CITI $RLYP Alert: Quick Analysis Suggests ~$1.4B to ~$2.2B Takeout Value
or ~$42 / Share at the Midpoint of Range
 Reuters reported today at 12:45 PM that Relypsa has hired the investment
bank Centerview Partners to review offers in connection with a potential sale
of the company ─ The news is consistent with our recent thematic piece on M&A in
SMid cap Biotech suggesting we could see an uptick in deals given reset valuations
in the SMid cap space.
 Recall we had highlighted RLYP as one of the 8 names in our coverage space
that we see as having a greater likelihood of being acquired ─ See M&A May
Take Time but the Ingredients Are Brewing – Our Universe Offers Oppys - A Look at
What's Under the Hood across Our SMid Biotech Pipelines - Shopping List for
Pharma/Big Biotech.
 Analysis of Potential RLYP takeout Valuation – Low End of Range ─ AZN
bought ZSPH for $2.7B in November 2015 at a 42% premium. If we apply this
premium to the current ~$1B market cap of RLYP we see a takeout valuation of
~$1.4B on the low end. This would translate to $33/shr.
 Analysis of Potential RLYP takeout Valuation – High End of Range ─ We
currently model Veltassa peak US sales (2024) of $770M. Considering 1) precedent
set by the prior $2.7B buyout of ZS Pharma and 2) our ZS-9 peak US sales
estimates of ~$930M at the time of the deal, valuing Relypsa on a relative peak
sales multiple basis would imply a ~$2.2B valuation (770/930 * $2.7B). This would
translate to $51/shr.
 Possible bidders for RLYP based on ZSPH bidding history? ─ Recall in the
SEC filings (Schedule 14D-9) for the ZSPH bidding history, there were two other
bidders beyond AZN 1) Party A (which was Actelion, bid $2.5B for ZSPH) and 2)
Party B (unnamed). Also note the Schedule 14D-9 indicated that there were "four
remaining Potential Bidders: "During the week of September 13, 2015,
representatives of Goldman Sachs engaged in discussions regarding process with
each of AstraZeneca, Party B and the other four remaining Potential Bidders."

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