Relypsa Inc (RLYP)

[H2R]

8-K: Positive Outlook from Brean Capital Analyst Difei Yang

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Brean Capital analyst Difei Yang weighed in on biotech company Relypsa after the company updated its March and Q1 monthly prescription numbers through the 8-K. Relypsa’s lead drug is Veltassa, used to treat elevated potassium levels.

The analyst notes that, “while the [prescription] data did not blow investors away, it met our expectations; as such, we are keeping our Q1 and full-year estimates intact.” The data from the March and Q1 data revealed that the company reported 1,277 units of free starter-supply; a 75% increase from the month prior, and 706 retail units, marking a 102% increase from the month prior. Yang elaborates on these figures, explaining, “With the numbers meeting our expectations, we are keeping our full year sales estimates the same,” restating her 2016 sales estimate of $29.7 million, well below the consensus of $39.4 million. However her first quarter sales estimates of $7.3 million are in-line with consensus.

Yang explains, “Given significant unmet needs for hyperkalemia, we assume a conservative revenue forecast at a 7% discount rate. Our estimates assume a slow market acceptance of Veltassa and imminent approval of ZS-9.”

Further, Benzinga reported late last week that Relypsa has dropped Centerview as its M&A advisor, though Relypsa has declined to comment on this. In light of this, Yang comments, “Though Centerview is now out of the running as the M&A advisor, we still believe that a deal may materialize.” Further, the analyst assures, “We still view a take out as being probable due to strategic fit with a larger pharma company.”

Despite the analyst’s conservative outlook, Yang reiterates a Buy rating on the stock with a $26.00 price target.