Analyst Sees Relypsa's Valtassa Becoming 'The Standard Of Care,' Initiates With Buy, $63 Target

• Despite having recovered some of the losses over the last three months, Relypsa Inc (NASDAQ: RLYP) shares are down 8 percent year-to-date.
• H.C. Wainwright’s Ed Arce initiated coverage of the company with a Buy rating and a price target of $63.
• Arce believes that Veltassa is well positioned to address the serious unmet need to treat hyperkalemia and become the standard of care.

“Relypsa's new drug, Veltassa (patiromer), is a nonmetal, oral, once-daily potassium binder approved for the treatment of hyperkalemia (HK; excess blood potassium, K+),” analyst Ed Arce wrote.

While noting that HK is a serious, life-threatening condition, Arce pointed out that there were poor therapeutic options available. The options include:

1. A K+ restricted diet - seems unrealistic
2. Kayexalate - an old drug, the efficacy of which is questionable and it has poor GI tolerability
3. Reduce or discontinue RAAS inhibitor therapy

The analyst commented that almost all patients with HK, which totaled more than 3 million in the US, are also hypertensive. For this reason, RAASi therapy is being widely used for these patients for delaying kidney disease progression and reduce mortality in HF. He added, however, that RAASi meds caused or worsened HK, “creating a Catch-22 for physicians.”

Physicians have had to discontinue RAASi meds, despite their proven benefits, with there being no good options for HK. “Against this backdrop, Relypsa aims to create a market for the chronic treatment of HK with a drug that consistently and progressively reduces K+ within hours, and safely maintains normal K+ levels for at least a year,” Arce mentioned.

Veltassa is expected to be launched in the first week of January. It would be backed by 120 sales reps as well as be co-promoted by the experienced nephrology salesforce of Sanofi SA (ADR) (NYSE: SNY).

Moreover, Arce expects Relypsa to capitalize on “several important first-mover advantages with its best-in-class Veltassa” over its closest competitor, namely ZS-9 by ZS Pharma Inc (NASDAQ: ZSPH). ZS-9 has a PDUFA date of May 26, 2016.