Relypsa (RLYP) to Trade Toward Takeover Valuation After Competitor Delay - Mizuho

Mizuho analyst Irina Koffler is re-evaluating her Underperform rating and $12 PT on Relypsa (NASDAQ: RLYP) after AZN announced receipt of a CRL for its ZS-9 zirconium silicate NDA, with a delay that they expect to persist well into 2017.

The CRL was attributed to pre-approval manufacturing deficiencies along with submission of additional data ahead of the NDA that required more review time. Koffler hypothesizes that this could have been the human drug-drug interaction data on the ZS-9 molecule, which Relypsa submitted post-approval on Veltassa, while the manufacturing issue is more difficult to predict.

"We previously indicated that this outcome represents the best possible scenario for Relypsa as it gives it more time to gain traction in the market as first-mover and increases the likelihood of takeout interest in the name," Koffler said.

"That said, we still view the Veltassa launch trajectory as quite slow and expect the stock to remain relatively range-bound until growth becomes more tangible. Today we expect a strong rebound to the stock towards our $31 takeout valuation and will re-evaluate our rating and PT after speaking with mgmt."

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