Healthcare Analysts Chime In on Relypsa Inc (RLYP) and Pernix Therapeutics Holdings Inc (PTX) Following Launch Delay and Meeting With Management

Both biopharmaceutical companies Relypsa Inc (NASDAQ:RLYP) and Pernix Therapeutics Holdings Inc (NASDAQ:PTX) run into obstacles amidst preparing for the launch of their pipeline drugs. Analysts from Oppenheimer and Brean Capital share their expectations on the outcomes of both companies’ strategies.

Relypsa Inc

Veltassa, Relypsa’s prime hyperkalemia drug, is launching later than expected yet in line with other cardio-renal drugs’ progress. This delay combined with Relypsa’s 4Q15 results caused analyst Carlos Solorzano of Oppenheimer to reevaluate the company’s balance sheet for 2017-2019. The analyst reiterates a Buy rating and lowers his price target accordingly from $55 to $45.

Solorzano states, “Patients receiving a free starter supply in February were 812, up +99% m/m. February TRx (scripts covered by payors) were 350, up 254% m/m.” He continues, “Script numbers and growth are in line with other recent cardio- renal drug launches, including Corlanor and Praluent.” This demonstrated the potential growth awaiting the company, the analyst explains, “We still view RLYP as well positioned for growth given the safety, efficacy and blockbuster potential of Veltassa.” He finalizes, “We like the risk/reward profile of RLYP and think the shares will positively reflect the continued progress of the Veltassa launch as well as interest from potential acquirers.”

The remodelling of the coming years involves a reduction in revenues and a slight increase in expenses, as stated by the analyst, “We are reducing our 2016/17/18 Veltassa revenue estimates to $24.2M/$93.5M/$205M from $46.9M/$236.5M/$464.3M, and bringing down our price target to $44 from $55.” Regarding the company expenses, the analyst adds, “We are also increasing our 2016 R&D/SG&A expenses to $102M/$176M from $90M/$93M following management commentary, which lowers our EPS to ($5.76) from ($3.90).”

According to TipRanks, RLYP was rated by 11 analysts, 10 of which gave the stock a Buy rating and 1 gave RLYP a Sell rating. These ratings amount to an average one-year price target of 40.40$, marking a 200.60% upside for where shares last closed.

Pernix Therapeutics Holdings, Inc.

In a lunch hosted by the analyst Difei Yang of Brean Capital, a discussion with Pernix CEO and CFO took place regarding several key points that reflect the company’s current state and the path ahead. The points touched on are an expected arbitration’s outcome with GSK, cost restructuring, a Becton Dickinson (BD) deal, Treximet drug ingredient reformulation, and current market prescription trends. The discussions led the analyst to reiterate a Buy rating for the stock, with a price target of $5.00.

Pernix’s infringement of an Asset Purchase Agreement might be settled at a current ongoing arbitration and cost restructuring will take place regardless of the arbitration outcome. Yang states, “We believe that there could be a slight upside from an arbitration/settlement with GSK regarding an infringement of Section 8.15 of the Asset Purchase Agreement.” The company reserved $20M hoping to settle for less, either way, the analyst expects the outcome by September/October.

As said, the company is implementing cost restructuring to make ends meet, the analyst comments, “The biggest concern is that if Pernix would have adequate cash to pay for the principal of a note due August, 2015.” She continues, “The company must repay its debt in 1Q and 3Q of each year until 2020; it holds $56M in cash and $478M in total liabilities as of December 31, 2015.” Yet Yang sees the company’s options helpful, She states, “With the reduction in costs through multiple avenues and base business is running roughly breaking-even, we see any potential cost savings could be helpful to extend the cash runway.”

Lastly, Yang points to the ongoing deal with BD, she notes, “As we have said in our previous notes, BD discussions are in the process, though the timing is unclear.” Pernix is considering many options to finalize the deal as soon as they can. She adds, “They noted that the process is ‘moving and competitive’. The CEO, CFO, internal BD personnel, and Perella Weinberg Partners are all involved in the process.”

According to TipRanks, in the past three months, 3 analysts rated PTX, Yang gave the stock a Buy rating, but 2 other analysts remained neutral. The analyst’s’ ratings amount up to a 12-month price target average of $5.00, marking a 362.96% upside from where shares last closed.


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