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In biotech, knowing the competition is integral to understanding how drugs will succeed once they are on the market. Below, analysts weigh in on drug makers Relypsa Inc (NASDAQ:RLYP) and Sarepta Therapeutics Inc (NASDAQ:SRPT) as competitors hit some roadblocks.
Relypsa got a nice boost last week when AstraZeneca received notice that the FDA’s decision on its ZS-9 drug for hyperkalemia would be delayed, giving Relypsa’s Veltassa more time to launch without competition. In light of this welcomed news, Irina Rivkind Koffler of Mizuho weighs in on the company, becoming incrementally more positive on the stock.
Koffler explains, “Relypsa’s problems were unexpectedly overshadowed by a meaningful delay in a competitor’s launch: Relypsa’s stock had been pressured by a weaker than expected Veltassa launch and a recent $150M debt offering that suggested a lack of acquirer interest.” However, now that AstraZeneca’s ZS-9 has been delayed, the analyst believes that Relypsa has sufficient time “to pursue improved coverage and further entrench Veltassa.” As a result, Koffler increased her estimate of the probability of a takeout from 10% to 60%, but modeling a lower takeout value of $26 per share “based on lower discounted peak sales.”
Now that Veltassa will enjoy extra time as the only hyperkalemia drug on the market, Koffler explains that the “commercial picture is now different.” She continues, “Relypsa just needs to build its growth trajectory and remain visible to generate continued takeout buzz, which may eventually translate into an actual bidder.”
Following these changing circumstances, Koffler upgrades Relypsa from Underperform to Neutral, raising her price target from $12 to $20, primarily based on “a higher likelihood of a takeout.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Irina Rivkind Koffler has a yearly average return of 26.4% and a 57% success rate. Koffler has a -28.5% average return when recommending RLYP, and is ranked #14 out of 3986 analysts.
Out of the analysts who have rated Relypsa in the last three months, 80% are bullish and 20% remain neutral. The average 12-month price target is $30.56, marking a 54% potential upside from where shares last closed.
Sarepta Therapeutics Inc
Liisa Bayko of JMP Securities weighs in on Sarepta in light of a recent decision by competitor BioMarin to terminate efforts developing one of its pipeline drugs, noting that this is incrementally positive for Sarepta as both companies are developing drugs for Duchenne Muscular Dystrophy, or DMD.
Bayko explains, “[BioMarin] withdrew its MAA for Kyndrisa following discussions with EMA’s CHMP, which the company said clearly indicated the committee planned to issue a negative opinion and it subsequently decided to discontinue its BMN 044, BMN 045, and BMN 053 candidates that were all in Phase 2.”
This is positive news for Sarepta because it releases concerns that BioMarin “could block commercialization of eteplirsen and some follow-on exons (45, 46, and 53) in the EU and potentially the U.S., based on its patent,” explains the analyst. While Bayko continues to wait for the FDA to rule on eteplirsen, Sarepta’s drug for DMD, she still views “the risk-reward profile as unfavorable, particularly given the recent strength in shares.” Bayko points to a potential upside of $65/share if eteplirsen is approved and a downside of $5/share if it is rejected.
Bayko reiterates an Underperform rating on the stock with a $10 price target.
According to TipRanks, Bayko has a 51% success rate recommending stocks and an 18.3% average annual return per rating. Out the analysts who have covered Sarepta in the last 3 months, 37% are bullish, 37% are bearish, and 26% are neutral. The average 12-month price target is $17.71, marking a 17% potential downside from current levels.