Relypsa Plunges After Veltassa FDA Approval; Wedbush Says 'Misunderstanding' Creates Buying Opportunity

• Relypsa Inc RLYP confirmed that the FDA has approved patiromer Veltassa for the treatment of hyperkalemia.
• However, a misunderstanding has created a buying opportunity, Wedbush analysts assured in a report issued Thursday. The stock was down more than 18 percent on Thursday trading.
• Consequently, the firm reiterated an Outperform rating on the stock, while raising its price target from $66 to $75.

As Wedbush analysts Liana Moussatos and Kelechi Chikere expected, the FDA officially permitted the use of Veltassa -dosed orally once a day- for the treatment of hyperkalemia. In fact, the experts highlighted, they believe the approved label puts no limitations on the potential use of the drug “in the acute / non-emergency setting as adjunct therapy or in the chronic setting.” The full package insert can be accessed through this link.

Wedbush’s Take

In the above-mentioned report, Wedbush analysts shared some comments regarding the FDA approval of Veltassa.

For starters, they said, they “believe the box warning on the label indicating POTENTIAL drug-drug interactions is easily addressable, a minor issue,” and thus, does not have an impact on the firm’s sales projections.

In fact, the experts assured they anticipate a successful launch for Veltassa, which the company plans to start selling in the first week of January of 2016. With manufacturing in place, a specialty sales force comprising roughly 120 reps in the U.S., the co-detailing partnership with Sanofi SA (ADR) SNY, “and distribution hub for the chronic market, a successful launch is likely,” the report stated.

Wedbush projected peak annual sales to surpass $1 billion in the U.S. alone. Actually, “with FDA approval in hand, we project full year profitability in 2019,” the experts added.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.