Biotech Daily Digest: Valeant Pharmaceuticals Intl Inc (VRX) and Relypsa Inc (RLYP)

New insights emerge in the biotech sector as Valeant Pharmaceuticals Intl Inc (NYSE:VRX) received a Complete Response Letter (CRL) from the FDA on its eye drug Vesneo, and Relypsa Inc (NASDAQ:RLYP) agreed to be acquired by Galenica for $32 per share. Let’s take a closer look as analysts weigh in on both biotech giants:

Valeant Pharmaceuticals Intl Inc

Early this morning, Valeant disclosed that it had received a Complete Response Letter (CRL) from the FDA on its New Drug Application (NDA) for Vesneo®, an intra-ocular pressure (IOP)-lowering single-agent eye drop product for treatment of open angle glaucoma or ocular hypertension, sending shares down nearly 7%.

While disappointing, Canaccord analyst Neil Maruoka believes that the identified deficiencies can be rectified and it is likely that Valeant could still get Vesneo approved before the end of the year.

Maruoka noted, “Despite strong clinical data for Vesneo, Valeant couldn’t get the last approval in an FDA catalyst-laden week. Nonetheless, we believe that Vesneo will eventually be approved and could form a cornerstone for the B+L pharmaceuticals franchise.”

“Although the FDA actions this week have provided several potentially positive catalysts, our concerns are primarily focused on other aspects of Valeant’s business, including the Walgreens partnership and the company’s relationships with managed care. We therefore remain cautious going into the Q2 results to be reported on August 9th,” the analyst concluded.

Maruoka reiterated a Hold rating on shares of Valeant, with a price target of $28, which implies an upside of 22% from current levels.

As usual, we recommend taking analyst notes with a grain of salt. According to, analyst Neil Maruoka has a yearly average return of -31.8% and a 18.5% success rate. Maruoka has a -38.9% average return when recommending VRX, and is ranked #3989 out of 4075 analysts.

Out of the 17 analysts polled by TipRanks, 5 rate Valeant stock a Buy, 9 rate the stock a Hold and 3 recommend a Sell. With a return potential of 58%, the stock’s consensus target price stands at $38.73.

Relypsa Inc

Morgan Stanley analyst Andrew Berens upgraded shares of Relypsa from Underweight to Equal-weight, while lifting the price target from $9.00 to $32.00, following the news that Swiss firm Galenica Group agreed to pay $32 a share, or $1.53 billion total, to acquire Relypsa.

Berens commented, “We did not anticipate a deal was likely to originate ahead of the new action date for AstraZeneca’s ZS-9, given the difficulty in predicting the long-term market dynamics, and the disappointing launch to date. […] While it is possible that competing bids could emerge, we think the deal is likely to be consummated at or near the current offer, given that Galenica likely placed more value in the Relypsa infrastructure than would a pharma company with an existing U.S. commercial infrastructure, and Galenica already owns rights to Veltassa outside of the U.S. and Japan.”

“Fundamentally, our commercial outlook for Veltassa has not changed, and Galenica denied recognizing cost synergies. Given the pending offer, we do not expect the stock to trade on fundamentals, but primarily on the anticipated price for the deal. Therefore, we are moving to EW and raising our PT to $32, in-line with the Galenica offer and our previous bull case scenario,” the analyst concluded.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Andrew Berens has a yearly average return of 4.1% and a 58.5% success rate. Berens has a -20.1% average return when recommending RLYP, and is ranked #1098 out of 4075 analysts.

Out of the 13 analysts polled by TipRanks, 8 rate Relypsa Inc stock a Buy, while 5 rate the stock a Hold. With a return potential of 14.8%, the stock’s consensus target price stands at $36.73.


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