Wedbush Hikes Relypsa Target To $86 On Edge Of U.S. Veltassa Launch

• Relypsa Inc RLYP shares are down 12 percent year-to-date, and have been trading below $30 since August 7.
• Wedbush’s Liana Moussatos maintained an Outperform rating for the company, while raising the price target from $75 to $86.
• Following the US launch of Veltassa, Moussatos expressed optimism regarding its successful commercialization.

Veltassa was approved by the FDA on October 21, and is the first new therapy for the treatment of hyperkalemia [elevated potassium] in over 50 years.

About a third of Relypsa’s salesforce and all of the nephrology salesforce of Sanofi SA (ADR) SNY began contacting and educating doctors about Veltassa. “Initial feedback suggests to us that the DDI (drug-drug interaction) box warning is of little concern and is unlikely to materially curb Veltassa prescribing,” analyst Liana Moussatos said.

Manufacturing is in place, and a specialty salesforce of around 120 reps are in the US. Given this, along with the partnership with Sanofi, contracts with specialty pharmacies and distributors, and the patient support hub for the chronic market set up, Moussatos believes that Veltassa would have a successful launch. Peak sales are projected to exceed $1 billion in the US.

The consensus sales expectations for Veltassa in 2016, with its mean at $38.7MM and median at $46.9MM, seem achievable. Moussatos estimates full-year sales at $48.5MM.

In the report Wedbush noted, “While we are unaware of evidence from Veltassa’s clinical program that suggests a DDI, we believe positive results from the DDI study [with the release of results expected in early 2016] could reduce the time required in the product insert to dose other drugs with in vitro binding to less than six hours before and after Veltassa dosing.”