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Relypsa, Inc.

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PREFACE
Relypsa (RLYP) is a small-cap clinical stage biopharmaceutical company whose stock continues to be driven almost exclusively by the rumor mill. In just the last three weeks we have seen the stock whip-saw. Today was no different -- except that the rumors didn't even make it into the news -- they were social media based.

Here's what is happening, what happened and now, what must happen.



NEWS TODAY
To keep it short and sweet -- basically some people on Twitter spread rumors that Merck (NYSE:MRK) was readying a bid for the company. This is hardly a new rumor -- in fact, it's become so common, from potential bidders like AstraZeneca (NYSE:AZN) and Sanofi (NYSE:SNY) we call upon the company to help stem the tide of ridiculousness. Here's a two-day stock chart:



We can see the spike today which took the stock to as high as $21.35. Not to be out done, here's what happened since April 7th:

NEWS ON APRIL 7TH
The company has a single drug named Veltassa that treats hyperkalemia, which is a condition of fatal levels of potassium in patients with chronic kidney disease or heart problems. This happened on April 7th:



Reuters reported that the firm was exploring a sale following a number of overtures from potential buyers, according to people familiar with the matter.


What was yet more bullish was the firm that was named: CenterView Partners. Business Insider penned an article in November, "This little bank is cleaning up in 2015's hottest sector for M&A." The article reads a quote from Jeffrey Nassof, vice president with Freeman & Co:


Then on the next Friday, the stock went into free fall.

NEWS ON APRIL 15TH
Benzinga reported "Relypsa Said To Have Dropped M&A Advisor Centerview Partners."


Relypsa's investor relations finally came back with a statement, which it had not made when the first news broke:


Here's what the stock did on Friday after that news:



And, finally, here's some actual news, that nobody paid attention to.

WHAT MUST HAPPEN
This myopic view is really a microcosm of the stock since December. Abrupt, jolting moves up on takeover rumors and then equally abrupt but slower stock price disintegrations down. Aiding the wild swings is the breathtaking short interest in the stock, which has neared 50% of the float.

Throughout the melee, the company has maintained a standard position of "no comment," for all intents and purposes. But now friends, we need more and here is my letter to the company's phenomenal CEO, John Orwin delivered through Yahoo! Finance:

DEAR JOHN
Dear Mr. Orwin,

First, I congratulate you on the approval of Veltassa, the first new treatment for hyperkalemia in 50 years and further, your impressive sales figures thus far:



I was dumbfounded, first, by the FDA's nearly unprecedented black box label and, second, its original incorrect wording surrounding the onset of action. I congratulate you on correcting the FDA and further on the DDI study. I hope the FDA removes the black box or reduces it to a 3 and 3. In any case, you've successfully done what was needed.

I further congratulate you on a superb job of reaching out to doctors and what appears to be a successful education program that has reduced the impact of the black box on sales to essentially zero. That's spectacularly done.

Finally, I congratulate you on your stellar career spanning some of the most important bio-pharma companies in the world, including Johnson and Johnson.

But now, I ask for your help. While the firm has done a wonderful job of releasing sales data on the 15th of every month in a successful attempt to deliver transparency, we are now at the point where the "no comment" auto-response to takeover rumors is not appropriate. We have crossed the chasm of slight disruptions from rumors to the point of outright bedlam.

The underlying value of the firm is so violently distorted from day to day, something must change. It doesn't matter if the company's comment pushes the stock price higher or lower. We entrust you to make the right decisions with respect to potential suitors even if that decision is to rebuff them. Relypsa can be a stand-alone entity if that's your goal -- go for it. But owners of Relypsa must have an understanding of the company's future and now that future is so disrupted by rumors that our CEO needs to speak.

I'm sure there are details that you can't share, competitive positions you must protect, but I'm also sure there are some details that you can share. It is not unprecedented for a firm to openly and transparently comment directly to takeover rumors when they become disruptive. The statements can be terse and short of detail, but nonetheless they are direct and clear.

We need your help. The rumor mill has taken the bullhorn and filled it with a cacophony of confusion. Please take the bullhorn back. Bring order back. It's your time, and we do wait with bated breath.

TO EVERYONE ELSE
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The author is net long Relypsa.

Thanks for reading, friends.

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