BTIG Cuts Veltassa Estimates, Relypsa's Price Target To $35

On its 1Q call, Relypsa Inc (NASDAQ: RLYP) highlighted the challenges it had been facing in gaining patient access for its hyperkalemia treatment, Veltassa.

BTIG’s Timothy Chiang maintains a Buy rating on the company, while lowering the price target from $45 to $35.

Estimates Lowered

Chiang explained that the sales estimates for Veltassa had been lowered to reflect the patient access headwinds, as well as the slow rate of adoption.

The CY16, CY17 and CY18 sales estimates were lowered from $36 million to $26.5 million, $113 million to $84.5 million and from $236 million to $203 million, respectively.

Related Link: Mizuho Downgrades Relypsa, Says Near-Term Takeout "Unlikely"

Veltassa Ramp

“While we believe management is up to the task of successfully executing the launch of Veltassa, we think it may take more time to ramp sales (as adoption by Medicare plans could take up to six months or more),” Chiang mentioned.

Chiang estimates that 60 percent of the patient population that the company was targeting were covered by Medicare Part D plans, and that the adoption of Veltassa would slowly occur through 2016.

Veltassa is estimated to achieve sales of $500 million by 2020.

Loss Per Share Increased

“Relypsa’s 2016 operating expense guidance remains unchanged at $275 million–$300 million,” the analyst said, while raising the loss per share estimates for CY16, CY17 and CY18.

The higher loss per shares estimates were based on expectations of a more gradual ramp for Veltassa, as well as Relypsa’s recent announced debt issuance of $150 million.