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Why Relypsa Stock Popped This Week

This article was updated at 4:37pm PST on July 12th, 2106 to reflect 8-K data from Relypsa.

Relypsa Inc (NASDAQ:RLYP), the famed small cap biotech with one approved drug, Veltassa, is seeing its stock momentum rise in the broader market rally as all eyes are on its data release this Friday for sales numbers for the month of June.

Here is the data:

We finally have data from Relypsa’ s first month of sales after competitor AstraZeneca's ZS-9 was given a complete response letter by the FDA -- a rejection based on manufacturing concerns. Relypsa Inc CEO, John Orwin, noted that several physicians had been waiting for the FDA decision on ZS-9 before committing to prescribe Relypsa’ s Veltassa to patients and it appears he was right. Relypsa has delivered excellent results.

As the number of outpatient prescriptions filled gets larger (the second row), Relypsa is seeing yet faster percentage growth. We can also see that while the hospital/institution market is a small one, Relypsa has flipped from shrinkage to large growth. It does appear that ZS-9's rejection has pushed Relypsa’ s Veltassa into the here and now for the physicians that had been waiting.

As an added bonus for the firm, the ZS-9 rejection received a fair amount of press, which put Relypsa front and center for several people that likely were less aware of the drug.

As the short interest in RLYP has grown, the narrative has now shifted more bullish with consecutive positive releases on interim phase studies showing Veltassa’ s ability to lower blood pressure in patients -- a concern that ZS-9 would have brought with it due to its tendency to raise sodium in the blood.

Any conversation about Relypsa almost automatically brings with it a discussion of a potential takeover. Rumors have swirled for months about a potential acquisition and several suitors have been named, including Merck (MRK), AstraZeneca (AZN) and Relypsa’ s partner Sanofi (SNY).

As the broader market rallies, M&A activity may pick up. Microsoft's acquisition of LinkedIn was the headline grabber, but let us not forget that Medivation (MDVN) is embroiled in a takeover frenzy as well.

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Thanks for reading, friends. The author is long call options in Relypsa.

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