Liquid Biopsy · @Liquid_Biopsy
8th Apr 2016 from TwitLonger
wedbush $RLYP Relypsa (RLYP - OUTPERFORM): We Believe Relypsa is an Acquisition Target;
Reiterate OUTPERFORM and $52 Price Target
Price: $24.91 12-Month Price Target: $52
• We are not surprised by the report that multiple suitors may be in early negotiations to acquire Relypsa. A Reuters’
article on April 7th indicated that Relypsa has received multiple overtures from potential buyers and as a consequence is
working with an investment bank to review offers. The article warned that because these discussions are in early stages this
effort may not lead to a sale. The article goes on with a reminder that ZS Pharma (developer of competing ZS-9 hyperkalemia
drug candidate) was acquired by AstraZeneca for $2.7 billion and cites sources estimating the hyperkalemia market to be
worth more than $6 billion. (Note with about 43.3 million shares outstanding the equivalent RLYP stock price at $2.7 billion
market capitalization is about $62 per share.) Of note on April 7th, RLYP closed up about 67%.
• We believe the most logical acquirer of Relypsa is Sanofi. We previously looked at the phosphate binder market and
based on Symphony Health estimates for total prescriptions, we calculated Renagel and Renvaler (both have the sevelamer
polymer as the active ingredient) together have over 80% of the total phosphate binder annual prescriptions (August 11, 2015
RLYP research report) and that Sanofi has been clearly successful in our view at counter detailing metal-based phosphate
binders. Sanofi and Relypsa have a two year co-detailing contract for Veltassa and we believe Sanofi’s involvement –
especially with their salespeople’s presumed long-term relationships with nephrologists who prescribe phosphate binders – is
likely to accelerate Veltassa uptake. Because Veltassa is a non-metal polymer like Sanofi’s phosphate binders, we see it as a
great addition for their salespeople. Consequently, we would not be surprised if Sanofi is the eventual acquirer.
• NEXT CATALYSTS: Release of March Veltassa prescription figures around mid-April, potential approval of ZS-9 in
late May, and potential Veltassa label update with sNDA approval around year-end. Relypsa plans to submit a sNDA to
the FDA around mid:16 that could improve the Veltassa package insert. The sNDA is expected to include data from the
Phase 1 drug-drug interaction (DDI) study. In the sNDA, we anticipate Relypsa to request removal of the black box warning,
reduction of drug-drug separation time to 3 hours and clinical DDI results included in a standard section for a package insert
which could help to accelerate sales beginning in 2017.