Healthcare analysts provide insight into Relypsa Inc (NASDAQ:RLYP) and Aduro BioTech Inc (NASDAQ:ADRO) as Relypsa begins commercialization of Veltassa, a drug to treat hyperkalemia, and Aduro announces a three-year partnership with UC Berkeley to conduct joint cancer research. The three-year deal will give UC Berkeley researchers access to Aduro’s proprietary platforms. Let’s take a closer look as analysts weigh in on both companies.
Brean Capital analyst Difei Yang was out pounding the table on Relypsa Tuesday, initiating coverage with a Buy rating and price target of $26, which represent a potential upside of 89% from current levels.
Yang believes that Veltassa stands on its own compared to competitors thanks to three factors. First, the analyst points to the drug’s mechanism of action; its strong efficacy and safety; and the “durability of efficacy.” These factors make the drug “ideal” for a “maintenance therapy” since there are “no therapeutic options available.”
According to the analyst, there is a large opportunity in the hyperkalemia market, estimating that 3 million patients had hyperkalemia in 2015. The cost of the treatment is $543/month and the duration of the treatment is 5 months. Given the estimate that Veltassa at its peak can capture a market share of 25% from 563,000 patients, peak revenues are estimated to be $484 million. These estimates, according to Yang, are conservative because of “possible approval of ZS-9 in May 2016;” and “generic pricing of Kayexalate.”
Kayexalate and ZS-9 are competing products that are used to treat hyperkalemia. However, ZS-9 is awaiting approval and Kayexalate is often associated with negative side effects. While Kayexalate and Veltassa include similar efficacy profiles, Veltassa “demonstrates a stronger safety profile…comparable to the placebo group.” If ZS-9 is approved, it could compete directly with Veltassa and could “change the landscape for treatment of hyperkalemia.” If the drug is not approved, Veltassa will be the only treatment available for the condition and given the safety issues associated with ZS-9, according to Yang, “approval with the competitive label is low.”
Difei Yang is ranked #3735 out of 3814 analysts on TipRanks. Yang has a yearly average loss of 21.9% and a 24% success rate.
According to TipRanks, out of the 11 analysts who have rated the company in the past 3 months, 5 are bearish and provided a Buy rating and 1 is bullish and rated the stock a Sell rating. The average 12-month price target for the stock is $40.40, marking a 212% upside from current levels.
Aduro BioTech Inc
Analyst Christopher James at FBR provides an update on Aduro after the company announced a research partnership with UC Berkeley’s Innovative Immunotherapeutics and Vaccine Research Initiative (IVRI). James reiterated an Outperform rating on the stock without providing a price target.
James explains that Aduro will contribute $7.5 million in funding over three years, with an option to increase and extend funding for an additional three years. During the three year period, IRVI researchers will have access to Aduro’s platform technologies. James notes,“the collaboration further enriches the array of scientific collaborators involved with Aduro’s three proprietary platforms.”
According to TipRanks which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher James has a annual average loss of 21.6% per rating and a 21% success rate. James is ranked #3,700 out of 3,814 analysts.
Out of the 5 analysts who have rated the company in the past 3 months, 5 gave a Buy rating and 1 gave a Sell rating. The average 12-month price target for the stock is $37.75, marking a 216.96% upside from current levels.