Relypsa (RLYP) Financing Does Not Prevent 2016 Acquisition - Wedbush

In a note dated May 6, Wedbush analyst Liana Moussatos reiterated an Outperform rating while trimming her price target on Relypsa, Inc. (NASDAQ: RLYP) to $51.00 (from $52.00), saying the financing provides a runway into mid-2017 and does not prevent a 2016 acquisition.

Moussatos commented, "The recent $150MM debt financing alleviates 2016 cash concerns but does not preclude an acquisition. We believe consensus is starting to acknowledge that Veltassa as the first FDA approved chronic hyperkalemia treatment is breaking new ground. With an imminent FDA decision for potentially competing ZS-9, we believe RLYP shares could appreciate significantly if ZS-9’s label mentions sodium related adverse events such as edema and hypertension which are unique to the drug’s mechanism of action."

She added, "RLYP has traded down recently due to concerns that its recent debt financing signals that take-out discussions have been terminated. In our experience, when there are several parties in early-stage discussions, the acquisition can take several months to complete. We believe the non-dilutive financing allows management to hold-out for more favorable deal terms."

The next catalysts: Release of April Veltassa figures around mid-May and potential FDA decision on ZS-9 on or before the May 26th PDUFA.

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 $13.51 yesterday.

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