AstraZeneca's CRL on ZS-9 Reduces Near Term Commercial Risk for Veltassa and Relypsa (RLYP) - Wedbush

Wedbush analyst Liana Moussatos reiterated an Outperform rating and $51 price target on Relypsa, Inc. (NASDAQ: RLYP) after AstraZeneca announced receipt of a complete response letter (CRL) from the FDA for ZS-9 instead of approval. Moussatos notes the press release cited a failed manufacturing inspection and receipt of new data for review: The CRL refers to observations arising from a pre-approval manufacturing inspection. The FDA also acknowledged receipt of recently-submitted data which it has yet to review. The CRL does not require the generation of new clinical data. AstraZeneca and ZS Pharma are evaluating the content of the CRL and will work closely with the FDA to determine the appropriate next steps for the NDA.

Moussato said the CRL reduces near-term commercial risk for Veltassa and Relypsa. "Based on the comments in AstraZeneca's press release about manufacturing, new data received and the lack of need to generate new clinical data, we estimate a new PDUFA deadline around August 26, 2016 at the earliest though not disclosed in the press release," she eaid. "This extra time allows Relypsa and Sanofi to further establish Veltassa as the sole option for nephrologists and cardiologists learning to prescribe a new treatment for chronic hyperkalemia."

If approved, they anticipate ZS-9's mechanism which elevates sodium is likely to limit its use in the larger chronic hyperkalemia market due to cardiovascular safety. ZS-9's mechanism of reducing potassium also elevates sodium by using sodium as a counter ion. Veltassa uses calcium as a counter ion and does not elevate but reduces sodium [Abstract SO008; 53rd Congress of the European Renal Association - European Dialysis and Transplant Association (ERAEDTA), May 21-24, 2016; Vienna]. They believe this is an important distinction for treating hyperkalemia in CKD and heart failure patients which are universally sodium restricted.

The analyst also said anticipate an improvement to Veltassa's product insert around year-end could accelerate its use.

For an analyst ratings summary and ratings history on Relypsa, Inc. click here. For more ratings news on Relypsa, Inc. click here.

Shares of Relypsa, Inc. closed at $16.60 yesterday.

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