Bay Area's Relypsa Falls on Unimpressive Veltassa Script Data
May 17, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Redwood City, California-based Relypsa disclosed prescription sales information for Veltassa late yesterday, which led to a stock decline of 7.8 percent during the pre-market period.
Investors have been closely watching the company for some time, primarily because of rumors about a potential buyout. Buyout rumors had caused the stock to jump in early April and in late April, both times on potential acquisition talk.
Relypsa’s nearest competition is under development at San Mateo, California-based ZS Pharma . Its compound, ZS-9 (sodium zirconium cyclosilicate), had positive interim results in a Phase III trial in November 2015. ZS Pharma was acquired by UK-based AstraZeneca in December for $2.7 billion.
Relypsa focuses on polymer-based medicines for overlooked and undertreated disorders. On December 2015, its drug Veltassa (patiromer) launched in the U.S. to treat hyperkalemia, or elevated blood potassium. Analysts project the market for the drug could be $6 billion.
The companies that bid on ZS Pharma and lost out to AstraZeneca are rumored to be interested in Relypsa. That includes Paris-based Sanofi and Switzerland-based Actelion Pharmaceuticals . Other companies floated include Merck & Co. , Pfizer and Biogen .
But yesterday’s news showed that new patients taking Veltassa declined over April. Veltassa is the first new drug to treat hyperkalemia in over 50 years. The standard of treatment has been Concordia Healthcare’s Kayexalate, which has numerous side effects, including gastrointestinal bleeding, constipation, and intestinal cell death.
However, when Veltassa was approved, the U.S. Food and Drug Administration (FDA) gave the drug a black-box warning because the drug can have negative effects when binding to other oral medications.
ZS Pharma’s drug hasn’t been approved yet, but isn’t expected to have a black-box warning.
“The numbers, including retail and non-retail TRx, were solid, though not impressive,” said Difei Yang, an analyst with Brean Capital, to Benzinga. “As we have reiterated in the past, uptake of Veltassa will continue to be slow in the near term.”
Starting in April, 1,216 new patients started on the drug’s oral suspension, which included a free starter supply. In March, the numbers were 1,277. In April, 928 outpatient prescriptions were covered and dispensed, compared to 706 in March, and 288 units were sold to hospitals and non-retail institutions, compared to 201 in March.
Yang repeated a “buy” rating for the company and gave it a price target of $26. He also points out that prescriptions vary monthly and doesn’t believe the data reflects long-term trends for Veltassa.
Relypsa is pretty volatile in general. It traded on July 22, 2015 for $34.81, dropped to $11.76 on Oct. 22, then popped back to $29.15 on Dec. 29. Then on Mar. 16, 2016, it dropped to $12.08 before climbing back to $24.32 on April 17, 2016. Shares are currently trading for $14.76.
Citigroup dropped its price target from $30 to $25. There is a “strong buy” consensus rating among eight analysts, with one “hold” and two “strong sells.” The 12-month consensus price target is $31.75.
Alex Eppstein, writing for Schaeffer’s Investment Research, says, “Whether that optimism is warranted is another story altogether. Since hitting a recent top at $25.60 in early April, Relypsa Inc. has plummeted 43.6 percent. This technical bloodbath has provoked more than a fair share of short selling. In fact, 41.6 percent of the stock’s float is sold short, which translates to 5.8 times Relypsa’s average daily trading levels. What’s more, it’s possible some of the recent call buyers are short sellers seeking protection against an unexpected rally.”