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Relypsa Soars 67% in Thursday Trading on Buyout Rumors

Biopharma company, Relypsa, Inc.’s RLYP shares shot up a whopping 67% yesterday on acquisition rumors. According to a Reuters article, Relypsa is exploring the possibility of a potential sale following interest from prospective buyers. While the company is rumored to be working with an investment bank on a potential sale, people familiar with the matter said that discussions are still in an early stage and may not result in a sale.

Veltassa Holds the Key

Relypsa is being viewed as an acquisition target mainly due to its sole approved product, Veltassa. Approved for the treatment of hyperkalemia, Veltassa was launched in the U.S. in Dec 2015. The product’s initial performance has been encouraging and is expected to bring in peak sales of a billion dollars.

Ever since AstraZeneca plc AZN shelled out $2.7 billion for one of Relypsa’s competitors, ZS Pharma, which had an experimental hyperkalemia treatment, ZS-9, in its pipeline, investors have been hopeful about Relypsa’s acquisition prospects considering it already has a marketed hyperkalemia treatment in its portfolio. The expectation is that the companies that were unsuccessful in acquiring ZS Pharma could well start a bidding war for Relypsa.

The market for the treatment of hyperkalemia is huge given the addressable patient population of about 3 million in the U.S. Veltassa is the first new drug to be approved in the U.S. to treat hyperkalemia in more than 50 years.

Will a Deal be Announced before ZS-9 PDUFA Date?

While Relypsa has limited competition and huge target market potential on its side, the big question is will a deal materialize before May 26 when the FDA is expected to decide on the fate of AstraZeneca’s ZS-9. Potential suitors could well decide to wait for this regulatory decision before approaching Relypsa. If ZS-9 is approved with a better label, then it could very well have an edge over Veltassa which comes with a black box label that tells patients to avoid taking any other oral medications within 6 hours of taking Veltassa.

Relypsa is a Zacks Rank #3 (Hold) stock. Amphastar Pharmaceuticals, Inc. AMPH and Akorn, Inc. AKRX are better-ranked stocks in the healthcare sector with Amphastar holding a Zacks Rank #1 (Strong Buy) and Akorn a Zacks Rank #2 (Buy).

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ASTRAZENECA PLC (AZN): Free Stock Analysis Report
 
AMPHASTAR PHARM (AMPH): Free Stock Analysis Report
 
AKORN INC (AKRX): Free Stock Analysis Report
 
RELYPSA INC (RLYP): Free Stock Analysis Report
 
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