (commonly known as the "donut hole"), Synergy will be required to provide a discount on branded prescription drugs equal to 50% of the government-negotiated price, for drugs provided to certain beneficiaries who fall within the donut hole. Similarly, PPACA increases the level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1% and requires collection of rebates for drugs paid by Medicaid managed care organizations. The PPACA also includes significant changes to the 340B drug discount program including expansion of the list of eligible covered entities that may purchase drugs under the program. At the same time, the expansion in eligibility for health insurance benefits created under PPACA is expected to increase the number of patients with insurance coverage who may receive Synergy's products. While it is too early to predict all the specific effects the PPACA or any future healthcare reform legislation will have on Synergy's business, they could have a material adverse effect on Synergy's business and financial condition.

        Congress periodically adopts legislation like the PPACA and the Medicare Prescription Drug, Improvement and Modernization Act of 2003, that modifies Medicare reimbursement and coverage policies pertaining to prescription drugs. Implementation of these laws is subject to ongoing revision through regulatory and subregulatory policies. Congress also may consider additional changes to Medicare policies, potentially including Medicare prescription drug policies, as part of ongoing budget negotiations. While the scope of any such legislation is uncertain at this time, there can be no assurances that future legislation or regulations will not decrease the coverage and price that Synergy may receive for its proposed products. Other third-party payors are increasingly challenging the prices charged for medical products and services. It will be time consuming and expensive for Synergy to go through the process of seeking coverage and reimbursement from Medicare and private payors. Synergy's proposed products may not be considered cost-effective, and coverage and reimbursement may not be available or sufficient to allow Synergy to sell its proposed products on a profitable basis. Further federal and state proposals and health care reforms are likely which could limit the prices that can be charged for the product candidates that Synergy develops and may further limit its commercial opportunities. Synergy's results of operations could be materially adversely affected by proposed healthcare reforms, by the Medicare prescription drug coverage legislation, by the possible effect of such current or future legislation on amounts that private insurers will pay and by other health care reforms that may be enacted or adopted in the future.

        In September 2007, the Food and Drug Administration Amendments Act of 2007 was enacted, giving the FDA enhanced post-marketing authority, including the authority to require post-marketing studies and clinical trials, labeling changes based on new safety information, and compliance with risk evaluations and mitigation strategies approved by the FDA. The FDA's exercise of this authority could result in delays or increased costs during product development, clinical trials and regulatory review, increased costs to assure compliance with post-approval regulatory requirements, and potential restrictions on the sale and/or distribution of approved products.

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Risks Related to Synergy's Intellectual Property

It is difficult and costly to protect Synergy's proprietary rights, and it may not be able to ensure their protection.

        Synergy's commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of its product candidates, and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges. Synergy will only be able to protect its product candidates from unauthorized making, using, selling, offering to sell or importation by third parties to the extent that it has rights under valid and enforceable patents or trade secrets that cover these activities.

        As of November 29, 2012, Synergy has five issued United States patents. Two of these patents cover the composition-of-matter of plecanatide and were issued on May 9, 2006 and September 21, 2010; they will expire in 2023 and 2022, respectively. A third patent covers the composition-of-matter of SP-333 issued on February 1, 2011 and expires in 2028. A fourth patent granted October 11, 2011 covers composition-of-matter of analogs related to plecanatide and SP-333 and will expire in 2028. A fifth patent granted February 14, 2012 covers a method of treating inflammatory bowel disease using plecanatide and will expire in 2022. In addition, Synergy has three granted foreign patents which cover composition-of-matter of plecanatide and expire in 2022. These foreign patents cover Austria, Belgium, Switzerland, Cyprus, Germany, Denmark, Spain, Finland, France, United Kingdom, Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco, Netherlands, Portugal, Sweden, Turkey, Hong Kong, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyz Republic, Moldova, Russian Federation, Tajikistan, Turkmenistan, and Japan.

        Additionally, as of November 29, 2012, Synergy has seven pending United States patent applications and 37 pending foreign patent applications covering plecanatide and SP-333 and various derivatives and analogs. In April 2010, two parties filed an opposition to Synergy's granted patent with the European Patent Office. An opposition hearing was held December 14, 2011, which resulted in the European Patent Office issuing the following statement: Account being taken of the amendments made by the patent proprietor during the opposition proceedings, the patent and the invention to which it relates are found to meet the requirements of the European Patent Convention (Art.101(3)(a)EPC). In particular, the composition-of-matter claim covering plecanatide was upheld. In addition, Synergy is aware that another pharmaceutical company has been issued a patent for the use of plecanatide for treatment of constipation or constipation predominant irritable bowel syndrome.

        On September 14, 2012 Synergy entered into a binding letter of intent (the "LOI") with Ironwood Pharmaceuticals, Inc. ("Ironwood") pursuant to which Synergy and Ironwood agreed to enter into a definitive license agreement giving Synergy an exclusive worldwide license to Ironwood's method of use patents on plecanatide for the treatment of chronic constipation. The LOI contemplates a low single digit royalty on net sales and both parties agreed not to challenge each other's patents covering certain GC-C agonists, except that Synergy retains the right to challenge Ironwood's method of use patents on plecanatide.

        The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in biotechnology patents has emerged to date in the United States. The biotechnology patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of Synergy's intellectual property. Accordingly, Synergy cannot predict the breadth of claims that may be allowed or enforced in its issued patents or in third-party patents.

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        The degree of future protection for Synergy's proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect its rights or permit Synergy to gain or keep its competitive advantage. For example:

    others may be able to make compounds that are competitive with Synergy's product candidates but that are not covered by the claims of its patents;

    Synergy might not have been the first to make the inventions covered by its pending patent applications;

    Synergy might not have been the first to file patent applications for these inventions;

    others may independently develop similar or alternative technologies or duplicate any of its technologies;

    it is possible that its pending patent applications will not result in issued patents;

    Synergy may not develop additional proprietary technologies that are patentable; or

    the patents of others may have an adverse effect on its business.

        Synergy also may rely on trade secrets to protect its technology, especially where it does not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While Synergy uses reasonable efforts to protect its trade secrets, its employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose its information to competitors. Enforcing a claim that a third party illegally obtained and is using Synergy's trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, Synergy's competitors may independently develop equivalent knowledge, methods and know-how.

Synergy may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and it may be unable to protect its rights to, or use, its technology.

        If Synergy chooses to go to court to stop someone else from using the inventions claimed in its patents, that individual or company has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and would consume time and other resources even if Synergy was successful in stopping the infringement of these patents. In addition, there is a risk that the court will decide that these patents are not valid and that Synergy does not have the right to stop the other party from using the inventions. There is also the risk that, even if the validity of these patents is upheld, the court will refuse to stop the other party on the ground that such other party's activities do not infringe Synergy's rights to these patents.

        Furthermore, a third party may claim that Synergy is using inventions covered by the third party's patent rights and may go to court to stop Synergy from engaging in its normal operations and activities, including making or selling its product candidates. These lawsuits are costly and could affect Synergy's results of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that Synergy is infringing the third party's patents and would order Synergy to stop the activities covered by the patents. In addition, there is a risk that a court will order Synergy to pay the other party damages for having violated the other party's patents. The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If Synergy is sued for patent infringement, it would need to demonstrate that its products or methods of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid, and it may not be able to do this. Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

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        Because some patent applications in the United States may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, and publications in the scientific literature often lag behind actual discoveries, Synergy cannot be certain that others have not filed patent applications for technology covered by its issued patents or its pending applications or that it was the first to invent the technology. Synergy's competitors may have filed, and may in the future file, patent applications covering technology similar to its. Any such patent application may have priority over Synergy's patent applications and could further require it to obtain rights to issued patents covering such technologies. If another party has filed a United States patent application on inventions similar to Synergy's, it may have to participate in an interference proceeding declared by the PTO, to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of Synergy's United States patent position with respect to such inventions.

        Some of Synergy's competitors may be able to sustain the costs of complex patent litigation more effectively than it can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on Synergy's ability to raise the funds necessary to continue its operations.

Obtaining and maintaining Synergy's patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and its patent protection could be reduced or eliminated for non-compliance with these requirements.

        The PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

Synergy has not yet registered trademarks for plecanatide in its potential markets, and failure to secure those registrations could adversely affect its ability to market its product candidate and its business.

        Synergy has not yet registered trademarks for plecanatide in any jurisdiction. Its trademark applications in the United States, when filed, and any other jurisdictions where it may file may not be allowed for registration, and its registered trademarks may not be maintained or enforced. During trademark registration proceedings, Synergy may receive rejections. Although it is given an opportunity to respond to those rejections, it may be unable to overcome such rejections. In addition, in the PTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against Synergy's trademarks, and its trademarks may not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect Synergy's ability to market its product candidates and its business.

Confidentiality agreements with employees and others may not adequately prevent disclosure of Synergy's trade secrets and other proprietary information and may not adequately protect Synergy's intellectual property, which could limit its ability to compete.

        Because Synergy operates in the highly technical field of research and development of small molecule drugs, it relies in part on trade secret protection in order to protect its proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and Synergy cannot be certain that others will not develop the same or similar technologies on their own. Synergy has taken steps, including entering into confidentiality agreements with its employees, consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect its trade secrets and

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unpatented know-how. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by Synergy during the course of the party's relationship with Synergy. Synergy also typically obtains agreements from these parties which provide that inventions conceived by the party in the course of rendering services to Synergy will be its exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to Synergy. Enforcing a claim that a party illegally obtained and is using Synergy's trade secrets or know-how is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets or know-how. The failure to obtain or maintain trade secret protection could adversely affect Synergy's competitive position.

Synergy may be subject to claims that its employees have wrongfully used or disclosed alleged trade secrets of their former employers.

        As is common in the biotechnology and pharmaceutical industry, Synergy employs individuals who were previously employed at other biotechnology or pharmaceutical companies, including its competitors or potential competitors. Although no claims against Synergy are currently pending, Synergy may be subject to claims that these employees or Synergy has inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if Synergy is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.


Risks Related to Ownership of Synergy's Common Stock

The market price of Synergy's common stock may be volatile and adversely affected by several factors.

        The market price of Synergy's common stock could fluctuate significantly in response to various factors and events, including:

    Synergy's ability to integrate operations, technology, products and services;

    Synergy's ability to execute its business plan;

    operating results below expectations;

    announcements concerning product development results, including clinical trial results, or intellectual property rights of others;

    litigation or public concern about the safety of Synergy's potential products;

    Synergy's issuance of additional securities, including debt or equity or a combination thereof, which will be necessary to fund its operating expenses;

    announcements of technological innovations or new products by Synergy or its competitors;

    loss of any strategic relationship;

    industry developments, including, without limitation, changes in healthcare policies or practices or third-party reimbursement policies;

    economic and other external factors;

    period-to-period fluctuations in Synergy's financial results; and

    whether an active trading market in Synergy's common stock develops and is maintained.

        In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of Synergy's common stock.

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Synergy has not paid cash dividends in the past and does not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of its common stock.

        Synergy has never paid cash dividends on its capital stock and does not anticipate paying cash dividends on its capital stock in the foreseeable future. The payment of dividends on its capital stock will depend on its earnings, financial condition and other business and economic factors affecting us at such time as the board of directors may consider relevant. If Synergy does not pay dividends, its common stock may be less valuable because a return on your investment will only occur if the common stock price appreciates.

A sale of a substantial number of shares of the common stock may cause the price of Synergy's common stock to decline.

        If Synergy's stockholders sell, or the market perceives that its stockholders intend to sell for various reasons, including the expiration of the 24 month lock-up period entered into in connection with the merger or the consent by Synergy of the early termination of the 24 month lock-up period,, substantial amounts of Synergy's common stock in the public market, including shares issued upon the exercise of outstanding options or warrants, the market price of its common stock could fall. Sales of a substantial number of shares of Synergy's common stock may make it more difficult for Synergy to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. Synergy may become involved in securities class action litigation that could divert management's attention and harm its business.

        The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of biotechnology and biopharmaceutical companies. These broad market fluctuations may cause the market price of Synergy's common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for Synergy because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. Synergy may become involved in this type of litigation in the future. Litigation often is expensive and diverts management's attention and resources, which could adversely affect its business.

Synergy's quarterly operating results may fluctuate significantly.

        Synergy expects its operating results to be subject to quarterly fluctuations. Its net loss and other operating results will be affected by numerous factors, including:

    variations in the level of expenses related to its development programs;

    addition or termination of clinical trials;

    any intellectual property infringement lawsuit in which Synergy may become involved;

    regulatory developments affecting its product candidates;

    Synergy's execution of any collaborative, licensing or similar arrangements, and the timing of payments it may make or receive under these arrangements; and

    if plecanatide receives regulatory approval, the level of underlying demand for that product and wholesalers' buying patterns.

        If Synergy's quarterly operating results fall below the expectations of investors or securities analysts, the price of its common stock could decline substantially. Furthermore, any quarterly fluctuations in Synergy's operating results may, in turn, cause the price of its common stock to fluctuate substantially.

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Synergy's ability to use its net operating loss carryforwards may be subject to limitation.

        Generally, a change of more than 50% in the ownership of a company's stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change may limit a company's ability to use its net operating loss carryforwards attributable to the period prior to the change. As a result, if Synergy earns net taxable income, its ability to use its pre-change net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations, which could potentially result in increased future tax liability for it. At December 31, 2011, Synergy had net operating loss carryforwards aggregating approximately $60 million. It has determined that an ownership change occurred as of April 30, 2003 pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, or the Code. In addition, the shares of Synergy's common stock that it issued from July 14, 2008 through July 8, 2010 have resulted in an additional ownership change. As a result of these events, Synergy's ability to utilize its operating loss carry forwards is limited.

If Synergy fails to comply with the rules under the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or, if Synergy discovers material weaknesses and deficiencies in its internal control and accounting procedures, its stock price could decline significantly and raising capital could be more difficult.

        If Synergy fails to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if it discovers material weaknesses and other deficiencies in its internal control and accounting procedures, its stock price could decline significantly and raising capital could be more difficult. Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of Synergy's internal control over financial reporting and a report by its independent auditors addressing these assessments. If material weaknesses or significant deficiencies are discovered or if Synergy otherwise fails to achieve and maintain the adequacy of its internal control, it may not be able to ensure that it can conclude on an ongoing basis that it has effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for Synergy to produce reliable financial reports and are important to helping prevent financial fraud. If Synergy cannot provide reliable financial reports or prevent fraud, its business and operating results could be harmed, investors could lose confidence in its reported financial information, and the trading price of its common stock could drop significantly.

Synergy's certificate of incorporation and bylaws and Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause its stock price to decline.

        Synergy's certificate of incorporation and bylaws and Delaware law could make it more difficult for a third party to acquire Synergy, even if closing such a transaction would be beneficial to its stockholders. Synergy is authorized to issue up to 20,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by Synergy's board of directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. No preferred stock is currently outstanding. The issuance of any preferred stock could materially adversely affect the rights of the holders of Synergy's common stock, and therefore, reduce the value of its common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict its ability to merge with, or sell its assets to, a third party and thereby preserve control by the present management.

        Provisions of Synergy's second amended and restated certificate of incorporation and bylaws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by Synergy's stockholders to

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replace or remove its management. In particular, the certificate of incorporation and bylaws and Delaware law, as applicable, among other things:

    provide the board of directors with the ability to alter the bylaws without stockholder approval;

    place limitations on the removal of directors; and

    provide that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum.

        Synergy is subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, prohibits "business combinations" between a publicly-held Delaware corporation and an "interested stockholder," which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation's voting stock for a three-year period following the date that such stockholder became an interested stockholder.

        These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of Synergy to first negotiate with its board. These provisions may delay or prevent someone from acquiring or merging with Synergy, which may cause the market price of its common stock to decline.

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THE MERGER TRANSACTION

        This section and the section entitled "The Merger Agreement" in this Joint Proxy Statement/Prospectus describe the material aspects of the merger, including the merger agreement, as amended. While Synergy and Callisto believe that this description covers the material terms of the merger and the merger agreement, it may not contain all of the information that is important to you. You should read carefully this entire Joint Proxy Statement/Prospectus for a more complete understanding of the merger and the merger agreement, including the merger agreement, as amended attached as Annex A and Annex B to this Joint Proxy Statement/Prospectus, which is herein incorporated by reference.


General

        At the effective time, Callisto will merge with and into Synergy, which will be the surviving entity. Each holder of a share of Callisto common stock will receive 0.1799 of a share of Synergy common stock. See "The Merger Agreement—Merger Consideration." Based solely upon the outstanding shares of Synergy common stock on November 29, 2012 and Callisto's outstanding shares of common stock on November 29, 2012, immediately following the completion of the merger, Callisto stockholders will own approximately 39.5% of the combined company's outstanding common stock. Based upon the fully-diluted outstanding shares of Synergy and Callisto on November 29, 2012, immediately following the completion of the merger, Callisto security holders would own approximately 38.8% of the combined company's outstanding common stock.


Background of the Merger

        On July 14, 2008, Pawfect Foods Inc. ("Pawfect"), a Florida corporation incorporated on November 15, 2005, acquired 100% of the common stock of Synergy and its wholly-owned subsidiary, Synergy Advanced Pharmaceuticals, Inc., from Callisto in exchange for 22,732,380 shares of Pawfect's common stock under the terms of an Exchange Transaction among Pawfect, Callisto, Synergy, and certain other holders of Synergy common stock ("Exchange Transaction"). Callisto received 22,295,000 of the 22,732,380 shares of Pawfect's common stock exchanged for ownership of Synergy, which at the time represented approximately 68% of Pawfect's outstanding common stock.

        On July 21, 2008, Pawfect amended its articles of incorporation to, among other things, change its name to Synergy Pharmaceuticals, Inc. ("Synergy-FL")

        During the twelve months ended December 31, 2009, Synergy-FL sold 11,407,213 shares of unregistered common stock to private investors. On March 31, 2010, Callisto held approximately 50.4% of Synergy-FL's outstanding common stock.

        During the winter and spring of 2010, Gary S. Jacob, Chief Executive Officer of Callisto and Gabriele Cerrone, Chairman of Callisto discussed with Herb Sommer from Sommer & Schneider LLP, special counsel to Callisto (S&S"), Jeffrey Fessler from Sichenzia Ross Friedman Ference LLP, corporate and securities counsel to Synergy ("SRFF") and Jack Wilk from Wilk Auslander LLP, tax counsel to Callisto ("WA" and together with S&S and SRFF, "Counsel") various methods by which the Synergy-FL shares of common stock held by Callisto could be distributed to the Callisto stockholders on a tax-free basis. Messrs. Jacob and Cerrone and Counsel agreed on a spinoff structure and a request for rulings under Sections 368(a)(1)(E) and 355 of the Internal Revenue Code of 1986, as amended (the "Code) was submitted to the Internal Revenue Service ("IRS") on behalf of Callisto on June11, 2010 (the "Request for Ruling").

        On July 22, 2010 Messrs. Jacob, Cerrone and Bernard F. Denoyer, Senior Vice President Finance of Callisto, and Counsel, participated in a telephone conference with IRS counsel, during which Callisto responded to IRS questions. During this teleconference and subsequent follow-up by WA it became clear the IRS would not issue a favorable Ruling, principally because it did not believe Callisto

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would be sufficiently engaged in a trade or business, as defined in Regulation section 1.355-3(b)(ii) and (iv), immediately after the distribution.

        On October 7, 2010, Callisto withdrew its Request for Ruling.

        During the fall of 2010, Messrs. Jacob and Cerrone and Counsel discussed alternative structures by which the Synergy-FL shares of common stock held by Callisto could be distributed to the Callisto stockholders on a tax-free basis.

        In November 2011, Mr. Wilk from WA prepared a memorandum which discussed options which would simplify the structure of the transaction and eliminate the presence of two public companies. The memorandum suggested that a merger of Callisto into Synergy in which Synergy would survive the merger and Callisto stockholders would receive Synergy-FL shares in exchange for their Callisto shares would be preferable and simple.

        On February 14, 2012, Synergy-FL entered into an agreement and plan of merger with Synergy, its wholly-owned subsidiary, for the purpose of changing its state of incorporation to Delaware from Florida. Pursuant to the merger agreement, Synergy-FL merged with and into Synergy with Synergy continuing as the surviving corporation.

        From January 2012 through March 2012, Messrs. Cerrone and Jacob had a number of informal discussions with Mr. Fessler from SRFF with respect to a common stock exchange ratio to be offered to the Callisto stockholders in exchange for their Callisto shares, and also the period of time that Synergy shares which were received by the Callisto stockholders would be subject to a lock-up agreement with Synergy. The ratios discussed ranged between .15 and .175 and the lock up periods discussed were between 18 and 24 months.

        On March 4, 2012, attorneys from SRFF began drafting a merger agreement between Callisto and Synergy.

        On March 12, 2012, Callisto engaged Gracin & Marlow, LLP ("GM") as counsel for the merger with Synergy.

        On March 15, 2012, attorneys from SRFF distributed a draft of the merger agreement to GM, and through April 2012, SRFF and GM negotiated the merger agreement with input from their respective clients.

        On April 1, 2012, by unanimous written consent of the Board of Directors of Callisto, a special project committee of the Board (the "Callisto Committee") was established in connection with discussing terms of a merger agreement with Synergy. Dr. Randall Johnson, the only Callisto director that does not also serve on the Synergy Board of Directors was appointed by Callisto's Board as the sole member of the Callisto Committee.

        On April 4, 2012, Brean Murray, Carret & Co. was retained by Callisto to undertake certain investigations and reviews in connection with the possible rendering of an opinion as to the fairness, from a financial point of view, of the common stock exchange ratio, as defined in a merger agreement with Synergy.

        On April 10, 2012, Canaccord Genuity was retained by Synergy as its financial advisor solely in connection with the delivery of a fairness opinion with respect to a possible business combination transaction with Callisto.

        On April 20, 2012, by unanimous written consent of the Board of Directors of Synergy, a special project committee of the Board (the "Synergy Committee") was established in connection with discussing terms of a merger agreement with Callisto. Thomas Adams, Melvin Spigelman and Christopher McGuigan were appointed by Synergy's Board as members of the Synergy Committee.

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        In May 2012, Dr. Jacob and Mr. Cerrone discussed whether to replace Synergy's existing financial advisor with a new financial advisor. Dr. Jacob consulted with members of Synergy's board of directors and on May 30, 2012, Dr. Jacob sent a termination letter to Canaccord notifying them that its engagement by Synergy is terminated effective June 9, 2012.

        Subsequently, Dr. Jacob and Mr. Cerrone considered several potential financial advisors to engage. After consideration of multiple financial advisors, Dr. Jacob and Mr. Cerrone presented Cantor Fitzgerald & Co. ("Cantor") to the Synergy Committee and the Synergy Committee approved the engagement of Cantor as Synergy's financial advisor. During this period, Synergy also engaged Cantor as a placement agent in connection with a potential at the market offering.

        On June 27, 2012, Cantor Fitzgerald & Co. was retained by Synergy to render an opinion to Synergy's Board of Directors as to the fairness, from a financial point of view, to the Synergy stockholders of the consideration to be paid by Synergy in the merger.

        In subsequent discussions with Cantor related to the merger and the merger consideration, it became apparent to Synergy there may be the potential for a conflict of interest. On July 11, 2012, Synergy sent a termination letter to Cantor notifying them that their engagement by Synergy is terminated immediately.

        On July 12, 2012, Canaccord Genuity was re-engaged by Synergy as its financial advisor in connection with the delivery of a fairness opinion with respect to a possible merger with Callisto.

        On July 20, 2012, the Synergy Committee met to discuss and consider the terms of the proposed merger agreement. Mr. Fessler from SRFF gave a brief description of the terms and conditions of the merger agreement between Callisto and Synergy to the Synergy Committee. During the meeting, Canaccord Genuity reviewed in detail with the Synergy Board its financial analyses with respect to the fairness, from a financial point of view, to Synergy of the issuance of the shares of Synergy common stock in the merger pursuant to the merger agreement (as amended) and rendered its oral opinion (which opinion was subsequently confirmed in writing by the delivery of Canaccord Genuity's written opinion dated the same date) to the effect that as of such date, and based upon and subject to the various assumptions, limitations and qualifications in the review undertaken by Canaccord Genuity to render the opinion, the exchange ratio in the merger agreement was fair, from a financial point of view, to the Synergy stockholders. The Synergy Committee determined that the merger and merger agreement is fair to and in the best interests of Synergy and its stockholders and resolved to recommend to the Synergy Board that the merger and merger agreement be approved.

        Later in the day on July 20, 2012, the Synergy Board met to discuss the merger transaction. Mr. Fessler from SRFF gave an overview of what occurred at the Synergy Committee meeting and the Board discussed the merger agreement and merger consideration. The Synergy Board determined that the merger and merger agreement is fair to and in the best interests of Synergy and its stockholders and approved the merger and merger agreement.

        On July 20, 2012, the Special Committee of the Board of Directors (represented by Dr. Johnson) and Callisto's Board of Directors met, discussed and considered the terms of the proposed merger agreement. Callisto's outside counsel presented the terms and conditions of the merger agreement and discussed the Board's fiduciary obligations with respect to the proposed merger. During the meeting, at the request of the Special Committee, Brean Murray, Carret & Co. reviewed in detail with the Committee and the Board of Directors its financial analyses with respect to fairness of the consideration being offered to the Callisto stockholders and rendered its oral opinion (which opinion was subsequently confirmed in writing by the delivery of Brean Murray, Carret & Co.'s written opinion dated the same date) to the effect that as of such date, and based upon and subject to the various assumptions, limitations and qualifications in the review undertaken by Brean Murray, Carret & Co.. to

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render the opinion, the consideration to be received by the stockholders of Callisto in the merger was fair, from a financial point of view, to such stockholders.

        An extensive discussion among the Board members and with outside counsel and Brean Murray, Carret & Co. then ensued. Thereafter, Dr. Johnson, on behalf of the Special Committee, recommended that the Board of Directors approve the merger. Upon a motion duly made by Dr. Johnson, Callisto's sole independent director, (with all other attending members abstaining by reason of their interest in Synergy), the Board of Directors passed a resolution finding that the merger agreement, the merger contemplated thereby and the other transactions contemplated by the merger agreement were advisable and in the best interest of Callisto's stockholders and, as such, approved the merger agreement, the merger contemplated thereby and the other transactions contemplated by the merger agreement and recommended that and instructed management and counsel to finalize all documentation related to the merger as promptly as practicable.

        Following the meetings of the Synergy and Callisto Boards on July 20, 2012, Callisto and Synergy exchanged execution copies of the merger agreement and delivered the definitive merger agreement as of July 20, 2012.

        Later on July 20, 2012, Synergy and Callisto issued a joint press release announcing the execution of the merger agreement.

        On October 11, 2012, the Special Committee of the Board of Directors (represented by Dr. Johnson) and Callisto's Board of Directors met, discussed and considered the terms of the proposed amendment to the merger agreement. Callisto's outside counsel presented the terms and conditions of the proposed amendment to the merger agreement, which included an increase in the exchange ratio from 0.1700 to 0.1799 and an increase in the stockholder lock up period from 18 months to 24 months, subject to the right of the Synergy Board of Directors to release such lock up, and discussed the Board's fiduciary obligations with respect to the proposed amendment to the merger agreement. During the meeting, at the request of the Special Committee, Brean Murray, Carret & Co. reviewed in detail with the Special Committee and the Board of Directors its financial analyses with respect to fairness of the new consideration being offered to the Callisto stockholders and rendered its oral opinion (which opinion was subsequently confirmed in writing by the delivery of Brean Murray, Carret & Co.'s written opinion dated the same date) to the effect that as of the date of the execution of the merger agreement, July 20, 2012, prior to the impact of the merger announcement on the market, and based upon and subject to the various financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to Brean Murray, Carret & Co the consideration to be received by the stockholders of Callisto in the merger provided for in the merger agreement, after taking into account the amendment to the merger agreement was fair, from a financial point of view, to such stockholders.

        An extensive discussion among the Board members and with outside counsel and Brean Murray, Carret & Co. then ensued. Thereafter, Dr. Johnson, on behalf of the Special Committee, recommended that the Board of Directors approve the proposed amendment to the merger agreement. Upon a motion duly made by Dr. Johnson, Callisto's sole independent director, (with all other attending members abstaining by reason of their interest in Synergy), the Board of Directors passed a resolution finding that the proposed amendment to the merger agreement, and the merger contemplated thereby were advisable and in the best interest of Callisto's stockholders and, as such, approved the proposed amendment to the merger agreement, the merger contemplated thereby and the other transactions contemplated by the merger agreement, as it will be amended, and recommended that and instructed management and counsel to finalize all documentation related to the merger as promptly as practicable.

        On October 15, 2012, the Special Committee of Synergy's Board of Directors met, discussed and considered the terms of the proposed amendment to the merger agreement. Synergy's outside counsel

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presented the terms and conditions of the proposed amendment to the merger agreement, which included an increase in the exchange ratio from 0.1700 to 0.1799 and an increase in the lock up period from 18 months to 24 months, subject to the right of the Synergy Board of Directors to release such lock up, and discussed the Board's fiduciary obligations with respect to the proposed amendment to the merger agreement. During the meeting, at the request of the Special Committee, Canaccord Genuity, Inc. reviewed in detail with the Special Committee its financial analyses with respect to fairness of the new consideration being offered to the Callisto stockholders and rendered its oral opinion (which opinion was subsequently confirmed in writing by the delivery of Canaccord Genuity, Inc.'s written opinion dated the same date) to the effect that as of such date, and based upon and subject to the various financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to Canaccord Genuity, Inc., the consideration to be received by the stockholders of Callisto in the merger, after taking into account the amendment to the merger agreement was fair, from a financial point of view, to such stockholders.

        An extensive discussion among the Board members and with outside counsel and Canaccord Genuity, Inc. then ensued. Thereafter, the Special Committee, recommended that the Board of Directors approve the proposed amendment to the merger agreement. Upon a motion duly made, the Board of Directors passed a resolution finding that the proposed amendment to the merger agreement, and the merger contemplated thereby were advisable and in the best interest of Synergy's stockholders and, as such, approved the proposed amendment to the merger agreement, the merger contemplated thereby and the other transactions contemplated by the merger agreement, as it will be amended, and recommended that and instructed management and counsel to finalize all documentation related to the merger as promptly as practicable.


Recommendation of the Synergy Board of Directors and its Reasons for the Merger

        Synergy's Board of Directors has (i) determined that the merger is advisable and fair to, and in the best interest of Synergy and its stockholders, has approved the merger and the merger agreement and (iii) recommends that Synergy stockholders vote "FOR" the adoption and approval of the merger agreement, as amended. In considering the recommendation of the Synergy Board of Directors with respect to the merger agreement, as amended, Synergy stockholders should be aware that certain directors and officers of Synergy have certain interests in the merger that are in addition to the interests of Synergy stockholders generally. The Synergy Board of Directors consulted with and received information from Synergy management and Synergy's legal and financial advisors in evaluating the merger, and considered a number of factors in reaching its decision to take the foregoing actions, including, but not limited to the following:

    the belief that the combination of the businesses of Synergy and Callisto would create more value for Synergy stockholders in the long term than Synergy would create as a subsidiary of Callisto;

    the belief that the merger of Synergy and Callisto is an effective method of distribution of the Synergy shares of common stock held by Callisto to the Callisto stockholders;

    net annual cost savings of $275,000 expected to be realized by the combined company from reduced general and administrative and other costs;

    the fact that the Exchange Ratio is fixed and will not fluctuate based upon changes in the stock prices of Synergy or Callisto prior to the completion of the merger;

    the opinion letter of Canaccord Genuity Inc., dated October 15, 2012, to the Special Project Committee of the Synergy Board of Directors as to the fairness, from a financial point of view and as of the date of the opinion to Synergy of the issuance of the shares of Synergy common stock to be issued in the merger pursuant to the merger agreement, as amended (see section

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      entitled "Chapter One—The Merger—The Merger Transaction—Opinion of Synergy's Financial Advisor" beginning on page 66);

    the use of Synergy common stock as the sole consideration in the merger, which will allow Synergy to proceed with the merger without having to deplete its existing cash resources;

    the fact that a significant stockholder of Callisto, owning 16% of Callisto's outstanding shares, and certain of the directors and executive officers of Callisto agreed to vote their shares of Callisto common stock in favor of the merger and against any alternative acquisition proposal, which the Synergy Board of Directors viewed as sending a strong message to the market that the Callisto Board of Directors and senior management are supportive of the combination and that Callisto is likely to obtain stockholder approval for the merger; and

    the belief that the terms and conditions of the merger agreement, including the parties' mutual representations and warranties, covenants, deal protection provisions and closing conditions, are reasonable for a transaction of this nature; and

        The Synergy Board of Directors also identified and considered a variety of risks and other countervailing factors in its deliberations concerning whether to approve the merger and enter into the merger agreement, including, but not limited to, the following:

    the risks described under the section entitled "Chapter One—The Merger—Risk Factors" beginning on page 31;

    the possibility that the operational and financial benefits anticipated in connection with the merger might not be realized by the combined company;

    the fact that the implied value of the Exchange Ratio, represented a 34% premium to Callisto's 20 trading day weighted average closing stock price ending on July 20, 2012 and a 12% premium based on the single-day spot closing prices of Synergy's and Callisto's common stock on July 20, 2012;

    the substantial transaction costs to be incurred by Synergy in connection with the merger, even if the nerger is not completed in a timely manner or at all;

    the interests of Synergy directors and executive officers in the merger, including the matters described under the section entitled "Chapter One—The Merger—The Merger Transaction—Interests of Synergy Directors and Executive Officers in the Merger" beginning on page 88;

    the expected substantial limitations on the combined company's utilization of net operating loss carryforwards in light of Section 382 of the Code; and

    the risk that conditions to the completion of the merger will not be satisfied and that the merger may not be completed in a timely manner or at all.

        In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Synergy Board of Directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the merger agreement and to recommend that Synergy stockholders vote in favor of the issuance of shares of Synergy common stock in the merger. In addition, individual members of the Synergy Board of Directors may have given differing weights to different factors. The Synergy Board of Directors conducted an overall analysis of the factors described above.

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Opinion of Synergy's Financial Advisor

        Canaccord Genuity is acting as financial advisor to Synergy in connection with the merger. As part of that engagement, the Special Project Committee of the Synergy Board of Directors (the "Synergy Special Committee") requested that Canaccord Genuity evaluate the fairness, from a financial point of view, to Synergy of the issuance of the shares of Synergy common stock to be issued in the merger (the "Recapitalization Shares"). At a meeting of the Synergy Special Committee held on July 20, 2012 to evaluate the merger, Canaccord Genuity delivered to the Synergy Special Committee an oral opinion, which opinion was confirmed by delivery of a written opinion, dated July 20, 2012, to the effect that, as of that date and based upon and subject to certain assumptions, factors and qualifications, the issuance of the Recapitalization Shares pursuant to the original merger agreement (subsequently executed on July 20, 2012) was fair, from a financial point of view, to Synergy. As discussed elsewhere in this Joint Proxy Statement/Prospectus, Synergy and Callisto subsequently negotiated revised terms and conditions for the merger, including an increase in the exchange ratio to 0.1799 and an extension of the contractual lock-up prohibiting transfers of the Recapitalization Shares to 24 months. Prior to Synergy approving and entering into Amendment No. 1 to the merger agreement ("Amendment No. 1"), at a meeting of the Synergy Special Committee held on October 15, 2012 to evaluate the merger under the revised terms of Amendment No. 1, Canaccord Genuity delivered to the Synergy Special Committee an oral opinion, which opinion was confirmed by delivery of a written opinion, dated October 15, 2012, to the effect that, as of that date and based upon and subject to certain assumptions, factors and qualifications, the issuance of the Recapitalization Shares pursuant to the merger agreement, as amended by Amendment No. 1, was fair, from a financial point of view, to Synergy.

        The full text of Canaccord Genuity's opinion is attached as Annex C to this Joint Proxy Statement/Prospectus and is incorporated into this Joint Proxy Statement/Prospectus by reference. The description of Canaccord Genuity's opinion set forth in this Joint Proxy Statement/Prospectus is qualified in its entirety by reference to the full text of Canaccord Genuity's opinion. Holders of Synergy common stock are encouraged to read Canaccord Genuity's opinion carefully in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Canaccord Genuity in connection with its opinion. Canaccord Genuity's opinion was addressed to the Synergy Special Committee, was only one of many factors considered by the Synergy Special Committee and the Synergy Board of Directors in their evaluation of the merger and only addresses the fairness of the issuance of the Recapitalizations in the merger from a financial point of view to Synergy. Canaccord Genuity's opinion does not address the relative merits of the merger as compared to other business strategies or transactions that might be available to Synergy or the underlying business decision of Synergy to proceed with the merger and is not intended to, and does not, constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or related transactions. Canaccord Genuity's opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Canaccord Genuity as of, October 15, 2012, the date of its opinion. Canaccord Genuity assumes no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of the opinion.

        In connection with rendering the opinion described above and performing its related financial analyses, Canaccord Genuity reviewed, among other things:

    the merger agreement dated July 20, 2012 and the draft of Amendment No. 1 presented to the Synergy Special Committee;

    certain internal financial statements and other business and financial information, including certain projected financial and operating data concerning Synergy prepared by Synergy management;

    the reported prices and trading activity for Synergy common stock and Callisto common stock;

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    the terms, to the extent publicly available, of selected transactions involving the issuance of securities subject to restrictions on transfer;

    the terms, to the extent publicly available, of selected transactions involving the sale of control;

    the terms, to the extent publicly available, of selected transactions involving the repurchase by issuers of outstanding shares of common stock;

    such other financial studies and analyses, performed such other investigations, and took into account such other matters as we deemed necessary, including an assessment of general economic, market and monetary conditions.

        Canaccord Genuity also held discussions with members of the senior management of Synergy and Callisto regarding their assessment of the strategic rationale for, and the potential benefits of, the merger and the past and current business operations, financial condition and future prospects of their respective companies. Also in connection with rendering its opinion and performing its related financial analysis, Canaccord Genuity noted that Callisto does not have any independent business operations and that its only material assets are 22,295,000 shares of Synergy common stock, which represent approximately 33.9% of the outstanding shares of Synergy's common stock. Canaccord Genuity also noted that the Recapitalization Shares would be issued subject to a restriction on transfer for 24 months following the closing.

        For purposes of rendering the opinion described above, Canaccord Genuity relied upon and assumed, without assuming any responsibility for independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Canaccord Genuity and have relied on assurances of management that they are not aware of any facts that would make such information misleading. In that regard, Canaccord Genuity assumed with Synergy's consent that internal financial forecasts and other forward-looking information reviewed has been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Synergy. In addition, Canaccord Genuity did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Synergy or Callisto or any of their respective subsidiaries and Canaccord Genuity was not furnished with any such evaluation or appraisal. Canaccord Genuity assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Synergy or Callisto or on the expected benefits of the merger in any way meaningful to Canaccord Genuity's analysis. Canaccord Genuity also assumed that the merger will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to Canaccord Genuity's analysis. Canaccord Genuity's opinion did not address the underlying business decision of Synergy to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to Synergy, nor does it address any legal, regulatory, tax or accounting matters. Canaccord Genuity's opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the merger consideration to be paid to the holders of shares of Synergy common stock pursuant to the merger agreement. Canaccord Genuity did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement or merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including, without limitation, the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Synergy, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Synergy, or class of such persons, in connection with the merger, whether relative to the merger consideration to be paid to holders of shares of Synergy common stock pursuant to the merger agreement or otherwise. Canaccord Genuity did not express any

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opinion as to the prices at which shares of Synergy common stock will trade at any time or as to the impact of the merger on the solvency or viability of Synergy or Callisto or the ability of Synergy or Callisto to pay their respective obligations when they come due. Canaccord Genuity' opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Canaccord Genuity as of, the date of the opinion and Canaccord Genuity assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Canaccord Genuity's advisory services and opinion were provided for the information and assistance of the Synergy Special Committee in connection with its consideration of the merger and such opinion does not constitute a recommendation as to how any holder of Synergy common stock should vote or make any election with respect to such merger or any other matter. Canaccord Genuity's opinion was approved by a fairness committee of Canaccord Genuity.

        The following is a summary of the material financial analyses delivered by Canaccord Genuity to the Synergy Special Committee in connection with rendering the opinion described above that was delivered on October 15, 2012 based on the terms of the merger agreement, as amended by Amendment No. 1. The following summary, however, does not purport to be a complete description of the financial analyses performed by Canaccord Genuity, nor does the order of analyses described represent relative importance or weight given to those analyses by Canaccord Genuity. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Canaccord Genuity's financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before October 12, 2012, the last trading day before Canaccord Genuity delivered its financial analysis to the Synergy Special Committee, and is not necessarily indicative of current market conditions.

        Implied Transaction/Discount Premium Analysis.    As noted above, Callisto has no independent business operations and its only material assets are 22,295,000 shares of Synergy common stock. In addition, Callisto has 158,859,577 shares of its common stock outstanding. Based on the consideration of 0.1799 of shares of Synergy common stock to be paid in respect of each share of Callisto common stock pursuant to the merger agreement (as amended by Amendment No. 1), Canaccord Genuity calculated the total number of shares of Synergy common stock to be issued in the merger to be 28,674,162. Such shares represented:

    a premium of 28.6% relative to Callisto's current holdings of Synergy common stock;

    a discount of 22.2% to Synergy; and

    dilution of 9.4% to the total current Synergy stockholders.

        Selected Sale of Control Transactions Premium Analysis.    Based on the consideration of 0.1799 of shares of Synergy common stock to be paid in respect of each share of Callisto common stock pursuant to the merger agreement (as amended by Amendment No. 1), Canaccord Genuity calculated that the consideration to be paid for each share of common stock of Callisto would have an implied value of approximately $0.88. based upon the $4.89 closing market price of the Synergy common stock on October 3, 2012. Canaccord Genuity reviewed and compared the value of $.88 per share implied in the merger to the trading price as of one day, 30 days and 60 days prior to public announcement for selected sale of control transactions in the pharmaceutical/biotechnology industry, i.e., transactions in which a significant controlling position was sold to a third party. Based on underlying information obtained from SEC filings and other public sources, with respect to each selected transaction, Canaccord Genuity calculated the premiums of the purchase prices for the precedent transactions to the closing market price of the target's common stock as of one day, 30 days and 60 days prior to the announcement of the transaction.

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        The following presents the results of the analysis:

 
  1-Day Premium   30-Day Premium   60-Day Premium  

Mean

    50.2 %   58.8 %   55.2 %

Median

    54.4 %   55.7 %   52.1 %

High

    121.4 %   145.7 %   131.6 %

Low

    9.6 %   9.0 %   6.4 %

Premium Paid to Callisto

    25.7 %   87.2 %   51.7 %

        While none of the selected sale of control transactions are directly comparable to the merger, the transactions all involved target companies in the publicly traded pharmaceutical/biotechnology industry with a market capitalizations between $40 to $500 million and, in each transaction, at least 40% of the target company was acquired. In order to obtain the most comparable set of precedent transactions, Canaccord Genuity excluded transactions completed at a discount or at a 150% or greater premium. Canaccord Genuity reviewed and compared a total of 32 transactions that fit within these criteria.

        Selected Buyback Transactions Premium Analysis.    Canaccord Genuity reviewed and compared the implied premiums to trading price as of one day, 30 days and 60 days prior to public announcement for selected buyback transactions (i.e., publicly traded companies repurchasing a significant block of their outstanding shares of common stock) since 2010, with monetary values less than $150 million.

        Based on underlying information obtained from SEC filings and other publicly available information, with respect to each selected buyback transaction, Canaccord Genuity calculated the premiums of the purchase prices to the closing market price of the applicable company's common stock as of one day, 30 days and 60 days prior to public announcement of the buyback transaction.

        The following presents the results of the analysis:

 
  1-Day Premium   30-Day Premium   60-Day Premium  

Mean

    20.6 %   23.1 %   28.2 %

Median

    13.8 %   18.5 %   20.1 %

High

    82.8 %   76.7 %   103.8 %

Low

    2.9 %   2.8 %   0.0 %

Premium to Callisto's Synergy stockholders

    28.6 %   28.6 %   28.6 %

        While none of the selected buyback plan transactions are directly comparable to the transaction, the selected buyback transactions all involved repurchases of an issuer's common stock of an aggregate size comparable to the merger in which a premium to the trading price was paid. Canaccord Genuity reviewed and compared a total of 10 transactions that fit within these criteria.

        Selected PIPE Offering Analysis.    Canaccord Genuity reviewed and compared the discount to the trading price at which shares of common stock for selected publicly traded companies were sold in private placements where the purchasers were entitled to a subsequent registration of the shares to provide liquidity, or what is generally referred to as a "PIPE Offering", and the discount to the trading price at which shares were issued in all public offerings since October 2009. The companies that had conducted PIPE Offerings that were selected for review and comparison in this analysis were:

    Repros Therapeutics Inc.

    Oragenics Inc.

    AP Pharma, Inc.

    BIOLineRx Ltd.

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    Genetic Technologies Ltd.

    InSite Vision Inc.

    Trius Therapeutics, Inc.

    Ampio Pharmaceuticals, Inc.

    K-V Pharmaceutical Company

    IntelliPharmaceutics International Inc.

    Oncothyreon Inc.

    Altair Nanotechnologies, Inc.

    PROLOR Biotech Inc.

    Amarin Corporation plc

    Aoxing Pharmaceutical Company, Inc.

    EXACT Sciences Corporation

    Cornerstone Therapeutics, Inc.

    Chemgex Pharmaceuticals Limited

        The following table presents the results of this analysis:

 
  Discount to
Trading Price
 

Selected PIPE Offerings

       

Average

    31.5 %

Median

    29.0 %

High

    4.2 %

Low

    67.9 %

All Public Offerings

       

Average

    6.9 %

Median

    5.4 %

PIPE Offering Discount Less Public Offering Discount

       

Average

    24.6 %

Median

    23.6 %

Synergy's Discount to Callisto

    22.2 %

        While none of the selected transactions are directly comparable to the merger, the companies that participated in the selected transactions were publicly traded pharmaceutical/biotechnology companies with a market capitalization at the time of announcement was between $40 million and $300 million and, in each of the PIPE Offerings, the sale was completed at a discount to the trading price one day prior to the offering.

        In connection with its review and analysis of the selected PIPE Offerings, Canaccord Genuity noted that shares issued in private placement transactions were subject to restriction on transfer for six months from issuance pursuant to SEC Rule 144, while the Recapitalization Shares being issued in the merger were subject to a contractual restriction on transfer for 24 months.

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        The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Canaccord Genuity's opinion. In arriving at its fairness determination, Canaccord Genuity considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Canaccord Genuity made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Synergy, Callisto or the merger.

        Canaccord Genuity prepared these analyses for purposes of Canaccord Genuity providing its opinion to the Synergy Special Committee as to the fairness from a financial point of view of Synergy issuing the Recapitalization Shares to the holders of the shares of Callisto common stock pursuant to the merger agreement (as amended by Amendment No. 1). These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Synergy, Callisto, Canaccord Genuity or any other person assumes responsibility if future results are materially different from those forecast.

        The merger consideration was determined through negotiations between Synergy and Callisto and was approved by the Synergy Special Committee and Synergy's Board of Directors. Canaccord Genuity did not participate in the determination of the terms of the merger and did not recommend any specific amount of consideration to Synergy, the Synergy Special Committee or Synergy's Board of Directors or that any specific amount of consideration constituted the only appropriate consideration for the merger.

        As described above, Canaccord Genuity's opinion to the Synergy Special Committee was one of many factors taken into consideration by the Synergy Special Committee and Synergy's Board of Directors in making their determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Canaccord Genuity in connection with its opinion and is qualified in its entirety by reference to the full text of the written opinion of Canaccord Genuity attached as Annex C to this Joint Proxy Statement/Prospectus.

        Canaccord Genuity and its affiliates are engaged in investment banking and financial advisory services, commercial banking, securities trading, investment management, brokerage activities and other financial and non-financial activities and services for various persons and entities. In the ordinary course of these activities and services, Canaccord Genuity and its affiliates may at any time make or hold long or short positions and investments, as well as actively trade or effect transactions, in the equity, debt and other securities (or related derivative securities) and financial instruments of Synergy, Callisto, any of their respective affiliates or third parties that may be involved in the transaction contemplated by the merger agreement for their own account and for the accounts of their customers.

        Canaccord Genuity acted as financial advisor to Synergy solely in connection with the delivery of a fairness opinion with respect to the merger. Canaccord Genuity may provide investment banking services to Synergy, and its respective affiliates in the future for which Canaccord Genuity may receive compensation.

        Synergy's board of directors selected Canaccord Genuity as its financial advisor because it is a nationally recognized investment banking firm that has substantial experience in transactions similar to the merger in the pharmaceutical/biotechnology industry. Pursuant to letter agreements, dated July 12,

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2012 and October 4, 2012, Synergy engaged Canaccord Genuity to act as its financial advisor solely in connection with the delivery of a fairness opinion with respect to the merger. Pursuant to the terms of these engagement letters, Synergy agreed to pay Canaccord Genuity a customary fixed fee for the opinion delivered on July 20, 2012 and a customary fixed fee for the opinion delivered on October 15, 2012. Neither of these fees is contingent upon consummation of the merger. In addition, Synergy has agreed to reimburse Canaccord Genuity for certain of its expenses and to indemnify Canaccord Genuity and related persons against various liabilities, including certain liabilities under the federal securities laws.


Recommendation of the Callisto Board of Directors and its Reasons for the Merger

        The Callisto Board of Directors (i) has determined that the merger agreement and the merger are advisable and fair to, and in the best interests of, Callisto and its stockholders (ii) has approved the merger agreement as amended, and the Callisto voting agreements and (iii) recommends that the Callisto stockholders vote "FOR" the merger and merger agreement as amended. In reaching its decision to approve the merger agreement as amended, the Callisto Board of Directors consulted with senior members of Callistos' management, members of the Callisto Board of Directors' special committee and with Callistos' financial and legal advisors regarding the strategic and operational aspects of combining Callisto and Synergy and reviewed the results of the due diligence efforts undertaken by Callisto management and Callistos' financial, legal, consulting and accounting advisors.

        The principal factors supporting the Callisto Board of Directors' decision to approve the merger agreement as amended, and recommend that Callisto stockholders vote to adopt the merger agreement included the following:

    the belief that the merger of Synergy and Callisto is an effective method of distribution of the Synergy shares of common stock held by Callisto to the Callisto stockholders;

    that the merger was superior to the strategic alternatives available to Callisto, including continuing as a stand-alone company based on Callistos' current business model or attempting to sell Callisto to a third-party acquirer, each of which the Callisto Board of Directors viewed as less favorable to Callisto stockholders than the merger. In making its determination, the Callisto Board of Directors considered, among the other factors described in this section, Callisto's projected need for additional financing to allow it to continue its business and the risks associated with Callisto's ability to obtain such financing on terms that would not be overly dilutive to its current stockholders, and the ability of the Callisto Board of Directors, in certain circumstances, to terminate the merger agreement in order to accept a superior offer.

    the fact that, based on the closing price of Synergy common stock on July 20, 2012, the 0.1799 exchange ratio represented an implied value of approximately $0.87 per share of Callisto common stock, based on the 20 day trade weighted average of the closing price of Callisto common stock of $0.65 per share on that date.

    the opinion of Callisto's financial advisor, Brean Murray that based upon the assumptions and qualifications set forth in its written opinion, the Exchange Ratio in the merger was fair, from a financial point of view, to the holders of Callisto common stock and Callisto's Board of Directors' review of the financial analysis conducted by Brean Murray in connection with that opinion.

    that the merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code and that, assuming the merger qualifies as a reorganization, Callisto's stockholders generally will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of Callisto common stock for shares of Synergy common stock in connection with

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      the merger, except with respect to cash received in lieu of fractional shares of Synergy common stock.

    the fact that the merger agreement as amended, contains reciprocal representations and warranties, operational covenants, closing conditions and termination rights.

    the ability of the Callisto Board of Directors to respond to and engage in discussions or negotiations regarding unsolicited third-party acquisition proposals under certain circumstances and, ultimately, to terminate the merger agreement in order to accept a superior offer.

    the fact that, prior to the Callisto special meeting of stockholders, the Callisto Board of Directors has the right to change its recommendation to the Callisto stockholders that they vote in favor of the adoption of the merger agreement if the Callisto Board of Directors determines in good faith, after having consulted with its outside legal counsel, that, in light of a superior offer or certain material developments or changes in circumstances arising after the date of the merger agreement, the failure to change its recommendation would reasonably constitute a breach of its fiduciary duties to Callisto stockholders under applicable law.

        The Callisto Board of Directors also considered a number of potentially negative factors in its deliberations concerning the merger agreement, including:

    the possibility that the merger might not be completed whether as a result of the failure to satisfy conditions to the closing of the merger, including the failure to secure the required approvals from Callisto and Synergy stockholders, or as a result of the termination of the merger agreement by Callisto or Synergy in certain specified circumstances.

    the effect of a public announcement of the transactions on Callistos' operations, stock price and employees, the potential disruption to Callisto and Synergy and their businesses as a result of the announcement and pendency of the merger and the potential adverse effects on the financial results of Callisto and Synergy as a result of that disruption and the continued operations of the core business of Callisto and Synergy during the period between the signing of the merger agreement and the completion of the merger.

    Callisto's inability to solicit competing acquisition proposals.

    the expected limitations on the combined company's utilization of net operating loss carryforwards in light of Section 382 of the Code.

    the fact that the executive officers and all but one of Callisto's directors may have interests in the merger that are different from, or in addition to, those of Callistos' other stockholders, including the matters described under the section entitled "Chapter One—The Merger—The Merger Transaction—Interests of Callisto Directors and Executive Officers in the Merger" beginning on page 89, and the risk that these different interests might influence their decisions with respect to the merger.

    the other risks of the type and nature described under "Chapter One—The Merger—Risk Factors" beginning on page 31 of this Joint Proxy Statement/Prospectus.

        The foregoing discussion of the information and factors considered by the Callisto Board of Directors is not exhaustive, but Callisto believes it includes all the material factors considered by the Callisto Board of Directors in connection with its approval and recommendation of the merger and the other related transactions described in this Joint Proxy Statement/Prospectus. In view of the wide variety of factors considered by the Callisto Board of Directors in connection with its evaluation of the merger and the complexity of these matters, the Callisto Board of Directors did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific

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factors it considered in reaching its decision. Rather, the Callisto Board of Directors made its decision based on the totality of information presented to, and the investigation conducted by, it, including discussions with the senior management of Callisto and Callistos' legal and financial advisors, and determined that the merger was advisable and fair to, and in the best interests of, Callisto and its stockholders. In considering the factors discussed above, individual directors may have given different weights to different factors.


Opinion of Callisto's Financial Advisor

        Brean Murray, Carret & Co., LLC, or Brean Murray, is acting as financial advisor to Callisto in connection with the merger. As part of that engagement, the Special Committee of the Callisto Board of Directors (the "Callisto Special Committee") requested that Brean Murray evaluate the fairness, from a financial point of view, to the holders of the common stock of Callisto of the shares of Synergy common stock to be received by the holders of common stock of Callisto in accordance with exchange ratio in the merger (the "Exchange Ratio"). On July 20, 2012, Brean Murray, rendered its oral opinion to the Special Committee of the Board of Directors of Callisto at a meeting held to evaluate the Merger (which was confirmed in writing by Brean Murray's delivery of a written opinion dated such date) as to the fairness to holders of Callisto common stock, from a financial point of view, of the Exchange Ratio pursuant to the merger agreement (subsequently executed on July 20, 2012). As discussed elsewhere in this Joint Proxy Statement/Prospectus, Synergy and Callisto subsequently negotiated revised terms and conditions for the merger, including an increase in the exchange ratio to 0.1799 and an extension of the contractual lock-up prohibiting transfers of the merger shares to 24 months. Prior to Callisto approving and entering into Amendment No. 1 to the merger agreement ("Amendment No. 1"), at a meeting of the Callisto Special Committee held on October 15, 2012 to evaluate the merger under the revised terms of Amendment No. 1, Brean Murray, rendered a new oral opinion to the Special Committee in light of the proposed Amendment No.1 (which was subsequently confirmed in writing by Brean Murray's delivery of a written opinion dated such date) as to the fairness to holders of Callisto common stock, from a financial point of view, of the the Exchange Ratio pursuant to the merger agreement, as amended by Amendment No. 1.

        The opinion was addressed to the Callisto Special Committee and only addressed the fairness to holders of Callisto common stock, from a financial point of view, of the Exchange Ratio in the merger pursuant to the merger agreement, as amended by Amendment No. 1, as of July 20, 2012. Brean Murray's opinion was provided for the information and assistance of the Callisto Special Committee and is not intended to be and does not constitute a recommendation to you as to how you should vote or proceed with respect to the transaction. Brean Murray was not requested to, and did not, negotiate the terms of the transaction or advise Callisto or any members of its board of directors with respect to alternatives to it. Brean Murray was not requested to opine as to, and the Brean Murray opinion does not address, Callisto's underlying business decision to proceed with or effect the merger, the relative merits of the transaction as compared to any alternative business strategy that might exist for Callisto and the other alternatives to the merger that might exist for Callisto. The opinion did not address any other term or aspect of the merger or the merger agreement, including, but not limited to any term or aspect of the merger that is not susceptible to financial analyses, the fairness of the merger, or all or any portion of the merger consideration, to any other security holders of Callisto or any creditors or other constituencies of Callisto, nor the fairness of the amount or nature, or any other aspect, of any compensation to or consideration payable to or received by any officers, directors or employees of any parties to the merger, or any class of such persons, relative to the consideration to be received by the holders of Callisto common stock in the merger pursuant to the merger agreement, or otherwise. The summary of the opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion, which is included as Annex D to this Joint Proxy Statement/Prospectus and is incorporated herein by reference and sets forth the assumptions made, matters considered, procedures followed, and limitations on the review undertaken by Brean Murray in rendering the opinion. The

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opinion will be made available for inspection and copying at the principal offices of Callisto during its regular business hours by any interested equity security holder of Callisto or representative who has been so designated in writing. Neither the opinion nor this summary of the opinion and the related analyses set forth in this Joint Proxy Statement/Prospectus is intended to be, and neither constitutes, a recommendation to the Callisto Special Committee, the Callisto Board of Directors, holders of Callisto common stock or any other security holder as to how they should vote or act with respect to any matter relating to the merger or otherwise.

        The opinion was addressed to the Callisto Special Committee for the use and benefit of the members of the Callisto Special Committee (in their capacities as such) in connection with its evaluation of the merger. The opinion may not be used for any other purpose without Brean Murray, Carret & Co's prior written consent. Brean Murray has advised Callisto that it does not believe any person other than the Callisto Special Committee has the legal right to rely on the opinion and, absent any controlling precedent, Brean Murray would resist any assertion otherwise, including, but not limited to, by asserting the substance of the disclaimer contained in this Joint Proxy Statement/Prospectus and in the opinion. The opinion is not intended to and does not constitute advice or a recommendation to any holders of Callisto common stock or other security holders as to how such holders of Callisto common stock or other security holder should vote or act with respect to any matter relating to the merger or otherwise. The opinion should not be construed as creating any fiduciary duty on Brean Murray's part to Callisto or any other party to the merger agreement, any security holder of Callisto or such other party, any creditor of Callisto or such other party, or any other person. Brean Murray's opinion was just one of the several factors the Callisto Special Committee took into account in making its determinations to approve the merger, including those described elsewhere in this Joint Proxy Statement/Prospectus.

        The opinion did not address the relative merits of the merger as compared to any alternative transaction or business strategy that might exist for Callisto, or the merits of the underlying decision by Callisto to engage in or consummate the merger. The financial and other terms of the Merger, including the determination of the merger consideration, were determined pursuant to negotiations between the parties to the merger agreement and were not determined by or pursuant to any recommendation from Brean Murray. In addition, Brean Murray was not authorized to, and it did not, solicit indications of interest from third parties regarding a potential transaction involving Callisto.

        Brean Murray's analysis and opinion were necessarily based upon market, economic and other conditions, as they existed on, and could be evaluated as of July 20, 2012, the date of the execution of the merger agreement. Accordingly, although subsequent developments could arise that would otherwise affect Brean Murray's opinion, Brean Murray did not assume any obligation to update, review or reaffirm the opinion to the Callisto Special Committee or any other person or otherwise to comment on or consider events occurring or coming to Brean Murray's attention after the date of the original opinion, other than the Amendment No. 1.

        In arriving at its opinion, Brean Murray made such reviews, analyses, and inquiries as it deemed necessary and appropriate under the circumstances. Among other things, Brean Murray:

    reviewed publicly available historical financial and operating data concerning Callisto and Synergy, including, without limitation the Annual Reports of Callisto on Form 10-K for the fiscal years ended December 31, 2011 and December 31, 2010 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012;

    reviewed projected financial information prepared by Callisto management as well as certain updated financial information provided directly to us by both Callisto and Synergy;

    reviewed publicly available non-financial information concerning Synergy and Callisto;

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    reviewed the merger agreement dated July 20, 2012 and Amendment No. 1 thereto;

    conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as it deemed appropriate in arriving at its opinion;

    analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations and financings it considered relevant in evaluating those of Callisto and Synergy;

    compared the proposed financial terms of the merger with the financial terms of certain other transactions that it deemed to be relevant;

    reviewed Callisto's historical financial and operating data; and

    conducted discussions with Callisto's and Synergy's senior management concerning Callisto's and Synergy's historical financial results, business prospects and projected financial information.

        In arriving at its opinion, Brean Murray assumed and relied upon the accuracy and completeness of the financial and other information provided to it without assuming any responsibility for the independent verification of such information. Further, Brean Murray relied upon the assurances of Callisto and Synergy that they are not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial information utilized, Brean Murray, Carret & Co assumed that such information has been reasonably prepared on a basis reflecting the best then currently available estimates and judgments, and that such information provides a reasonable basis upon which it could make an analysis and form an opinion.

        Brean Murray assumed that the transaction will be consummated in a manner that complies in all respects with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. Brean Murray also assumed that obtaining all regulatory approvals and third party consents, if any, required for the consummation of the merger would not have an adverse impact on Callisto, Synergy or on the anticipated benefits of the merger. Brean Murray further assumed that the merger with Synergy as described in the merger agreement would be consummated in a timely manner without waiver or modification of any of the material terms or conditions contained therein. In arriving at its opinion, Brean Murray did not conduct a physical inspection of Synergy's properties or facilities and did not make or obtain any evaluation or appraisal of the assets or liabilities of Synergy. In addition, Brean Murray did not attempt to confirm whether Callisto and Synergy had good title to their respective assets. Brean Murray's opinion set forth herein is necessarily based upon financial, market, economic and other conditions and circumstances as they existed and were disclosed on, and were evaluated as of July 20, 2012. Accordingly, although developments subsequent to July 20, 2012 may affect its opinion, Brean Murray has not assumed any obligation to update, review or reaffirm its opinion, other than related to Amendment No. 1.

        In connection with preparing its opinion, Brean Murray performed a variety of financial analyses. The following is a summary of the material financial analyses performed by Brean Murray in connection with the preparation of its opinion. The summary set forth below does not purport to be a complete description of all the analyses performed by Brean Murray. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analyses and the application of these methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to partial analysis or summary description. Brean Murray did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, notwithstanding the separate factors summarized above, Brean Murray believes, and has advised the Callisto Special Committee, that its analyses must be considered as a whole and that selecting portions of its analyses

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and the factors considered by it, without considering all analyses and factors, could create an incomplete view of the process underlying its opinion. In performing its analyses, Brean Murray made numerous assumptions with respect to industry performance, business and economic conditions and other matters, many of which are beyond the control of Callisto and Synergy. These analyses performed by Brean Murray are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses.

        The following summary of the material financial analyses performed by Brean Murray in connection with the preparation of its opinion based on the terms of the merger agreeemnt, as amended by Amendment No. 1. The analyses performed were prepared solely as part of Brean Murray analysis of the fairness, from a financial point of view, of the Common Stock Exchange Ratio to Callisto pursuant to Callisto's merger with Synergy, and were provided to the Callisto Special Committee in connection with the delivery of Brean Murray's opinion. The opinion of Brean Murray was just one of the many factors taken into account by the Callisto's Special Committee in making its determination to approve the transaction, including those described elsewhere in this Joint Proxy Statement/Prospectus.

Analysis—Overview

        For purposes of Brean Murray's analysis, Brean Murray had approached the merger from both a financial and technical vantage point. When calculating the Exchange Ratio, Brean Murray considered Callisto's net assets to be the ownership of Synergy shares (22.3 million unregistered shares) less non-material liabilities($1.7 million). Also, the newly-issued Synergy shares would have a meaningful lock-up restriction. In addition, the newly-issued Synergy shares would be fully-distributed and not controlled by a single corporate entity.

        Brean Murray approached the analysis by utilizing a variety of valuation methodologies, and indicated to the Special Committee of the board of directors that no single methodology will indicate specific fairness, and that the analyses needed to be taken together in order to provide Opinion clarity and support. Brean Murray undertook the following analyses:

    PIPE versus Registered Offerings Analysis

    Registration Rights Analysis

    Minority-Stake Acquisitions Analysis (Acquisitions of Public Minority-Stakes for Stock)

PIPES versus Registered Offering Analysis

        As part of its analysis, Brean Murray analyzed 87 common stock equity transactions from January 2011 to July 20, 2012 to gauge the Effective Cost of Capital for issuers currently. The Effective Cost of Capital calculation is the sum of the discount/premium plus the value of warrants as determine using Black-Scholes. Brean Murray, Carret & Co analyzed the value of share lock-up restrictions by analyzing differences between Non-Registered transactions such as a Private Investments of Public Equity (PIPE) and comparing that to registered transactions such as Registered Directs and Confidentially Marketed Public Offerings. Brean Murray, Carret & Co analyzed 36 PIPEs from 2011 to the July 20, 2012. In addition, Brean Murray, Carret & Co analyzed 51 Registered Directs (RDs) and Confidentially Marketed Public Offerings (CMPOs) from 2011 to the July 20, 2012.

        Brean Murray, Carret & Co summarized the data in three ways. The summary using Market Capitalization ranges to compare PIPEs to Registered Offering showed an Average Cost of Capital of 38.9% and 16.2% for Market Capitalizations between $100mm and $400mm, respectively, and an Average Cost of Capital of 82.0% and 46.3% for Market Caps between $30mm and $100mm, respectively. Given the approximately $300mm Market Capitalization of Synergy, this analysis implied an Average Non Registered—to—Registered premium (or Variance) of 22.7% according to Brean Murray.

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        The summary of using deal size as a Percentage of Market Capitalizations to compare PIPES to Registered Offerings showed an Average Cost of Capital of 40.9% and 29.9% for Percentages between 20 and 51%, respectively, and an Average Cost of Capital of 74.8% and 30.2% for Percentages between 1.0% and 19.9%, respectively. Given the approximately 40% of Synergy owned by Callisto stockholders pro forma, this analysis implied an Average Non Registered—to—Registered premium (or Variance) of 11.1% according to Brean Murray.

        The summary of using deal size as a multiple of 30 Days Average Days Trading to compare PIPEs to Registered Offering showed an Average Cost of Capital of 79.3% and 34.3% for Multiple of Trading Days between 60 and 500, respectively, and an Average Cost of Capital of 70.5% and 39.4% for Multiple of Trading Days between 20 and 59.9, respectively. Given the approximately 108 Trading Days Holdings of Callisto stockholders pro forma, this analysis implied an Average Non Registered—to—Registered premium (or Variance) of 45.1%.

        This analysis supported Brean Murray, Carret & Co's determination that the Exchange Ratio was fair, from a financial point of view, to Callisto stockholders because the Synergy minimum exchange ratios implied by the various analyses of the same data were .172087, .155818, and .203503 for average variances of 22.7%, 11.1% and 45.1%, respectively.

        Below are 87 issuers of common stock equity offerings Brean Murray, Carret & Co analyzed:

Synergy Pharmaceuticals,  Inc. (NasdaqCM:SGYP)

    07/19/11  

Biodel Inc. (NasdaqGM:BIOD)

    05/13/11  

Keryx Biopharmaceuticals Inc. (NasdaqCM:KERX)

    05/04/11  

XOMA Corporation (NasdaqGM:XOMA)

    03/05/12  

BioSante Pharmaceuticals,  Inc. (NasdaqGM:BPAX)

    07/27/11  

Cardica Inc. (NasdaqGM:CRDC)

    02/07/12  

Unilife Corporation (NasdaqGM:UNIS)

    11/15/11  

EnteroMedics, Inc. (NasdaqCM:ETRM)

    09/22/11  

GTX Inc. (NasdaqGM:GTXI)

    06/22/11  

Alexza Pharmaceuticals Inc. (NasdaqGM:ALXA)

    02/16/12  

Pacira Pharmaceuticals Inc. (NasdaqGM:PCRX)

    04/11/12  

IntelliPharmaCeutics International Inc. (NasdaqCM:IPCI)

    03/09/12  

YM BioSciences Inc. (TSX:YM)

    02/23/12  

Titan Pharmaceuticals Inc. (OTCBB:TTNP)

    04/10/12  

Rockwell Medical Technologies Inc. (NasdaqGM:RMTI)

    02/09/12  

Lexicon Pharmaceuticals,  Inc. (NasdaqGS:LXRX)

    11/11/11  

Amicus Therapeutics,  Inc. (NasdaqGM:FOLD)

    03/01/12  

Synergy Pharmaceuticals,  Inc. (NasdaqCM:SGYP)

    11/15/11  

Pernix Therapeutics Holdings,  Inc. (AMEX:PTX)

    07/21/11  

Trius Therapeutics, Inc. (NasdaqGM:TSRX)

    05/25/11  

Celldex Therapeutics,  Inc. (NasdaqGM:CLDX)

    02/23/12  

Biolase Technology, Inc. (NasdaqCM:BLTI)

    06/24/11  

Array BioPharma, Inc. (NasdaqGM:ARRY)

    02/08/12  

InVivo Therapeutics Holdings Corp. (OTCBB:NVIV)

    12/22/11  

Oncothyreon Inc (NasdaqGM:ONTY)

    03/28/12  

Bacterin International Holdings, Inc. (AMEX:BONE)

    05/31/11  

OncoGenex Pharmaceuticals,  Inc. (NasdaqCM:OGXI)

    03/15/12  

Zogenix, Inc. (NasdaqGM:ZGNX)

    06/30/11  

Trius Therapeutics, Inc. (NasdaqGM:TSRX)

    01/25/12  

Bacterin International Holdings, Inc. (AMEX:BONE)

    05/03/11  

Antares Pharma Inc. (AMEX:AIS)

    05/12/11  

Organovo Holdings, Inc. (OTCPK:ONVO)

    02/13/12  

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PharmAthene, Inc. (AMEX:PIP)

    06/10/11  

Hansen Medical, Inc. (NasdaqGM:HNSN)

    11/07/11  

Raptor Pharmaceuticals Corp. (NasdaqGM:RPTP)

    09/07/11  

Genetic Technologies Ltd. (ASX:GTG)

    07/22/11  

Ampio Pharmaceuticals,  Inc. (NasdaqCM:AMPE)

    12/20/11  

Somaxon Pharmaceuticals,  Inc. (NasdaqCM:SOMX)

    06/08/11  

Celldex Therapeutics,  Inc. (NasdaqGM:CLDX)

    05/17/11  

Unigene Laboratories Inc. (OTCBB:UGNE)

    10/06/11  

Neostem, Inc. (AMEX:NBS)

    07/18/11  

Celsion Corp. (NasdaqCM:CLSN)

    07/21/11  

MELA Sciences, Inc. (NasdaqCM:MELA)

    12/16/11  

RepliCel Life Sciences Inc. (OTCBB:REPC.F)

    03/29/12  

Cleveland BioLabs, Inc. (NasdaqCM:CBLI)

    06/17/11  

ChromaDex Corporation (OTCBB:CDXC)

    02/01/12  

Derma Sciences Inc. (NasdaqCM:DSCI)

    04/02/12  

Horizon Pharma, Inc. (NasdaqGM:HZNP)

    02/29/12  

Peregrine Pharmaceuticals Inc. (NasdaqCM:PPHM)

    09/02/11  

Tonix Pharmaceuticals Holding Corp (OTCBB:TNXP)

    01/23/12  

Apricus Biosciences,  Inc. (NasdaqCM:APRI)

    02/08/12  

XTL Biopharmaceuticals Ltd. (TASE:XTLB)

    03/19/12  

Discovery Laboratories Inc. (NasdaqCM:DSCO)

    03/15/12  

Celsion Corp. (NasdaqCM:CLSN)

    07/01/11  

Galena Biopharma, Inc. (NasdaqCM:GALE)

    04/04/12  

Insite Vision Inc. (OTCBB:INSV)

    07/13/11  

Alexza Pharmaceuticals Inc. (NasdaqGM:ALXA)

    05/03/11  

OncoSec Medical Incorporated (OTCBB:ONCS)

    06/21/11  

Echo Therapeutics, Inc. (NasdaqCM:ECTE)

    12/06/11  

Transgenomic Inc. (OTCBB:TBIO)

    02/03/12  

Celsion Corp. (NasdaqCM:CLSN)

    07/21/11  

Derma Sciences Inc. (NasdaqCM:DSCI)

    06/20/11  

Nanosphere, Inc. (NasdaqGM:NSPH)

    05/09/11  

Celsion Corp. (NasdaqCM:CLSN)

    12/01/11  

TearLab Corporation (NasdaqCM:TEAR)

    04/10/12  

Northwest Biotherapeutics,  Inc. (OTCBB:NWBO)

    07/05/11  

CEL-SCI Corp. (AMEX:CVM)

    01/26/12  

Omni Bio Pharmaceutical,  Inc. (OTCBB:OMBP)

    06/13/11  

Orexigen Therapeutics,  Inc. (NasdaqGM:OREX)

    12/14/11  

IntelliCell BioSciences,  Inc. (OTCPK:SVFC)

    02/23/12  

TranS1, Inc. (NasdaqGM:TSON)

    09/20/11  

Celsion Corp. (NasdaqCM:CLSN)

    05/27/11  

Agenus Inc. (NasdaqCM:AGEN)

    08/11/11  

Emisphere Technologies,  Inc. (OTCBB:EMIS)

    06/30/11  

CytRx Corporation (NasdaqCM:CYTR)

    07/26/11  

Guided Therapeutics, Inc (OTCBB:GTHP)

    11/28/11  

ChromaDex Corporation (OTCBB:CDXC)

    02/01/12  

Athersys, Inc. (NasdaqCM:ATHX)

    03/09/12  

Cyclacel Pharmaceuticals,  Inc. (NasdaqGM:CYCC)

    07/01/11  

BioLineRx, Ltd. (TASE:BLRX)

    02/16/12  

CEL-SCI Corp. (AMEX:CVM)

    10/04/11  

Transition Therapeutics Inc. (NasdaqGM:TTHI)

    11/21/11  

Neuralstem, Inc. (AMEX:CUR)

    02/06/12  

Tekmira Pharmaceuticals Corp. (NasdaqCM:TKMR)

    02/29/12  

Repros Therapeutics Inc. (NasdaqCM:RPRX)

    01/27/12  

Encision Inc. (OTCPK:ECIA)

    04/02/12  

Neostem,  Inc. (AMEX:NBS)

    03/28/12            

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        None of the selected companies have characteristics identical to Callisto. An analysis of selected publicly traded companies is not mathematical; rather it involves complex consideration and judgments concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the public trading values and Cost of Capital of the companies reviewed.

Registration Rights Analysis

        Brean Murray, Carret & Co analyzed the value of share lock-up restrictions by surveying Registration Rights Agreements, typically associated with PIPEs, for their approach to compensating investors for delays in registration. Brean Murray's premise was to evaluate penalties if the shares were not registered for up to a period of 24 months. Brean Murray selected and analyzed 13 health care deals which Brean Murray believed to be reasonably comparable to Callisto. Moreover, the Market Caps ranged from $41.2mm to $191.5mm and their Average Daily Volume range from $.049mm to $1.680mm. Brean Murray, Carret & Co indicated that while no single company proved substantially analogous to Callisto, Brean Murray observed that each of the comparable companies had substantial technology value as recognized by the financial markets.

        Given the 24 month lock-up restriction, the total compensation ranges from 12.2% to 40.8%, with an Average of 25.7% for monthly charges of between 0.5% to 1.5% according to Brean Murray.

        This analysis supported Brean Murray's determination that the Common Stock Exchange Ratio was fair, from a financial point of view, to Callisto's stockholders because the Synergy minimum exchange ratio implied by the analysis was .176295 for an average variance of 25.7%.

        Below are the 13 healthcare deals Brean Murray, Carret & Co analyzed:

Organovo Holdings, Inc. (OTCPK:ONVO)

    02/13/12  

Trius Therapeutics, Inc. (NasdaqGM:TSRX)

    05/25/11  

Celsion Corp. (NasdaqCM:CLSN)

    07/21/11  

Tonix Pharmaceuticals Holding Corp (OTCBB:TNXP)

    01/23/12  

Insite Vision Inc. (OTCBB:INSV)

    07/13/11  

OncoSec Medical Incorporated (OTCBB:ONCS)

    06/21/11  

Derma Sciences Inc. (NasdaqCM:DSCI)

    06/20/11  

Celsion Corp. (NasdaqCM:CLSN)

    12/01/11  

Celsion Corp. (NasdaqCM:CLSN)

    05/27/11  

Athersys, Inc. (NasdaqCM:ATHX)

    03/09/12  

BioLineRx, Ltd. (TASE:BLRX)

    02/16/12  

Horizon Pharma, Inc. (NasdaqGM:HZNP)

    02/29/12  

Transgenomic Inc. (OTCBB:TBIO)

    02/03/12  

Minority-Stake Acquisitions Analysis (Acquisitions of Public Minority-Stakes for Stock)

        Brean Murray analyzed 26 Minority-Stake Acquisitions where the exchange rate was used for stock consideration. According to Brean Murray, no single transaction proved substantially analogous to the proposed Merger as most of the minority-stakes were comprised of operating assets. Brean Murray explained that in such cases of operating assets, acquisition premiums typically incorporate not only small change-of-control premiums, but also substantial operating synergies. Moreover, operational rationale constitutes anywhere between 50% and 100% of the premiums especially with two public companies with public governance profiles and independent investor bases, according to Brean Murray. Given the approximately 40% of Synergy owned by Callisto stockholders pro forma, this analysis implied an Average Stock Premium of 18.6%.

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        This analysis supported Brean Murray's determination that the Exchange Ratio was fair, from a financial point of view, to Callisto because the Synergy minimum exchange ratio implied by the analysis was .166337 for an average variance of 18.6%.

        Below are the 26 Minority-Stake Acquisitions Brean Murray analyzed:

Aluminium of Greece S.A./

 

Golar LNG Energy Limited (OB: GOLE)/

Mytilineos Holdings SA (ATSE: MYTIL)

 

Golar LNG Ltd. (Nasdaq: GLNG)

American Independence Corp. (Nasdaq: AMIC)/

 

Golar LNG Energy Limited (OB: GOLE)/

Independence Holding Co. (NYSE: IHC)

 

Golar LNG Ltd. (Nasdaq: GLNG)

Broadnet AG (DB: MSC/

 

GTC Real Estate N.V. (TASE: GTC)/

QSC AG (XTRA:QSC)

 

Kardan N.V. (ENXTAM:KARD)

Clublink Corp. (TSX: LNK)/

 

Gujarat NRE Resources NL (ASX: GUJ)/

Tri-White Corp. (TSX: TWH)

 

India NRE Minerals Ltd (ASX: INR)

Credito Artigiano S.p.A. (BIT: CRA)/

 

Hitachi Mobile Co.,  Ltd. (TSE: 9429)/

Credito Valtellinese soc Coop (BIT: CVAL)

 

Hitachi Ltd. (TSE:6501)

Cyber Communications Inc. (TSE: 4788)/

 

Kanto Auto Works Ltd. (TSX: 7223)/

Dentsu Inc. (TSE: 4324)

 

Toyota Motor Corporation (TSE: 7203)

Delta Projects S.A./

 

Mitsubishi UFJ Securities Company Ltd. (TSE: 8615)/

lineos Holdings SA (ATSE: MYTIL)

 

Mitsubishi UFJ Financial Group, Inc. (TSE: 8306)

Duncan Energy Partners LP (NYSE: DEP)/

 

NEC Infrontia Corp./

Enterprise Products Operating, LLC

 

NEC Corporation (TSE:6701)

EGG plc/

 

SBI E*Trade Securities Co., Ltd. (JASDAQ: 8701)/

Prudential plc (LSE:PRU)

 

SBI Holdings, Inc. (TSE: 8473)

Energomontaz Polnoc SA (WSE: EPN)/

 

Seco Tools AB (OM: SECO B)/

Polimex-Mostostal Spolka Akcyjna (WSE:PXM)

 

Sandvik AB (OM: SAND)

European Capital Ltd. (LSE: ECAS)/

 

Sumitomo Wiring Systems Ltd. (NSE: 6948)/

American Capital, Ltd. (Nasdaq: ACAS)

 

Sumitomo Electric Industries Ltd. (TSE: 5802)

First Advantage Corporation (Nasdaq: FADV)/

 

Toho Tenax Co. Ltd. (TSE: 3403)/

First American Corp. (NYSE: FAF)

 

Teijin Ltd. (TSE:3401)

Fujitsu Business Systems Ltd. (TSE: 8092)/

 

Toyota Auto Body Co.,  Ltd. (TSE: 7221)/

Fujitsu Ltd. (TSE: 6702)

 

Toyota Motor Corporation (TSE: 7203)

        None of the selected companies involved with these transactions have characteristics identical to Callisto. An analysis involves complex consideration and judgments concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the public trading values and acquisition premiums of the companies reviewed in these transactions.

Summary

        Based on the information and analyses set forth above, Brean Murray delivered its written opinion to Callisto Board of Directors, which stated that, as of July 20, 2012 taking into account to Amendment No. 1), based upon and subject to the assumptions made, matters considered, and limitations on its review as set forth in the opinion, the Exchange Ratio was fair, from a financial point of view, to Callisto. The nature and scope of Brean Murray's analysis, as well as form and substance of its opinion was determined by Brean Murray.

        Brean Murray was selected by the Callisto Special Committee to render an opinion to the Callisto Special Committee because Brean Murray is a nationally recognized investment banking firm and

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because, as part of its investment banking business, Brean Murray is continually engaged in the valuation of businesses and their securities in connection with mergers and mergers, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Brean Murray is providing a Fairness Opinion for Callisto for which it will receive customary fees. In addition, in the ordinary course of its business, Brean Murray and its affiliates may trade the equity securities of Callisto and Synergy for their own account and for the accounts of their customers, and, accordingly, may at any time hold a long or short position in such securities. Brean Murray and its affiliates in the ordinary course of business have, from time to time, provided, and in the future may continue to provide, commercial and investment banking services to Callisto and Synergy, including serving as a financial advisor on potential mergers and as an underwriter or private placement agent for equity offerings, and may in the future receive, fees for the rendering of such services. Brean Murray was an underwriting co-manager in an April 2012 financing for Synergy.

        Pursuant to the Brean Murray engagement letter, Brean Murray will be entitled to receive a customary fee. Additionally, Callisto has agreed to indemnify Brean Murray against certain liabilities, including liabilities under the federal securities laws. The terms of the fee arrangement with Brean Murray, which are customary in transactions of this nature, were negotiated at arm's length between Callisto and Brean Murray and the Callisto Special Committee was aware of and approved the arrangement. Brean Murray was paid an aggregate fee of $250,000 by Callisto in connection with the fairness opinion, which was not conditioned upon the closing of the merger. Except as described above, Brean Murray has not received any compensation from Callisto during the previous two fiscal years and the current year to date.


Accounting Treatment

        As Callisto does not meet the definition of a business under ASC 805, the merger will not be accounted for as a business combination. The merger is expected to be accounted for as a recapitalization of Synergy, effected through exchange of Callisto shares for Synergy shares, and the cancellation of Synergy shares held by Callisto. The excess of Synergy shares issued to Callisto shareholders over the Synergy shares held by Callisto is the result of a discount associated with the restricted nature of the Synergy shares to be received by Callisto shareholders. Therefore, considering this discount, the share exchange has been determined to be equal from a fair value stand point. Upon the effective date of the Merger, Synergy will account for the merger by assuming Callisto's net liabilities. Synergy's financial statements will reflect the operations of Callisto prospectively and will not be restated retroactively to reflect the historical financial position or results of operations of Callisto.


Certain U.S. Federal Income Tax Consequences of the Merger

General

        The following general discussion summarizes the material United States federal income tax consequences of the merger to Synergy, Callisto and holders of Callisto capital stock who are "United States persons" (as defined in Section 7701(a)(30) of the Code) and who hold their Callisto capital stock as a capital asset within the meaning of Section 1221 of the Code. The term "non-United States person" means a person or holder other than a "United States person." If a partnership or other flow-through entity is a beneficial owner of Callisto capital stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. A partner in a partnership holding Callisto capital stock should consult its tax advisor as to the particular tax consequences of the merger to such holder.

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        For purposes of this discussion, a U.S. Holder means:

    a citizen or resident of the United States;

    a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any of its political subdivisions

    a trust, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust; or

    an estate that is subject to U.S. federal income tax on its income regardless if its source

        This section does not discuss all of the United States federal income tax consequences that may be relevant to a particular stockholder in light of his or her individual circumstances or to stockholders subject to special treatment under the federal income tax laws, including, without limitation:

    brokers or dealers in securities or foreign currencies;

    stockholders who are subject to the alternative minimum tax provisions of the Code;

    tax-exempt organizations;

    stockholders who are "non-United States persons";

    expatriates;

    stockholders that have a functional currency other than the United States dollar;

    banks, financial institutions or insurance companies;

    stockholders who acquired Callisto stock in connection with stock option or stock purchase plans or in other compensatory transactions; or

    stockholders who hold Callisto stock as part of an integrated investment, including a straddle, hedge, or other risk reduction strategy, or as part of a conversion transaction or constructive sale.

    Persons under the jurisdiction of a court in a Title 11 or similar case

        Assuming the merger is completed according to the terms of the merger agreement and this Joint Proxy Statement/Prospectus, and based upon customary assumptions and certain representations as to factual matters by Callisto and Synergy, and subject to the qualifications contained herein and in the Wilk Auslander opinion letter included as Exhibit 8.1, (i) it is the opinion of Wilk Auslander LLP that the merger will be treated for United States federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and (ii) this summary constitutes the opinion of Wilk Auslander LLP regarding the material U.S. federal income tax consequences of the merger to the holders of Callisto common stock. No ruling has been or will be sought from the Internal Revenue Service as to the United States federal income tax consequences of the merger, and the following summary and the opinion of Wilk Auslander LLP is not binding on the IRS or the court nor will it preclude the Internal Revenue Service from adopting a position contrary to those expressed in the opinion. This discussion is based upon the Code, laws, regulations, rulings and decisions in effect as of the date of this proxy statement/prospectus, all of which are subject to change, possibly with retroactive effect. This summary does not address the tax consequences of the merger under state, local and foreign laws or under United States federal tax law other than income tax law. There can be no assurance that the IRS will not challenge one or more of the tax consequences described herein.

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        Callisto stockholders are urged to consult their own tax advisors as to the specific tax consequences to them of the Merger, including any applicable federal, state, local and foreign tax consequences.

        The following summary sets forth the material federal income tax consequences for the Callisto stockholders and the corporate parties to the merger assuming, consistent with Wilk Auslander's opinion, that the merger will constitute a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986 as amended.

    Callisto stockholders will not recognize any gain or loss upon the receipt of Synergy common stock in exchange for Callisto stock in connection with the merger (except to the extent of cash received in lieu of a fractional share of Synergy common stock, as discussed below).

    The aggregate tax basis of the Synergy common stock received by a Callisto stockholder in connection with the merger will be the same as the aggregate tax basis of the Callisto stock surrendered in exchange for Synergy common stock (except for any portion of the basis of Callisto stock that is allocated to any fractional share interest for which cash is received).

    The holding period of the Synergy common stock received by a Callisto stockholder in connection with the merger will include the holding period of the Callisto stock surrendered in connection with the merger.

    A dissenting stockholder who perfects appraisal rights will generally recognize gain or loss with respect to his or her shares of the Callisto stock equal to the difference between the amount of cash received and his or her basis in such shares. Such gain or loss will generally be long term capital gain or loss, provided the shares were held for more than one year prior to the disposition of the shares. Interest, if any, awarded in an appraisal proceeding by a court would be included in such stockholder's income as ordinary income.

    Synergy and Callisto will not recognize gain or loss solely as a result of the merger; except for the possible recognition of gain by Callisto as result of the payment by Synergy of Callisto's reorganization expenses, and other intercompany transactions.

Backup Withholding

        If you are a non-corporate holder of Callisto stock you may be subject to information reporting and backup withholding on any cash payments received for perfecting appraisal rights. You will not be subject to backup withholding, however, if you:

    furnish a correct taxpayer identification number to the paying agent for the transaction when submitting such U.S. Holder's stock certificates, and certify that you are not subject to backup withholding on the substitute Form W-9 or a substitute or successor form included in the letter of transmittal to be delivered to you following the completion of the merger (or the appropriate Form W-8, as applicable); or

    are otherwise exempt from backup withholding.

        If a U.S. Holder does not provide a correct taxpayer identification number, such U.S. Holder may be subject to penalties imposed by the Internal Revenue Service. Any amounts withheld under the backup withholding rules does not constitute an additional tax and will be allowed as a refund or credit against your United States federal income tax liability, provided you furnish the required information to the IRS. U.S Holder's should consult with their own tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining the exemption

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Tax Return Reporting Requirements

        If you receive Synergy common stock as a result of the merger, you will be required to retain records pertaining to the merger, and you will be required to file with your United States federal income tax return for the year in which the merger takes place, a statement setting forth certain facts relating to the merger as provided in Treasury Regulations Section 1.368-3(b). The facts to be disclosed by a U.S. Holder include the U.S. Holder's basis in the Callisto or Synergy Pharmaceutical stock, as the case may be which are transferred and the number of shares of Synergy Pharmaceutical shares received in the transaction.

Taxable Acquisition

        The failure of the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code would result in a Callisto stockholder recognizing capital gain or loss with respect to the shares of Callisto stock surrendered by such stockholder equal to the difference between the stockholder's basis in the shares and the fair market value, as of the effective time of the merger, of the Synergy stock received in exchange for the Callisto stock (and the cash received in lieu of a fractional share of Callisto stock). In such event, a stockholder's aggregate basis in the Synergy common stock so received would equal its fair market value and such stockholder's holding period would begin the day after the merger. A dissenting stockholder who receives cash will be required to recognize gain or loss in the same manner as described above (see discussion of dissenters in a reorganization above).

        The foregoing discussion is not intended to be a complete analysis or description of all potential United States federal income tax consequences of the merger. In addition, the discussion does not address tax consequences which may vary with, or are contingent on, your individual circumstances. Moreover, the discussion does not address any non-income tax or any foreign, state or local tax consequences of the merger. Accordingly, you are urged to consult with your own tax advisor to determine the particular United States federal, state, local or foreign income or other tax consequences to you of the merger. We have not been asked to address, nor have we addressed, any other consequences of the Merger, including for example any issues related to intercompany transactions, changes in accounting methods resulting from the merger, the conversion of options, or the status of the tax attributes of each party to the merger after the transaction is consummated.


Effective Time of the Merger

        The merger agreement requires the parties to consummate the merger after all of the conditions to the consummation of the merger contained in the merger agreement are satisfied or waived, including the adoption of the merger agreement by the stockholders of Callisto. The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as is agreed by Synergy and Callisto and specified in the certificate of merger. Neither Synergy nor Callisto can predict the exact timing of the consummation of the merger.


Regulatory Approvals

        Synergy must comply with applicable federal and state securities laws in connection with the issuance of shares of Synergy common stock and the filing of this Joint Proxy Statement/Prospectus with the SEC. In addition, Synergy must comply with the rules and regulations of the NASDAQ Capital Market LLC, or NASDAQ.

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Appraisal Rights

        If the merger is completed, holders of Callisto common stock are entitled to appraisal rights under Section 262 of the DGCL, hereinafter referred to as Section 262, provided that they comply with the conditions established by Section 262.

        The discussion below is a summary regarding a Callisto stockholder's appraisal rights under Delaware law but is not a complete statement of the law regarding dissenters' rights under Delaware law and is qualified in its entirety by reference to the text of the relevant provisions of Delaware law, which are attached to this Joint Proxy Statement/Prospectus as Annex G. Stockholders intending to exercise appraisal rights should carefully review Annex G. Failure to follow precisely any of the statutory procedures set forth in Annex G may result in a termination or waiver of these rights.

        A record holder of shares of Callisto capital stock who makes the demand described below with respect to such shares, who continuously is the record holder of such shares through the effective time of the merger, who otherwise complies with the statutory requirements of Section 262 and who neither votes in favor of the merger nor consents thereto in writing will be entitled to an appraisal by the Delaware Court of Chancery, or the Delaware Court, of the fair value of his, her or its shares of Callisto capital stock in lieu of the consideration that such stockholder would otherwise be entitled to receive pursuant to the merger agreement. All references in this summary of appraisal rights to a "stockholder" or "holders of shares of Callisto capital stock" are to the record holder or holders of shares of Callisto capital stock. Except as described herein, stockholders of Callisto will not be entitled to appraisal rights in connection with the merger.

        Under Section 262, where a merger is to be submitted for approval at a meeting of stockholders, such as the Callisto special meeting, not fewer than 20 days prior to the meeting, a constituent corporation must notify each of the holders of its stock for whom appraisal rights are available that such appraisal rights are available and include in each such notice a copy of Section 262. This Joint Proxy Statement/Prospectus shall constitute such notice to the record holders of Callisto capital stock.

        Stockholders who desire to exercise their appraisal rights must satisfy all of the conditions of Section 262. Those conditions include the following:

    Stockholders electing to exercise appraisal rights must not vote "for" the adoption of the merger agreement. Voting "for" the adoption of the merger agreement will result in the waiver of appraisal rights. Also, because a submitted proxy not marked "against" or "abstain" will be voted "for" the proposal to adopt the merger agreement, the submission of a proxy not marked "against" or "abstain" will result in the waiver of appraisal rights.

    A written demand for appraisal of shares must be filed with Callisto before the taking of the vote on the merger agreement at the special meeting. The written demand for appraisal should specify the stockholder's name and mailing address, and that the stockholder is thereby demanding appraisal of his, her or its Callisto capital stock. The written demand for appraisal of shares is in addition to and separate from a vote against the merger agreement or an abstention from such vote. That is, failure to return your proxy, voting against, or abstaining from voting on, the merger will not satisfy your obligation to make a written demand for appraisal.

    A demand for appraisal must be executed by or for the stockholder of record, fully and correctly, as such stockholder's name appears on the stock certificate. If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, this demand must be executed by or for the fiduciary. If the shares are owned by or for more than one person, as in a joint tenancy or tenancy in common, such demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record. However, the agent must identify the record owner and expressly disclose the fact that, in exercising the demand, he is acting as agent for the record

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      owner. A person having a beneficial interest in Callisto capital stock held of record in the name of another person, such as a broker or nominee, must act promptly to cause the record holder to follow the steps summarized below in a timely manner to perfect whatever appraisal rights the beneficial owners may have.

    A stockholder who elects to exercise appraisal rights should mail or deliver his, her or its written demand to Callisto at 420 Lexington Avenue, Suite 1609, New York, NY 10170, Attention: Bernard Denoyer, Senior Vice President, Finance.

        Within 10 days after the effective time of the merger, Synergy, as the surviving company, will provide notice of the effective time of the merger to all Callisto stockholders who have complied with Section 262 and have not voted in favor of the adoption of the merger agreement.

        Within 120 days after the effective time of the merger, either Callisto or any stockholder who has complied with the required conditions of Section 262 may file a petition in the Delaware Court, with a copy served on Callisto in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares of all stockholders seeking to exercise appraisal rights. There is no present intent on the part of Callisto to file an appraisal petition, and stockholders seeking to exercise appraisal rights should not assume that Callisto will file such a petition or that Callisto will initiate any negotiations with respect to the fair value of such shares. Accordingly, holders of Callisto capital stock who desire to have their shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262.

        Within 120 days after the effective time of the merger, any stockholder who has satisfied the requirements of Section 262 will be entitled, upon written request, to receive from Callisto a statement setting forth the aggregate number of shares of Callisto common stock and Callisto preferred stock not voting in favor of the adoption of the merger agreement and with respect to which demands for appraisal were received by Callisto and the aggregate number of holders of such shares. Such statement must be mailed within 10 days after the stockholder's request has been received by Callisto or within 10 days after the expiration of the period for the delivery of demands as described above, whichever is later.

        If a petition for an appraisal is timely filed and a copy thereof is served upon Callisto, Callisto will then be obligated, within 20 days after service, to file in the office of the Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares and with whom agreements as to the value of their shares have not been reached. After notice to stockholders, as required by the Delaware Court, at the hearing on such petition, the Delaware Court will determine which stockholders are entitled to appraisal rights. The Delaware Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Delaware Court may dismiss the proceedings as to such stockholder. Where proceedings are not dismissed, the Delaware Court will appraise the shares of Callisto capital stock owned by such stockholders, determining the fair value of such shares exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value.

        Although the board of directors of Callisto believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the consideration they would receive pursuant to the merger agreement. Moreover, Callisto does not anticipate offering more than the merger consideration to any stockholder exercising appraisal rights and reserves the right to assert, in any appraisal proceeding, that, for purposes of Section 262, the "fair value" of a share of Callisto capital stock is less

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than the merger consideration. In determining "fair value," the Delaware Court is required to take into account all relevant factors. The cost of the appraisal proceeding, which does not include attorneys' or experts' fees, may be determined by the Delaware Court and taxed against the dissenting stockholder and/or Callisto as the Delaware Court deems equitable under the circumstances. Each dissenting stockholder is responsible for his or her attorneys' and expert witness expenses, although, upon application of a dissenting stockholder, the Delaware Court may order that all or a portion of the expenses incurred by any dissenting stockholder in connection with the appraisal proceeding, including without limitation, reasonable attorneys' fees and the fees and expenses of experts, be charged pro rata against the value of all shares of stock entitled to appraisal.

        Any stockholder who has duly demanded appraisal in compliance with Section 262 will not, after the effective time of the merger, be entitled to vote for any purpose any shares subject to such demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to stockholders of record at a date prior to the effective time of the merger.

        At any time within 60 days after the effective time of the merger, any stockholder will have the right to withdraw his, her or its demand for appraisal and to accept the terms offered in the merger agreement. After this period, a stockholder may withdraw his, her or its demand for appraisal and receive payment for his, her or its shares as provided in the merger agreement only with the consent of Callisto. If no petition for appraisal is filed with the court within 120 days after the effective time of the merger, stockholders' rights to appraisal, if available, will cease. Inasmuch as Callisto has no obligation to file such a petition, any stockholder who desires a petition to be filed is advised to file it on a timely basis. Any stockholder may withdraw such stockholder's demand for appraisal by delivering to Callisto a written withdrawal of his, her or its demand for appraisal and acceptance of the merger consideration, except (i) that any such attempt to withdraw made more than 60 days after the effective time of the merger will require written approval of Callisto and (ii) that no appraisal proceeding in the Delaware Court shall be dismissed as to any stockholder without the approval of the Delaware Court, and such approval may be conditioned upon such terms as the Delaware Court deems just.

        Failure by any Callisto stockholder to comply fully with the procedures described above and set forth in Annex F to this Joint Proxy Statement/Prospectus may result in termination of such stockholder's appraisal rights. In view of the complexity of exercising appraisal rights under Delaware law, any Callisto stockholder considering exercising these rights should consult with legal counsel.


Board of Directors and Executive Officers of Synergy After the Completion of the Merger

    Board of Directors

        Upon completion of the merger, the Synergy Board of Directors will be composed of seven members, including Gabriele Cerrone, Gary S. Jacob and John Brancaccio who are currently directors of Synergy and Callisto. Tom Adams, Chris McGuigan, Melvin Spigelman and Alan Joslyn are currently members of the Synergy Board of Directors and will be members of the Synergy Board of Directors after the merger.

        Of the seven directors of Synergy who are expected to serve on the combined company's board of directors following the completion of the merger, all of such persons, other than Gabriele Cerrone and Dr. Gary S. Jacob are expected to meet the independence standards of the SEC and the NASDAQ.


Interests of Synergy Directors and Executive Officers in the Merger

        In considering the recommendation of the Synergy Board of Directors to vote "FOR" the adoption and approval of the merger agreement, as amended and the merger, Synergy stockholders should be aware that certain members of the Synergy Board of Directors and certain executive officers of Synergy have interests in the merger that may be in addition to, or different from, their interests as Synergy

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stockholders. These interests may create the appearance of a conflict of interest. The Synergy Board of Directors was aware of these potential conflicts of interest during its deliberations on the merits of the merger and in making its decisions in approving the merger agreement, the merger and the other transactions contemplated by the merger agreement, as amended. The Synergy Board of Directors formed a special committee of the Board consisting of three Synergy directors who did not have a conflict of interest.

        As described above, three of the current members of the Synergy Board of Directors are currently directors of Callisto and are expected to continue as directors of the combined company following the completion of the merger, and to hold office from and after the completion of the merger until his or her successor is duly elected and qualified or until his or her death, resignation or removal.

        Gary S. Jacob, Synergy's President and Chief Executive Officer, beneficially owns 1,851,745 shares of Callisto common stock.

        Gabriele M. Cerrone, Synergy's Chairman and a consultant to Synergy beneficially owns 3,417,292 shares of Callisto common stock.

        John Brancaccio, a director, beneficially owns 283,759 shares of Callisto common stock.


Interests of Callisto Directors and Executive Officers in the Merger

        In considering the recommendation of the Callisto Board of Directors to vote "FOR" the adoption and the approval of the merger agreement, as amended, Callisto stockholders should be aware that certain members of the Callisto Board of Directors and all of the executive officers of Callisto have interests in the merger that may be in addition to, or different from, their interests as Callisto stockholders. These interests may create the appearance of a conflict of interest. The Callisto Board of Directors was aware of these potential conflicts of interest during its deliberations on the merits of the merger and in making its decisions in approving the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Callisto Board of Directors formed a special committee of the Board consisting of one Callisto director who was its only director who did not have a conflict of interest.


Restrictions on Sales of Shares of Synergy Common Stock Received in the Merger

        All shares of Synergy common stock received by Callisto stockholders in connection with the merger will be freely tradable, except that each share of Synergy Common Stock received by the Callisto stockholders in connection with the merger shall be subject to a lock-up beginning on the effective date of the merger and ending on the earlier of (i) twenty four (24) months after such date, (ii) a Change in Control (as defined in the Merger Agreement) or (iii) written consent of Synergy, at Synergy's sole discretion, provided Synergy's consent shall apply to all shares of the Synergy common stock issued pursuant to the Merger.


NASDAQ Capital Market Listing of Synergy Common Stock; Delisting and Deregistration of Callisto Common Stock

        Application will be made to NASDAQ to have the shares of Synergy common stock issued in connection with the merger approved for listing on The NASDAQ Capital Market, where Synergy common stock currently is traded under the symbol "SGYP." If the merger is completed, Callisto common stock will be delisted from the OTC QB and there will no longer be a trading market for such stock. In addition, promptly following the closing of the merger, Callisto common stock will be deregistered under the Exchange Act and Callisto will no longer file periodic reports with the SEC.

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Legal Proceedings Related to the Merger

        On August 9, 2012, a stockholder class action complaint was filed in the Supreme Court for the State of New York, captioned Shona Investments v. Callisto Pharmaceuticals, Inc., et al., Civil Action No. 652783/2012. The complaint names as defendants, Callisto, each member of the Board of Callisto (the "Individual Defendants") and Synergy. The complaint generally alleges that the Individual Defendants breached their fiduciary duties and that Synergy aided and abetted the purported breaches of such fiduciary duties. The relief sought includes, among other things, an injunction prohibiting consummation of the proposed transaction, rescission (to the extent the proposed transaction has already been consummated) and the payment of plaintiffs' attorneys' fees and costs. Callisto and Synergy believe the plaintiffs' allegations lack merit and will contest them. An amended class action complaint was filed in the Supreme Court for the State of New York on November 21, 2012.

        On August 31, 2012, a stockholder class action complaint was filed in the Court of Chancery of the State of Delaware, captioned Gary Wagner v. Gary S. Jacob, Inc., et al., Case No. 7820-VCP. The complaint names as defendants, Callisto, the Individual Defendants and Synergy. The complaint generally alleges that the Individual Defendants breached their fiduciary duties and that Synergy aided and abetted the purported breaches of such fiduciary duties. The relief sought includes, among other things, an injunction prohibiting consummation of the proposed transaction, rescission (to the extent the proposed transaction has already been consummated) and the payment of plaintiffs' attorneys' fees and costs. Callisto and Synergy believe the plaintiffs' allegations lack merit and will contest them.

        There can be no assurance as to the outcome of these proceedings.

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THE MERGER AGREEMENT

        The following is a summary of selected provisions of the merger agreement, as amended. While Synergy, and Callisto believe that this description covers the material terms of the merger agreement, it may not contain all of the information that is important to you. The merger agreement, as amended, has been attached as Annex A and Annex B to this prospectus to provide you with information regarding its terms. It is not intended to provide any other factual information about Synergy and Callisto. The following description does not purport to be complete and is qualified in its entirety by reference to the merger agreement. You should refer to the full text of the merger agreement for details of the merger and the terms and conditions of the merger agreement. The merger agreement is incorporated by reference into this joint proxy/prospectus.

        The merger agreement contains representations and warranties that Synergy on the one hand, and Callisto, on the other hand, have made to one another as of specific dates. These representations and warranties have been made for the benefit of the other parties to the merger agreement and may be intended not as statements of fact but rather as a way of allocating the risk to one of the parties if those statements prove to be incorrect. In addition, the assertions embodied in the representations and warranties are qualified by information in confidential disclosure schedules exchanged by the parties in connection with signing the merger agreement. While Synergy does not believe that these disclosure schedules contain information required to be publicly disclosed under the applicable securities laws, other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the attached merger agreement. Accordingly, you should not rely on the representations and warranties as current characterizations of factual information about Synergy, or Callisto because they were made as of specific dates, may be intended merely as a risk allocation mechanism between Synergy and Callisto and are modified by the disclosure schedules.

    General

        Under the merger agreement, Callisto will merge with and into Synergy, with Callisto ceasing to exist and Synergy continuing as the surviving company.

    Closing and Effective Time of the Merger

        The closing of the merger will occur no later than the second (2nd) business day after the satisfaction or waiver of the conditions provided in the merger agreement, or on such other date as Synergy and Callisto may agree in writing. However, because the merger is subject to a number of conditions, neither Synergy nor Callisto can predict exactly when the closing will occur or if it will occur at all. Please see the section entitled "Chapter One—The Merger—The Merger Agreement—Conditions to Completion of the Merger" in this Joint Proxy Statement/Prospectus.

        The effective time of the merger will be the time and date when the merger becomes effective, which shall be the date and time of acceptance for record of the certificate of merger that will be filed with the Delaware Secretary of State on the closing date of the merger, or such other time specified in the certificate of merger.

    Merger Consideration

    Conversion of Callisto Common Stock

        At the effective time of the merger, each share of Callisto common stock issued and outstanding immediately prior to the effective time (other than any outstanding options of Callisto common stock, will be converted into a similar right applying the Exchange Ratio, or shares held by dissenting stockholders who have not waived in writing or failed to perfect or effectively withdrawn or lost their rights to appraisal under Section 262 of the DGCL) will be cancelled and extinguished and

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automatically converted into and become exchangeable for Synergy common stock as described below, together with the right, if any, to receive one full additional share, in lieu of fractional shares of Synergy common stock. Please see the section entitled "Chapter One—The Merger—The Merger Agreement—Fractional Shares of Synergy Common Stock" in this Joint Proxy Statement/Prospectus.

    Exchange Ratio

        The merger agreement provides that stockholders of Callisto will receive 0.1799 of a share of common stock of Synergy for each share of Callisto in the merger.

        This exchange ratio is subject to adjustment to account for the effect of any forward or reverse stock split, stock dividend, including any dividend or distribution of securities convertible into Synergy common stock or Callisto common stock), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Synergy common stock or Callisto common stock occurring on or after the date of the merger agreement and prior to the effective time.

    Synergy Common Stock Held by Callisto

        At the effective time of the merger, the 22,295,000 shares of Synergy common stock held by Callisto will be canceled. All other outstanding shares of Synergy common stock will remain as outstanding share of Synergy common stock and will not be converted or otherwise affected by the merger. For more information regarding the Synergy common stock, please see the section entitled "Chapter Five—Certain Additional Information—Description of Synergy Capital Stock" in this Joint Proxy Statement/Prospectus.

    Fractional Shares of Synergy Common Stock

        No fractional shares of Synergy common stock will be issued to any stockholder of Callisto upon completion of the merger. The holder of shares of Callisto common stock who would otherwise be entitled to a fraction of Synergy common stock (after aggregating all fractional shares of Synergy common stock that otherwise would be received by such holder), will be granted the automatic conversion of such fractional share to the right to receive from Synergy one full additional share of Synergy common stock to such holder of Callisto common stock.

    Share Issuance Process

        Promptly following the effective time, Synergy will make available for delivery the shares of Synergy common stock issuable under the merger agreement. These shares will be issuable in accordance with the stock register of Callisto as of the effective time, to each holder of record as of such time. Physical stock certificates of Callisto common stock will not be required to be exchanged for Synergy common stock certificates and will be automatically issuable in exchange for outstanding shares of Callisto common stock. All shares of Callisto common stock will be deemed to no longer be issued and outstanding as of the effective time, subject to rights of dissenting shares as set forth in the merger agreement.

        All shares of Synergy common stock received by Callisto stockholders in connection with the merger will be freely tradable, except that each share of Synergy Common Stock received by the Callisto stockholders in connection with the merger shall be subject to a lock-up beginning on the effective date of the merger and ending on the earlier of (i) twenty four (24) months after such date, (ii) a Change in Control (as defined in the Merger Agreement) or (iii) written consent of Synergy, at Synergy's sole discretion, provided Synergy's consent shall apply to all shares of the Synergy common stock issued pursuant to the Merger.

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    Conversion of Callisto Options and Warrants

        Each stock option exercisable for shares of Callisto common stock that is outstanding at the effective time of the Merger will be assumed by Synergy and converted into a stock option to purchase the number of shares of Synergy's common stock that the holder would have received if such holder had exercised such stock option for shares of Callisto common stock prior to the merger and exchanged such shares for shares of Synergy's common stock in accordance with the Exchange Ratio, respectively. In addition, each Callisto stock option exercisable for shares of Synergy common stock that is outstanding at the effective time of the merger will be assumed by Synergy and each outstanding warrant or obligation to issue a warrant to purchase shares of Callisto common stock, whether or not vested, shall be cancelled.

    Directors and Officers of Callisto Following the Merger

        Effective as of the closing of the merger, the surviving corporation's officers are expected to include the officers set forth in the certificate of merger, until their respective successors are duly appointed. The surviving corporation's initial directors are expected to include the directors set forth in the certificate of merger, until their respective successors are duly appointed.

    Certificate of Incorporation

        At the effective time Synergy will continue as the surviving corporation. Synergy will continue to be governed by its second amended and restated certificate of incorporation, as it existed prior to the merger, until it is thereafter amended in accordance with Delaware Law and such certificate of incorporation.

    Conditions to Completion of the Merger

        Each party's obligation to complete the merger is subject to the satisfaction or waiver by each of the parties, at or prior to the merger, of various conditions, which include the following:

    stockholders of Callisto and Synergy must have approved and adopted the merger agreement, and approved the merger, by the requisite vote under Delaware Law;

    the registration statement on Form S-4, of which this Joint Proxy Statement/Prospectus is a part, must have been declared effective by the SEC in accordance with the Securities Act and must not be subject to any stop order suspending the effectiveness of the registration statement on Form S-4 and no similar proceeding in respect to the proxy statement/prospectus will have been initiated or threatened in writing by the SEC. All other filings will have been approved or declared effective and no stop order will have been issued and no proceeding will have been initiated to revoke any such approval or effectiveness;

    the shares of Synergy common stock to be issued in the merger and such other shares of Synergy common stock to be reserved for issuance in connection with the merger shall have been approved for listing on The NASDAQ Capital Market, subject to official notice of issuance;

    no court, administrative agency, commission, governmental or regulatory authority, has enacted, enforced or entered any statute, rule, regulation, or other order which is in effect and which has the effect of making the merger illegal or otherwise prohibiting the consummation of the merger;

    all representations and warranties of the other party in the merger agreement subject to exceptions in certain schedules and exhibits to the merger agreement must be true and correct in all material respects on the date of the merger agreement and on the closing date of the

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      merger with the same force and effect as if made on the date on which the merger is to be completed or, if such representations and warranties address matters as of a particular date, then as of that particular date. Each party shall have delivered to the other party a certificate with respect to the foregoing executed on behalf of the other party by a duly authorized officer of such party;

    the other party to the merger agreement must have performed or complied with in all material respects all covenants and agreements required to be performed or complied with by it on or before the closing of the merger, and the parties must have received a certificate to such effect signed on behalf of the other party by a duly authorized officer of such party;

    no material adverse effect with respect to the other party will have occurred since the date of the agreement.

    Synergy will have received waivers from each executive of Callisto related to any rights they may have to payments, bonuses, vesting, acceleration or other similar rights that are or may be triggered by the consummation of the transactions set forth in the merger agreement.

    all state securities or "blue sky" authorizations necessary to carry out the transactions contemplated by the merger agreement shall have been obtained and be in effect; and

    all proceedings in connection with the merger and the other transactions contemplated by the merger agreement and all certificates and documents delivered by the other party as required under the merger agreement or otherwise reasonably requested by the requesting party will be executed and delivered by the other party and will be reasonably satisfactory to the requesting party.

        In addition, the obligation of Synergy to complete the merger is further subject to the satisfaction or waiver of the following conditions:

    Callisto must have obtained the consents, waivers and approvals required to be obtained in connection with the consummation of the transactions contemplated by the merger agreement; and

    No Solicitation

        During the period commencing from the date of the merger agreement until the earlier to occur of the termination of the merger agreement and the effective time, Callisto and its subsidiaries will not, nor will they authorize or permit any of their respective representatives, to directly or indirectly:

    Solicit, initiate, encourage or induce the making, submission or announcement of any acquisition transaction (as defined below);

    Participate in discussions or negotiations regarding, or take any other action to facilitate any inquiries of the making of any proposal that constitutes any acquisition transaction;

    Engage in discussions or negotiations with any person with respect to any acquisition transaction, except as to the existence of the non-solicitation provisions in the merger agreement;

    Subject to the merger agreement, approve, or recommend any acquisition transaction;

    Enter into any letter of intent or any contract agreement contemplating or relating to an acquisition transaction;

    Notwithstanding the foregoing, prior to the adoption and approval of the merger agreement and the approval of the merger by the Callisto stockholders, Callisto may furnish information regarding Callisto or any of its subsidiaries to, or enter into a confidentiality agreement or negotiations with, any person in response to a superior offer (as defined below) submitted by

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      such person if: (i) neither Callisto nor any representative of Callisto and its subsidiaries has violated any of the restrictions set forth in the non-solicitation provision in the merger agreement, (ii) the board of directors of Callisto concludes in good faith with the consultation of outside legal counsel that such action is required for the board of directors of Callisto to comply with its fiduciary obligations to its stockholders under Delaware Law, (iii) at least five (5) business days prior to furnishing any such information to or entering into negotiations with, such person Callisto gives Synergy written notice of the identity of such persons and Callisto's intention to negotiate with such persons and Callisto receives from such person an executed confidentiality agreement, and contemporaneously with furnishing any information to such person, Callisto furnishes such information to Synergy.

    An "acquisition transaction" means any transaction or series of related transactions, other than the transactions contemplated by the merger agreement, involving (i) an acquisition from Callisto by any "group" (as defined under Section 13(d) of the Exchange Act) of more than twenty-five percent (25%) interest in the total outstanding voting securities of Callisto or any of its subsidiaries, or any tender offer or exchange offer that if consummated would result in any person or "group" beneficially owning five percent (5%) or more of the total outstanding voting securities of Callisto or any of its subsidiaries, or any merger, consolidation, or business combination involving Callisto that would hold less than ninety-five (95%) of the equity interests in the surviving entity of such transaction, (ii) any sale, lease (other than in the ordinary course of business), exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of more than five percent (5%) of the assets of Callisto, or (iii) any liquidation or dissolution of Callisto.

    A "superior proposal" means any bona fide, unsolicited written acquisition proposal on terms that the board of directors of Callisto determines in good faith, on the basis of the advice of a financial advisor and taking into account all the terms and conditions of the acquisition proposal, are more favorable and provide greater value to all the stockholders of Callisto from a financial point of view than the terms of the merger set forth in the merger agreement; provided, however, that any such offer shall not be deemed to be a "superior offer" if any financing required to consummate the transaction contemplated by such offer is not committed and is not likely, to be obtained by such third party on a timely basis.

        The parties agree that any violation of the non-solicitation provision in the merger agreement will be deemed to be a breach by Callisto.

    Meeting of Stockholders

        Callisto and Synergy are each obligated under the merger agreement to call, give notice of, convene and hold a meeting of its stockholders for purposes of considering the merger and the merger agreement.

    Covenants; Conduct of Business Pending the Merger

        During the period commencing from the date of the merger agreement and continuing until the earlier to occur of the termination of the merger agreement or the effective time, the parties and each of their respective subsidiaries must, except to the extent that the other parties otherwise consent in writing, carry on its business in the usual, regular and ordinary course, and in compliance with all applicable laws and regulations, pay its debts and taxes when due, pay or perform material obligation, when due, and use commercially reasonable efforts consistent with past practices to: (i) preserve intact its business organization, (ii) keep available the services of its present officers and employees, and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licenses, and others with

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which it has business dealings. The parties must also notify each other of any material event involving its business operations.

        During the period commencing from the date of the merger agreement and continuing until the earlier to occur of the termination of the merger agreement or the effective time, neither Synergy nor Callisto, nor any of its subsidiaries, except to the extent that the other party consents in writing, is permitted to:

    purchase, redeem or otherwise acquire any shares of capital stock, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date of the merger agreement;

    acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, any business or any corporation, limited liability company, or other business organization, or otherwise acquire all or substantially all of the assets of any of the foregoing, or enter into any joint ventures, strategic partnerships or similar alliances;

    incur or enter into any agreement, contract or commitment or arrangement requiring such party or its subsidiaires to make payments in excess of $1,000,000 in any individual cases or $3,000,000 in the aggregate;

    engage in any action that could reasonably be expected to cause the merger to fail to qualify as a "reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as amended, whether or not otherwise permitted by the merger agreement;

    engage in any action with the intent to adversely impact or materially delay the consummation of the merger or any of the other transactions contemplated by the merger agreement;

    agree in writing or otherwise to take any of the foregoing actions.

    Other Agreements

        Each of Synergy and Callisto has agreed to use its commercially reasonable efforts to:

    coordinate with the other in preparing and exchanging information for purposes of (i) compliance with state and federal securities laws, and (ii) filing with the SEC this Joint Proxy Statement/Prospectus;

    consult and agree with each other about any public disclosure either will make concerning the merger, subject to certain exceptions;

    obtain all consents, waivers and approvals, for the consummation of the transactions contemplated by the merger agreement; and

    provide the other party and its representatives' reasonable access to information concerning the business of the other party as such other party may reasonably request.

        Callisto has further agreed to:

    promptly take all steps necessary in accordance with Delaware Law, its certificate of incorporation and its bylaws, to convene a meeting of the stockholders of Callisto, to be held as promptly as practicable, for the purpose of voting upon the merger agreement and the merger; and

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        Synergy has further agreed to:

    cause the surviving corporation to fulfill the obligations of Callisto under any indemnification agreements between Callisto and any of its directors and officers as in effect on the date of the merger agreement and any indemnification provisions under Callisto' certificate of incorporation or by laws as in effect on the date of the merger agreement.

    promptly take all steps necessary in accordance with Delaware Law, its certificate of incorporation and its bylaws, to convene a meeting of the stockholders of Synergy, to be held as promptly as practicable, for the purpose of voting upon the merger agreement and the merger; and

        Any party may waive compliance with any of the agreements or conditions contained in the merger agreement which waiver shall be written and signed on behalf of such party. There are no other requirements with respect to obtaining a waiver other than the requirement that it is in writing and signed on behalf of such party.

    Termination

        The merger agreement may be terminated at any time before the completion of the merger, whether before or after the required stockholder approvals to complete the merger have been obtained, as set forth below:

    by mutual written consent of Synergy and Callisto, duly authorized by their respective boards of directors;

    by either Synergy or Callisto if the merger is not consummated by the date that is 6 months after signing date of the merger agreement for any reason; provided, however, that this right to terminate is not available to any party whose action or failure to act has been a principal cause of the failure of the merger to occur on or before such date;

    by either Synergy or the Callisto if a court, administrative agency, commission, governmental or regulatory authority issues a final and nonappealable order, decree or ruling or taken any other action having the effect of permanently restraining, enjoining or otherwise prohibiting the merger;

    by either Synergy or Callisto if the requisite approval of the stockholders of Callisto is not obtained by reason of the failure to obtain the requisite vote at a meeting of the stockholders of Callisto, duly convened therefore or at any adjournment or postponement; provided, however, that this right to terminate is not available to Callisto if the failure to obtain the requisite approval of the stockholders of Callisto was caused by the action or failure to act of Callisto, and such action or failure to act constitutes a breach of the merger agreement;

    by Synergy if a triggering event (as defined below) occurs;

    by Callisto, upon a breach of any representation, warranty, covenant or agreement on the part of Synergy set forth in the merger agreement, or if any representation or warranty of Synergy becomes untrue, such that the conditions to the merger would not be satisfied as of the time of such breach or as of the time such representation or warranty becomes untrue; provided, however, that if such inaccuracy in Synergy's representations and warranties or breach by Synergy is curable by Synergy through the exercise of its commercially reasonable efforts, then Callisto may not terminate the merger agreement for thirty (30) calendar days following the delivery of written notice from Callisto to Synergy of such breach, provided Synergy continues to exercise commercially reasonable efforts to cure such breach;

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    by Synergy, upon a breach of any representation, warranty, covenant or agreement on the part of Callisto set forth in the merger agreement, or if any representation or warranty of Callisto becomes untrue, such that the conditions to the merger would not be satisfied as of the time of such breach or as of the time such representation or warranty becomes untrue; provided, however, that if such inaccuracy in Callisto' representations and warranties or breach by Callisto is curable by Callisto through the exercise of its commercially reasonable efforts, then Synergy may not terminate the merger agree-ment for thirty (30) calendar days following the delivery of written notice from Synergy to Callisto of such breach, provided Callisto continues to exercise commercially reasonable efforts to cure such breach; or

    by Synergy if a change that is materially adverse to the business, assets, capitalization, financial condition or results of operations with respect to Callisto or its subsidiaries occurs since the date of the merger agreement; provided, however, that if such change is curable by Callisto through commercially reasonable efforts, then Synergy may not terminate the merger agreement for thirty (30) calendar days following the occurrence of such change, provided Callisto continues to exercise commercially reasonable efforts to cure the effect that is materially adverse to the business, assets, capitalization, financial condition or results of operations with respect to Callisto if it is cured during such thirty (30) calendar day period.

    a "triggering event" has occurred if (i) the board of directors of Callisto or any of its committees has withdrawn or has amended or modified in a manner adverse to Synergy its recommendation in favor of the adoption and approval of the merger agreement or the approval of the merger; (ii) Callisto failed to include in the proxy statement/prospectus the recommendation of the board of directors of Callisto in favor of the adoption and approval of the merger agreement and the approval of the merger; (iii) the board of directors of Callisto failed to reaffirm its recommendation in favor of the adoption and approval of the merger agreement and the approval of the merger within five (5) business days after Synergy requests in writing that such recommendation be reaffirmed at any time following the announcement of an acquisition proposal; (iv) the board of directors of Callisto or any of its committees has approved or recommended any acquisition proposal; (v) Callisto has entered into any letter of intent or similar document accepting any acquisition proposal; or (vi) a tender or exchange offer relating to securities of Callisto has been commenced by a person unaffiliated with Synergy or its stockholders and Callisto has not sent to its security holders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10) business days after such tender or exchange offer is first published, a statement indicating that Callisto recommends rejection of such tender or exchange offer.

    Expenses

        Each party to the merger agreement will be responsible for the payment of all fees and expenses incurred by such party in connection with the merger agreement and the transactions contemplated by the merger agreement.

    Representations and Warranties

        The merger agreement contains substantially similar representations and warranties of Synergy and Callisto as to, among other things:

    corporate organization and existence;

    corporate power and authority;

    certificates of incorporation and bylaws;

    authority relative to the merger agreement;

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    no conflict, required filings and consents;

    absence of certain changes or events;

    absence of litigation; and

    the registration statement, and proxy statement/prospectus.

    agreements, contracts and commitments;

    no undisclosed liabilities;

    compliance

    employee benefit plans;

    environmental matters;

    brokers;

    taxes;

    SEC filings;

    financial statements;

    restrictions on business activities;

    title to property;

    intellectual property;

    insurance;

    board approval; and

    vote required to adopt the merger agreement and approve the merger.

        The representations and warranties are, in many respects, qualified by materiality and knowledge, and will not survive the merger, but their accuracy forms the basis of one of the conditions to the obligations of Synergy and Callisto to complete the merger.

        The merger agreement may be amended in writing by the parties at any time.

    Agreements Related to the Merger Agreement

    Callisto Voting Agreements

        As of July 20, 2012, certain of the stockholders of Callisto, indicated below, in their capacities as stockholders of Callisto, have separately entered into voting agreements with Callisto in which they have agreed to vote all shares of Callisto capital stock that they beneficially owned as of the date of their respective agreements, and that they subsequently acquire, in favor of the merger, against any matter that would result in a breach of the merger agreement by Callisto and against any proposal made in opposition to, or in competition with, the consummation of the merger and the other transactions contemplated by the merger agreement. The stockholders who have entered into Voting Agreements, include, Gabriele Cerrone, Gary Jacob, Bernard Denoyer, John Brancaccio, Randall Johnson and Merrill Hunter.

        As of November 29, 2012, these stockholders of Callisto owned, in the aggregate, 27,914,126 shares of Callisto capital stock, allowing them to exercise approximately 17.4% of the voting power of Callisto capital stock.

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CHAPTER TWO—INFORMATION ABOUT THE MEETINGS AND VOTING

        Synergy's Board of Directors is using this Joint Proxy Statement/Prospectus to solicit proxies from the holders of Synergy common stock for use at the Synergy annual meeting. Callisto's Board of Directors is using this Joint Proxy Statement/Prospectus to solicit proxies from the holders of Callisto common stock for use at the Callisto special meeting. This Joint Proxy Statement/Prospectus and accompanying form of proxy is being first mailed to Synergy stockholders on or about December 5, 2012 and to Callisto stockholders on or about December 5, 2012.


Matters Relating to the Meetings

 
  Synergy Annual Meeting   Callisto Special Meeting

Date, Time and Place:

  January 3, 2013   January 3, 2013

  10:00 a.m., Eastern Time   1:00 p.m., Eastern Time

  Offices of Sichenzia Ross Friedman Ference LLP   Offices of Callisto

  61 Broadway, 32nd Floor
New York, New York 10006
  420 Lexington Avenue Suite 1609

      New York, New York 10170

Purpose of Meeting is to Vote on the Following Items:

 

1. the adoption and approval of the merger agreement, described under "Chapter One—The Merger—The Merger Agreement" on page 91;

 

1. adoption and approval of the merger agreement as described under "Chapter One—The Merger—The Merger Agreement" on page 91;

 

2. the adjournment of the annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1;

 

2. adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Callisto Proposal No. 1; and

 

3. approval of an increase in the number of authorized shares issuable under Synergy's 2008 Equity Compensation Incentive Plan, as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 3—Approval of an Increase in the number of shares issuable under the Synergy's 2008 Equity Compensation Incentive Plan" beginning on page 151;

 

3. such other matters as may properly come before the Callisto meeting, including the approval of any adjournment of the meeting.

 

4. approval of an amendment to Synergy's Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 100,000,000 to 200,000,000, as described in "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 4" beginning on page 153;

   

 

5. the re-election of seven current Synergy directors to hold office until the 2013 annual meeting as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 5" beginning on page 155;

   

 

6. the ratification of the appointment of BDO USA, LLP as the independent registered public accounting firm of Synergy for its fiscal year ending December 31, 2012 as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 6" beginning on page 173;

   

 

7. To approve, on an advisory basis, the compensation of Synergy's named executive officers as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 7" beginning on page 174;

 

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  Synergy Annual Meeting   Callisto Special Meeting

 

8. To recommend, on an advisory basis, the three-year frequency with which Synergy should conduct future stockholder advisory votes on named executive officer compensation as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 8" beginning on page 175; and

   

 

9. Such other matters as may properly come before the Synergy meeting, including the approval of any adjournment of the meeting.

   

Record Date:

 

The record date for shares entitled to vote is November 29, 2012.

 

The record date for shares entitled to vote is November 29, 2012.

Outstanding Shares Held on Record Date:

 

As of November 29, 2012, there were 66,130,746 shares of Synergy common stock outstanding.

 

As of November 29, 2012, there were 158,965,565 shares of Callisto common stock outstanding.

Shares Entitled to Vote:

 

Shares entitled to vote are Synergy common stock held at the close of business on the record date, November 29, 2012.

 

Shares entitled to vote are Callisto common stock held at the close of business on the record date, November 29, 2012.

 

Each share of Synergy common stock that you own entitles you to one vote.

 

Each share of Callisto common stock that you own entitles you to one vote.

 

Shares held by Synergy in its treasury, if any, are not voted.

 

Shares held by Callisto in its treasury, if any, are not voted.

Quorum Requirement:

 

A quorum of stockholders is necessary to hold a valid meeting.

 

A quorum of stockholders is necessary to hold a valid meeting.

 

The presence in person or by proxy at the meeting of holders of shares representing a majority in interest of the Synergy common stock issued and outstanding and entitled to vote at the meeting is a quorum. Abstentions and broker non-votes count as present for establishing a quorum.

 

The presence in person or by proxy at the meeting of holders of shares representing at least a majority in interest of the Callisto common stock issued and outstanding and entitled to vote at the meeting is a quorum. Abstentions and broker non-votes count as present for establishing a quorum.

 

A broker non-vote occurs on an item when a broker is not permitted to vote on that item without instruction from the beneficial owner of the shares and no instruction is given.

 

A broker non-vote occurs on an item when a broker is not permitted to vote on that item without instruction from the beneficial owner of the shares and no instruction is given.

Outstanding Shares Entitled to Vote and Owned by Synergy or Callisto Directors, Executive Officers and their Affiliates as of November 29, 2012:

 

1,010,495 shares of Synergy common stock outstanding and entitled to vote at the Synergy annual meeting.

 

2,524,254 shares of Callisto common stock outstanding and entitled to vote at the Callisto special meeting.

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Vote Necessary to Approve Synergy and Callisto Proposals

Item
   
  Vote Necessary

Merger Proposal

  Synergy:   Adoption and approval of the merger agreement described in "Chapter One—The Merger" requires an affirmative vote of a majority of the issued and outstanding shares of Synergy common stock. Abstentions will be counted towards the vote total for this proposal and will have the same effect as "Against" votes and will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes will have the same effect as "Against" votes but will be counted for purposes of determining a quorum at the meeting.

 

Callisto:

 

Adoption and approval of the merger agreement described in "Chapter One—The Merger" requires an affirmative vote of a majority of the issued and outstanding shares of Callisto common stock. Abstentions will be counted towards the vote total for this proposal, and will have the same effect as "Against" votes. Broker Non-Votes will have the same effect as "Against" votes but will be counted for purposes of determining a quorum at the meeting.

Adjournment of the meeting, if necessary

 

Synergy:

 

Approval of the adjournment of Synergy's annual meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve the issuance of the shares of Synergy common stock pursuant to the merger agreement requires the affirmative votes present, in person or by proxy, and entitled to vote on the matter, regardless of whether a quorum is present. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

 

Callisto:

 

Approval of the adjournment of Callisto's special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of adoption of the merger agreement requires the affirmative vote of a majority of the votes present, in person or by proxy, and entitled to vote on the matter, if a quorum is present. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

Approval of an Increase in the number of shares issuable under Synergy's 2008 Equity Compensation Incentive Plan

  Synergy:   The approval of an increase in the number of shares issuable under the Synergy's 2008 Equity Compensation Incentive Plan as described in "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 3—Approval of an Increase in the number of shares issuable under the Synergy's 2008 Equity Compensation Incentive Plan" requires the affirmative vote of a majority of the votes present, in person or by proxy, and entitled to vote on the matter. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

  Callisto:   Not Applicable

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Item
   
  Vote Necessary

Approval of an amendment to Synergy's Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 100,000,000 to 200,000,000

  Synergy:   The approval of an amendment to Synergy's Amended and Restated Certificate of Incorporation as described under "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 4—Approval of Amendment to the Second Amended and Restated Certificate of Incorporation to Increase the Authorized Shares of Common Stock from 100,000,000 to 200,000,000" requires an affirmative vote of a majority of the issued and outstanding shares of Synergy common stock. Abstentions will be counted towards the vote total for this proposal, and will have the same effect as "Against" votes and will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes will have the same effect as "Against" votes but will be counted for purposes of determining a quorum at the meeting.

  Callisto:   Not Applicable.

Re-election of seven current directors to hold office until the 2013 annual meeting

  Synergy:   The re-election of seven (7) current Synergy directors to Synergy's board as described in "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 4—Election of Directors" requires the affirmative vote of a plurality of the votes present, in person or by proxy, and entitled to vote on the matter. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

  Callisto:   Not Applicable

Ratification of the appointment of BDO USA, LLP as the independent registered public accounting firm of Synergy

  Synergy:   The ratification of the appointment of BDO USA, LLP as the independent registered public accounting firm of Synergy as described in "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 5—Ratification of Appointment of Independent Registered Public Accounting Firm" requires the affirmative vote of a majority of the votes present, in person or by proxy, and entitled to vote on the matter. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

  Callisto:   Not Applicable

Approval, on an advisory basis, of the compensation of the Synergy's named executive officers

  Synergy:   The approval, on advisory basis, of the compensation of Synergy's named executive officers described in "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 6—Advisory Vote on the approval of executive compensation" requires the affirmative vote of a majority of the votes present, in person or by proxy, and entitled to vote on the matter. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

  Callisto:   Not Applicable

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Item
   
  Vote Necessary

Recommendation, on an advisory basis, the three-year frequency with which Synergy should conduct future stockholder advisory votes on named executive officer compensation.

  Synergy:   The recommendation, on advisory basis, of the three-year frequency with which Synergy should conduct future stockholder advisory votes on named executive officer compensation described in "Chapter Six—Synergy Annual Meeting Proposals—Synergy Proposal No. 7—Advisory Vote on the frequency of holding an advisory vote on executive compensation" requires the affirmative vote of a majority of the votes present, in person or by proxy, and entitled to vote on the matter. Abstentions will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting. Broker Non-Votes have no effect and will not be counted towards the vote total for this proposal but will be counted for purposes of determining a quorum at the meeting.

  Callisto:   Not Applicable


Voting

        You may vote in person at your meeting or by proxy. We recommend you vote by proxy even if you plan to attend your meeting. You can always change your vote at the meeting.

        Voting instructions are included on your proxy or proxy card. If you properly give your proxy and submit it in time to vote (or vote electronically via the Internet), one of the individuals named as your proxy will vote your shares as you have directed. You may vote for or against the proposals or abstain from voting. Abstentions and broker non-votes will be counted for purposes of determining a quorum at the meeting. With respect to Synergy Proposals No. 1 and No. 4 and Callisto Proposal No. 1, if you mark your proxy "abstain" with respect to such proposal, you will be in effect voting against such proposal. If your shares are held in "street name" by a broker, bank or other nominee, the broker cannot vote your shares on any proposal without your instructions. This is a "broker non-vote." Broker non-votes for Synergy Proposals No. 1 and 4 and Callisto Proposal No. 1 will have the same effect as voting against such proposals. Broker non-votes for all other proposals will have no effect and will not be counted towards the vote total for any proposal.


How to Vote by Proxy

Synergy