Wedbush Looks Ahead in Biotech: Relypsa Inc (RLYP), XOMA Corp (XOMA), and Intercept Pharmaceuticals Inc (ICPT)

The biotechnology sector is very fast-paced as every event, such as new data, FDA decisions, and trial initiations can double or deplete a share price. Looking ahead, Wedbush’s Liana Moussatos provides a brief on upcoming events to watch for in Relypsa Inc (NASDAQ:RLYP), XOMA Corp (NASDAQ:XOMA), and Intercept Pharmaceuticals Inc (NASDAQ:ICPT).


Relypsa Inc

Moussatos maintains an Outperform rating on the company with a $75 price target. Relypsa is most known for its pipeline hyperkalemia treatments; a condition indicating high potassium levels in the blood.

Patiromer, also known as Veltassa, is Relypsa’s FDA-approved treatment for hyperkalemia. Moussatos expects the drug to launch in the first quarter of 2016, even as early as January. The drug gained approval in October and Moussatos touts it as the “first breakthrough treatment for hyperkalemia since 1958.” She believes the treatment has the potential to be a “best-in-class” drug and describes its several advantages over existing therapies, including its effective ability to lower potassium levels along and “[reduces] the incidence of recurrent hyperkalemia.”

The analyst estimates that there are about 2.4 million patients “who would be immediately eligible for patiromer treatment, with additional opportunities to further expand and grow the market.” In all, peak sales for the drug could climb above $1 billion in the U.S. alone.

According to TipRanks, all 7 analysts who cover Relypsa are bullish on the company. The average 12-month price target between these 7 analysts is $46.57, marking a 63% potential upside from current levels.

RLYP consensus


Moussatos maintained an Outperform rating on Xoma on December 4 with a $6 price target. The company is best known for its lead pipeline candidate, Gevokizumab, a treatment for inflammatory diseases that is currently in Phase 3 testing. Gevokizumab is currently being tested to treat pyoderma gangrenosum (PG); a disfiguring skin condition. Moussatos comments, “Incidence [of PG] in the US is about 1,000-3,500 cases per year and we project gross peak annual worldwide sales [of Gevokizumab] could reach over $240MM in 2020 after launching in 2018.”

In this update, the analyst comments on Xoma’s announcement of a “license agreement with Novo Nordisk for the XMetA antibodies for diabetes.” XMetA is a class of antibodies that controls insulin. Moussatos believes the deal is a positive because it provides “nondilutive financing for the company while allowing the XMetA program to be developed by one the industry leaders in diabetes, Novo Nordisk.” According to the deal, Xoma will maintain commercialization rights for XMetA while Nova Nordisk will acquire global rights to use the platform to treat diabetes.

Looking forward, Moussatos expects the second international site for XOMA 358 testing to open immediately. XOMA 358 is a pipeline drug for congenital hyperinsulinism and data would be released in 2016. Coupled with Xoma’s recent move to sell its “manufacturing facilities, equipment and associated real estate to Agenus and [divest] its biodefense program,” the company is primed to focus on rare endocrine diseases.

According to TipRanks, Moussatos remains bullish on Xoma while two other analysts stay on the sidelines.


Intercept Pharmaceuticals Inc

All eyes are on Intercept’s pipeline therapy for OCA in PBC; a treatment for a liver condition. The drug is currently under FDA review and will be approved or rejected by February 29th. Moussatos believes the therapy will be approved by the FDA and Intercept is preparing for the potential approval as management provided “an overview of current standard of care for PBC, current estimates on the number of patients inadequately treated, and a review of its commercial preparations.” The analyst explains that the company is prepared for a commercial launch, pointing to new “key hires” and “activities to increase awareness of PBC.”

Pending approval, Moussatos believes OCA in PBC will be a welcomed replacement to the current standard of care. She explains, “Based on current serum marker criteria defining successful treatment, up to ~50% of PBC patients on current standard of care have an inadequate response… Intercept estimates about 66,000 uncontrolled PBC patients worldwide (US: 29,000, EU: 25,000, RoW: 12,000) which we consider to be likely candidates for OCA treatment.”

The analyst continues, “Despite being dwarfed by investor enthusiasm for NASH,” a different liver condition, “we believe OCA for the treatment of [PBS] is an underappreciated gem that has the potential of achieving over $2BN in peak sales.” Moussatos reminds investors that PBC is the most common liver disease in adults and OCA is more effective than existing treatments. The analyst is optimistic that the drug will be approved and estimates that first year sales for the therapy will reach $28 million.

According to the 10 analysts polled by TipRanks in the last 3 months, 6 are bullish on ICPT while 2 are bearish and 2 remain neutral. The average 12-month price target between these 10 analysts is $307.11, marking a 100% potential upside from where shares last closed.

ICPT consensus

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