Relypsa, Inc. (NASDAQ: RLYP)
Last Friday, shares of Relypsa surged on explosive volume following rumors that Merck (MRK) is preparing a bid to acquire the company. The stock was bolstered further by additional unconfirmed suggestions that pharmaceutical giants GlaxoSmithKline (GSX) and Sanofi (SNY) are also preparing offers to acquire RLYP.
Speculation that Relypsa could be bought has been buzzing since AstraZeneca (AZN) agreed to buy ZS Pharma (ZSPH) last month for $7 billion. Relypsa and ZS Pharma both make drugs treating high levels of potassium in the blood, known as hyperkalemia. ZS Pharma’s has not been approved, while Relypsa’s drug Veltassa was approved in October but with a stiff warning label about dangerous interactions with other drugs. Investors Business Daily.
Wedbush analyst Liana Moussatos said Sanofi is a “natural buyer” of Relypsa. In August of this year, Relypsa entered into a two-year detailing and distribution agreement with Sanofi for Veltassa, which is expected to be available to doctors and patients in January 2016. In a note published shortly after the drug gained FDA approval, Moussatos said that the FDA warning was misinterpreted and that she expects Veltassa to have a successful launch, eventually resulting in peak annual sales of more than $1 billion in the US alone. The analyst projected a potential launch in the European Union by the middle of 2017. Her projections show the drug could reach more than 3 million U.S. patients facing moderate to severe hyperkalemia and over 13 million suffering from a milder case of the condition. Moussatos holds a $75 12-month price target on Relypsa. Shares currently trade near the $26 mark.
Amid Friday’s market gyrations, Stifel released an intra-day note discussing Relypsa’s potential takeout value. Analysts there project peak Veltassa U.S. sales of $1.1 billion, translating to a “ZSPH-like” $3.3 billion valuation — approximately $75 per share. Benzinga
RLYP Technical Analysis
RLYP has only been publically traded for two years, reaching an all time high in March 2014 at $52.74. It started this year trading at $30.80 and put in 12-month highs of $42.26 on May 5. On October 21, investors reacting to the FDA’s black box warning dumped the stock driving it to an all-time-low of $10.26. Analysts immediately reported that the warning was misinterpreted and the stock has since trended back up to the $24 level before Friday’s breakout. Not surprisingly, Friday’s move stopped near the 200-day moving average at $29.47. A continued volume move thru this level indicates that funds believe a buyout is imminent. There could be some resistance at $30, $32.50 and $35. Support levels are near $28.60 and $27 and $26.40. Pay attention to the new levels that will be established for as long as RLYP remains in-play.
A confirmed offer or buyout agreement will of course negate technical trading levels and immediately send the stock to the buyout valuation. But until a real deal is announced, technical levels and volume can tell us how the so-called smart money is positioning.
About Relypsa, Inc.
Relypsa, Inc. is a biopharmaceutical company focused on the development and commercialization of non-absorbed polymeric drugs to treat disorders in the areas of renal, cardiovascular and metabolic diseases. The Company’s lead product candidate, Patiromer for Oral Suspension (Patiromer FOS) is for the treatment of hyperkalemia, a life-threatening condition defined as abnormally elevated levels of potassium in the blood. Its New Drug Application (NDA) for Patiromer FOS was accepted for filing by the United States Food and Drug Administration, or FDA. The Company’s NDA is supported by a clinical development program consisting of eight clinical trials: three Phase I trials, four Phase II trials and one two-part Phase III trial conducted under a Special Protocol Assessment, or SPA. The active ingredient is a cross-linked polymeric bead with a calcium containing counterion. The Company has the global royalty-free commercialization rights to Patiromer FOS. Google Finance