Cantor Fitzgerald Starts Relypsa (RLYP) at Buy

Cantor Fitzgerald initiated coverage on Relypsa (NASDAQ: RLYP) with a Buy rating and a price target of $42. Analyst Irina Rivkind Koffler thinks there is an 80% probability of Patiromer FOS approval and estimates longer-term peak sales of over $1.6 billion.

"Relypsa is waiting for FDA approval of Patiromer FOS, a treatment for elevated serum potassium levels that is prevalent amongst chronic kidney disease (CKD) and heart failure patients. We assume an 80% probability of approval by the October 21 PDUFA date, which we believe is a key binary event that could rally the stock. We also view shares as fundamentally undervalued given the size of the U.S. Patiromer market opportunity and our longer term peak sales estimates of over $1.6B. Our model excludes any upside from OUS royalties at this time," said Koffler.

The analyst added, "This story reminds us of Ironwood, another company with a primary care drug that is expected to attain blockbuster status. However, unlike Ironwood, Relypsa owns 100% of the global rights to Patiromer FOS and will therefore have more flexibility with strategic alternatives, in our view. We have not yet modeled any European revenues for the product but note that the company is seeking a European commercial partner and plans to submit Patiromer for European regulatory review in late 2015 or early 2016. Some additional royalty stream is therefore likely from this market, which has not been included in our estimates."

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

Shares of Relypsa closed at $32.57 yesterday.

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