Biotech Beat: All Eyes On Relypsa Inc (RLYP) And EXACT Sciences Corporation (EXAS)

Both Relypsa Inc (NASDAQ:RLYP) and EXACT Sciences Corporation (NASDAQ:EXAS) received good news about their flagship products this week. Relypsa announced May prescription data for Veltassa while a task force reaffirmed its support of Exact Sciences’ Cologuard. Analysts remain bullish on both companies and comment on what the good news means for share prices.

Relypsa Inc

Relypsa is most known for Veltassa, its FDA-approved drug to treat hyperkalemia. Analyst Mara Goldstein of Cantor Fitzgerald weighs in on the biotech company with bullish sentiments after May prescription numbers were released and dives deeper into her expectations for the drug.

Analysts lauded Veltassa as the first new hyperkalemia drug to be approved in 50 years. However, there are concerns that a competing drug, ZS-9 from AstraZeneca, will enter the market in a year and challenge Veltassa’s market share, following a delay imposed by the FDA. These concerns don’t faze Goldstein as she highlights strong Veltassa script growth in May, noting that outpatient prescriptions grew 33% month over month to 1,230. The number of starter pack prescriptions also increased from 1,216 to 1,385 month over month.

Goldstein expects Veltassa to have a “volatile” launch but notes that there are several signs of encouragement. She explains, “Our view has been and continues to be that sales will be well skewed to year-end, and prescription numbers thus far are in line with our forecast.” Now, Goldstein notes that her forecast of $1.4 million in Veltassa sales for the second quarter may be too conservative, explaining, “Our revenue forecast for Veltassa has been very back-end loaded for CY:16, and we think the level of prescribing thus far indicates that our annual forecast is achievable.”

Thanks to the strong Veltassa script data, Goldstein reiterates a Buy rating on Relypsa with a $41 price target, marking well over a 100% upside from current levels.

According to TipRanks, 80% of analysts are bullish on Relypsa, 10% are neutral, and 10% are bearish. The average 12-month price target between these analysts is $30.56, marking a 68% potential upside from where shares last closed.

EXACT Sciences Corporation

Sean Lavin of BTIG comments on Exact Sciences as a task force analyzing the company’s Cologuard finalized its recommendation for the product as it confirmed colorectal cancer screening guidelines. Following the news, Lavin reaffirms his optimism on the stock thanks to the future of Cologuard.

Cologuard is Exact Sciences’ at-home colon cancer screening accessible with a prescription. Now that the task force has finalized its support for the product, Lavin believes it will be reimbursed by more private insurers sooner rather than later. He estimates that Cologuard will be reimbursed by 70% to 90% of private insurers in the next two years thanks to the finalized guidelines.

Lavin is raising his revenue estimates in about 18 months from now, guiding the largest benefits in 2018 and thereafter. He explains, “While we feel EXAS has significantly more risk, we also model faster growth over the next few years and feel our numbers could be conservative depending on when routine reimbursement comes.”

Lavin reiterates a Buy rating on Exact Sciences and raises his price target from $9 to $13, marking a 39% upside from where shares last closed.

According to TipRanks, Lavin has a 61% success rate recommending stocks with an 8.5% average annual return per rating. Out of all the analysts who have rated the stock in the last 3 months, 4 are bullish and 2 are neutral with an average 12-month price target of $10.20, marking a 9% potential upside from where shares last closed.


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