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Actionable news in RLYP: RELYPSA Inc,

ZS Pharma take out by AstraZeneca puts the spotlight on Relypsa; shares rise 17% premarket

Updated Comparison of ZS-9 and VeltassaAstraZeneca ($AZN) just bought $ZSPH for $2.7B. Did anyone see that coming? I didn't. They must have outbid Actelion by $200M. The timing is interesting. Potential approval of ZS-9, although still seven+ months away, has likely been derisked in the eyes of $AZN due to the approval of Veltassa. The ZS-9 safety data has not yet been reported, although presumably $AZN has seen at least some of it.I think the biggest question on everyone's mind right now is "Why did ZSPH get scooped up for a tidy $2.7B so early on, and where is the buyout for RLYP?” Understanding this scenario requires understanding the motivations of all involved players. Let's start with facts that may have motivated ZSPH to accept an early pre-approval buyout.The ZS-9 safety trial (to be presented 11/7/15) allows titration of drug dose. This is presumably due to the previously recognized drug related edema. Previously, 14.1% of patients receiving a 15g dose of ZS-9 developed edema. The safety trial starts patients on the 10g dose (which previously produced 2-3x the incidence of edema relative to placebo), but allows the patient to increase to 15g if sub-therapeutic or decrease to 5g if experiencing edema. If edema develops after increasing the dose, presumably the dose would then be decreased - however if this occurs the patient would presumably return to being sub-therapeutic… of note, the 5g dose was only marginally effective.This dose-dependent edema produces two problems. The first relates to the FDA label. Target population for these drugs is moderate to severe chronic kidney failure and heart disease. Both of these populations are almost universally on salt (sodium) and fluid restricted diets. Failure to adhere to sodium and fluid restriction can result in water retention, which manifests as edema, increased blood pressure and most importantly, more rapid progression of heart/kidney disease. There is a very real risk that the FDA will approve ZS-9, but with restrictions or at least a boxed warning regarding chronic kidney failure and heart failure. Since these are the specific target populations, this would be a problem.ZS-9 is months behind Relypsa’s Veltassa. Relypsa is pressing their first to market advantage by teaming up with Sanofi’s experienced nephrology sales force, by rapidly completing contracts with payers including medicare and by...


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