Morgan Stanley's Berens Highlights Greater Payor Pushback For Relypsa's Veltassa; Stock Drops 5%

Morgan Stanley’s AlphaWise survey revealed that awareness and current treatment patterns remained significant headwinds for Veltassa, the lead product of Relypsa Inc RLYP. Morgan Stanley’s Andrew S. Berens maintains an Underweight rating for the company, with a price target of $9, saying that Veltessa faced significant commercialization hurdles.

Challenges For Relypsa

The survey of 200 physicians revealed that they continue to prefer treating hyperkalemia on an "as-needed" basis rather than via chronic or daily therapy.

“These physicians also expressed relatively low awareness of new-to-market potassium binders, with less than 50 percent of cardiologists and only 10 percent of general practitioners having heard of Veltassa ~5 months after approval,” analyst Andrew Berens mentioned.

The survey also suggested that the onset of action was the most important factor in potassium binder prescribing decision. This is likely to benefit ZS9 from AstraZeneca plc (ADR) AZN, rather than Veltassa, Berens believes.

Insurance Claims Data

Insurance claims data from the first nine weeks of Veltassa's launch suggested a greater payor pushback with a higher rejection rate for Veltassa during initial launch versus comparable launches from other companies, the analyst noted.

Berens believes that Relypsa may find it difficult to take proactive steps to gain payor traction through aggressive contracting and increased rebates, given Veltassa's high cost of manufacturing and expensive infrastructure and their impact on margins.

Reylpsa was recently seen down more than 5 percent on Friday, trading at $20.97.