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Shares of U.S.-based
(NASDAQ: RLYP) , a biopharma developing polymeric medicines for
disorders of the gastrointestinal tract, gained more than 72%
last month, according to data from
Global Market Intelligence
. The drugmaker's monthly surge was triggered by a
$1.53 billion all-cash buyout agreement
with the Swiss-based
. Upon closing in the third quarter of this year, Relypsa
will become the
the U.S. headquarters for Galencia's Vifor pharma business unit,
whereby enabling a planned split of the company by 2017.
The terms of this deal received a mixed reception among
Relypsa's shareholder base. The apparent reason for the
discontent is that the Street's high-end price target (before
this deal was announced) implied that Relypsa's market cap could
grow organically to around $2.43 billion, or around 59% higher
than Galencia's tender offer, over just the next year.
The long and short of it is that some analysts thought that
Relypsa's FDA-approved treatment for hyperkalemia, Veltassa,
would have an easier time capturing an outsized portion of this
projected $6 billion market following the rejection of
's(NYSE: AZN) competing experimental drug ZS-9 last May.
As Astra's rival hyperkalemia medicine was rejected
for manufacturing problems, and reportedly not for a lack of
efficacy and/or safety concerns,
there's a good chance that ZS-9 will reach the market within the
next year at the latest.
Although it's impossible to tell whether this delay would
provide Relypsa enough time to build a competitive moat strong
enough to withstand the entrance of a drug backed by a major
pharma like Astra, we do know that Veltassa's current
growth rate -- without any major competition to speak of at the
moment -- puts it on track to generate around about $200 million
in revenue for the drugmaker by the end of 2018.
Viewed this way, this deal looks more than fair, especially
with Astra's experimental drug still in the picture. The bottom
line is that it's unlikely that this deal will get scuttled over
concerns that management failed in its fiduciary duty to
shareholders, meaning that investors probably shouldn't hold out
hope that a higher bid is coming down the pike.
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