Overhang For Relypsa Remains, Morgan Stanley Says
A probable delay in the FDA approval of ZS-9, AstraZeneca plc’s (ADR) (NYSE: AZN) hyperkalaemia asset, could lend near-term upside to shares of Relypsa Inc (NASDAQ: RLYP). Morgan Stanley’s Andrew S Berens maintained an Equal-weight rating for the company, with a price target of $9.
AstraZeneca announced that ZS-9 had received a complete response letter [CRL], following the preapproval manufacturing inspection. There could be a delay of 9 to 12 months in the FDA approval of ZS-9, “giving Relypsa a slightly longer runway without competition,” analyst Andrew S Berens commented.
The latest development also removes AstraZeneca’s near-term assistance in building the marketplace, there is likely to be a positive, albeit modest impact on Relypsa’s Veltassa revenues. Berens added, “We note that the European approval timeline for approval in early 2017 could remain intact, with a CHMP opinion expected this fall.”
Impact On Financing
The ZS-9 delay could increase the likelihood of dilutive financing in the near-term, since the modest increase in revenue does not offset Relypsa’s cash needs, in view of its high burn rate.
“We also think that this delay decreases the likelihood of near-term strategic optionality, as it provides no visibility into the ZS-9 label. We believe any potential acquirer waiting until this point would similarly wait until the new action date to better assess the commercial dynamics expected in 2017 and beyond,” the analyst stated.
Latest Ratings for RLYP
|Sep 2016||BTIG Research||Terminates||Neutral|
|Aug 2016||Stifel Nicolaus||Downgrades||Buy||Hold|
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