UPDATE: Morgan Stanley Initiates Coverage on Relypsa on Large Opportunity in K+ Control

In a report published Tuesday, Morgan Stanley analyst David Friedman initiated coverage on Relypsa RLYP with an Overweight rating and $57.00 price target. In the report, Morgan Stanley noted, “We are OW Relypsa as we believe patiromer has $850+mn revenue potential in hyperK+. Patiromer has shown solid data reducing serum K+ levels in hyperkalemic patients out to 52 weeks. Patiromer's safety profile is clean, with manageable mild-to-moderate GI tolerability and low levels of hypokalemia and hypomagnesemia, which have not led to clinically meaningful issues. We expect patiromer to be approved in the US following a 3Q14 NDA filing; the EU path forward is less clear to us. Many HF and CKD patients must reduce or discontinue RAASi therapy, drugs which have been shown to improve long-term outcomes, given high K+ levels. We see a compelling opportunity for patiromer as the drug reduces K+ levels and may allow HF and CKD patients to remain on their RAASi therapy. We expect that limited long-term data and tolerability issues will moderate the impact of competitors such as ZS-9 and kayexalate.” Relypsa closed on Monday at $19.99.