E Relypsa Gains 8% On Competitor's FDA Rejection

On Friday, shares of Relypsa (RLYP) closed the day up 8% after one of its drug rivals AstraZeneca (AZN) had its hyperkalemia drug ZS-9 rejected by the FDA. AstraZeneca received a CRL for ZS-9 primarily because of manufacturing issues. While this takes ZS-9 out of the equation for now, it doesn't rule out the fact that the company can refile again for approval. Manufacturing issues are easy to take care of. That means that ZS-9 isn't out of the battle entirely yet. It is not like the FDA came out against the safety or efficacy of the drug.

In the short term this gives Relypsa breathing room to sell its hyperkalemia drug Valtessa in the market with no competitors. Valtessa received FDA approval last October, and has been doing quite well. Had AstraZeneca received FDA approval for ZS-9 today, it would have been a completely different story for Relypsa's stock. 

This is a big blow to AstraZeneca because it paid $2.7 billion to acquire ZS Pharma last year.

Hyperkalemia is characterized by potassium levels in the body in the blood that are abnormally too high, and this can cause life-threatening issues. Both Valtessa and ZS-9  help lower the amount of potassium in the blood. For now Relypsa has the entire market to itself, and many analysts believe that the market opportunity for peak sales in this indication is around $1 billion. 

Although the day's news was good for Relypsa, AZN escaped the day relatively unscathed due to good news for two of its other drugs. The European Ad Comm adopted a positive opinion regarding AstraZeneca's diabetes combo, and there were positive Phase 3 clinical trial results announced for its breast cancer drug Faslodex.

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